SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
MicroTouch Systems, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
MicroTouch Systems, Inc.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] 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:
-------------------------------------------------------------------------
Dear Fellow Shareholder:
You are cordially invited to attend the MicroTouch Annual Meeting of
Shareholders (the "Annual Meeting") to be held at 10:00 a.m. on Thursday, June
22, 2000 at the offices of MicroTouch Systems, Inc., 300 Griffin Brook Park
Drive, Methuen, Massachusetts 01844.
You will be asked at the meeting to elect one director, to ratify the
selection of Arthur Andersen LLP as MicroTouch's independent auditors for 2000
and to transact such other business as may properly come before the meeting or
any adjournment thereof.
As set forth in the accompanying Proxy Statement, which you are urged to
read, your Board of Directors recommends that you vote "FOR" the proposals.
At the Annual Meeting, management will be available for a discussion period
to answer your questions, and we welcome your comments. Representatives from
Arthur Andersen will also be available to answer questions.
The Board of Directors appreciates and encourages shareholder participation
in MicroTouch's affairs. Whether or not you plan to attend the Annual Meeting,
it is important that your shares be represented. Accordingly, we request that
you sign, date and mail the enclosed proxy in the envelope provided at your
earliest convenience.
Thank you for your cooperation.
Very truly yours,
/s/ D. Westervelt Davis
D. Westervelt Davis
President, Chief Executive Officer and
Director
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 24, 2000
To the Shareholders:
The Annual Meeting of Shareholders of MicroTouch Systems, Inc. will be held
on June 22, 2000 at the offices of MicroTouch Systems, 300 Griffin Brook Park
Drive, Methuen, Massachusetts, at 10:00 a.m., for the following purposes:
(1) To elect one Class II director.
(2) To approve Arthur Andersen LLP as independent auditors of the
Corporation for fiscal 2000.
(3) To transact such other business as may properly come before the meeting
or any adjournment thereof.
Shareholders of record at the close of business on May 8, 2000 are entitled
to vote at the meeting.
/s/ Diane Burak
Diane Burak
Clerk
MICROTOUCH SYSTEMS, INC.
300 Griffin Brook Park Drive
Methuen, Massachusetts 01844
Telephone (978) 659-9000
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 22, 2000.
The accompanying proxy is solicited by the Board of Directors, and all the
expenses of the solicitation will be borne by the Corporation. No costs of
solicitation have been incurred to date. The solicitation will be by mail, and
may also be made personally and by telephone by a presently indeterminable
number of officers and employees of the Corporation or by an independent
organization on behalf of the Corporation.
The annual report to shareholders was sent to shareholders with this proxy
statement and accompanying proxy on or about May 24, 2000.
VOTING
The Corporation has only one class of shares outstanding. The Board of
Directors has fixed the close of business on May 8, 2000 as the record date for
determination of shareholders entitled to notice of and to vote at the Annual
Meeting of Shareholders on June 22, 2000 (the "Annual Meeting"). As of April
28, 2000 there were outstanding 6,482,842 shares of common stock of $0.01 par
value per share (the "Common Stock"), each such share being entitled to one
vote. At any time prior to the Annual Meeting, a shareholder may revoke his or
her proxy by filing a proxy bearing a later date with the Clerk of the
Corporation. If a shareholder attends the Annual Meeting, such shareholder may
revoke his or her proxy at that time and vote in person. Proxies will be voted
as directed by the shareholder. Unless otherwise directed, proxies will be
voted for the election of the nominee for the Class II director listed below
and for the approval of Arthur Andersen LLP ("Arthur Andersen") as the
independent auditors of the Corporation. A majority in interest of all stock
issued, outstanding and entitled to vote at the Annual Meeting, represented at
the Annual Meeting, in person or by proxy, constitutes a quorum for the
transaction of business. Signed but unmarked proxies will be counted as
favorable votes; pursuant to Massachusetts law, broker non-votes and proxies
marked as abstentions will be counted as shares present for the purpose of
determining the presence of a quorum but broker non-votes will not be counted
as votes properly cast and will not affect the outcome of the voting. Proxies
marked as abstentions will be counted as votes properly cast and, accordingly,
will have the effect of a negative vote. The favorable vote of a plurality of
the shares represented at the meeting is required for the election of the
director. The favorable vote of a majority of the shares represented at the
meeting is required for the ratification of Arthur Andersen.
PROPOSAL I--NOMINATION AND ELECTION OF DIRECTOR
The Corporation's Board of Directors is divided into three classes. The
Board is currently comprised of two Class I directors, one Class II director
and two Class III directors. At each Annual Meeting of Shareholders, a class of
directors is elected for a three-year term to succeed the directors of the same
class whose terms are then expiring. The terms of the current Class II
director, Class III directors and Class I directors, respectively, will expire
upon the election and qualification of directors at the Annual Meeting of
Shareholders held in 2000, 2001 and 2002.
Pursuant to the provisions of the By-Laws of the Corporation, one Class II
director is to be elected at the Annual Meeting. The nominee for the Class II
member of the Board of Directors is Edward J. Stewart, III, who currently
serves as a Class II director. A person elected as director to a specific class
will serve until the expiration of such director's three-year term, and in each
case until the particular director's successor has been elected and qualified.
The board recommends a vote FOR the nominee.
1
If for any reason the nominee should not be a candidate for election at the
time of the Annual Meeting, the proxies may be voted, in the discretion of
those named as proxies, for a substitute nominee.
Following are summaries of the background and business experience and
descriptions of the principal occupations of the Directors and the nominee for
re-election to the Board of Directors.
James D. Logan Age: 47 Mr. Logan founded MicroTouch in 1983. He has served
as Chairman of the Board (Class III Director) since April 1992. In April 1996,
he stepped down as President and Chief Executive Officer, roles he had held
since 1983 and 1992, respectively, to pursue other business interests and is
currently the Chief Executive Officer and President of Gotuit Media, Inc., a
privately held high technology company. Mr. Logan continues to serve as
Chairman of the Board. Mr. Logan received an M.B.A. from the Amos Tuck School
of Business Administration at Dartmouth College, where he was an Edward Tuck
Scholar, and a B.A. from Hamilton College.
D. Westervelt Davis Age: 52 Since April 1996, Mr. Davis has served as
President and Chief Executive Officer of the Corporation and has been a
director of the Corporation (Class I) since 1991. Previously, Mr. Davis was the
President of Lasertron, a Division of Oak Industries, a manufacturer of
semiconductor components for fiber optic communications, from November 1994 to
March 1996. From April 1992 to November 1994, Mr. Davis was a principal with
Rand Griffin, a strategy consulting firm. Mr. Davis received an M.B.A. from the
Harvard Graduate School of Business Administration and a B.S.E. from Princeton
University.
Edward J. Stewart, III Age: 54 (Nominee for re-election as a Class II
Director) Mr. Stewart has been a director of the Corporation since 1983. Mr.
Stewart is a retired partner of Kestrel Venture Management. From 1983 to 1999,
Mr. Stewart was the General Partner of Kestrel Venture Management, a venture
capital firm, and its predecessor, and a series of affiliated venture capital
partnerships. Mr. Stewart is a director of nine privately held companies. Mr.
Stewart received an M.B.A. from the Harvard Graduate School of Business
Administration and a B.S. from Yale University.
Frank Manning Age: 51 Mr. Manning has been a director of the Corporation
(Class I) since 1993. He is President, Chief Executive Officer and Chairman of
the Board, and a co-founder of Zoom Telephonics, Inc., a publicly held
manufacturer of analog and broadband modems, wireless local area network
products, and other data communication products. In 1998, Mr. Manning became a
director of the Massachusetts Technology Development Corporation, which invests
in seed and early-stage technology companies in Massachusetts. Mr. Manning
received his B.S., M.S., and Ph.D. in Electrical Engineering from the
Massachusetts Institute of Technology, where he was a National Science
Foundation fellow.
Peter Brumme Age: 50 Mr. Brumme has been a director of the Corporation
(Class III) since 1998. Since January 2000, Mr. Brumme has served as Vice
President of Marketing & Business Development of SilverStream Software, Inc., a
producer of Internet application development software. During 1999, he served
as Executive Vice President of Sales & Marketing and in 1998 and 1997 as Chief
Operating Officer of SilverStream. From March 1993 to December 1996, Mr. Brumme
served as Senior Vice President of Sales & Marketing and Chief Operating
Officer of Watermark Software, Inc., a provider of Windows-based imaging
software acquired by FileNet Corporation. Mr. Brumme also serves as an advisor
to several venture capital firms. Mr. Brumme received a Master of Science in
Operations Research from Cornell University and a B.S. in Applied Mathematics
from MIT.
Six meetings of the Board of Directors were held during 1999. The Board has
three committees: Compensation, which met once during 1999; Audit, which met
twice during 1999; and Nominating, which did not meet in 1999. Each incumbent
director attended at least 75% of the aggregate of the total number of meetings
of the Board of Directors and the total number of meetings held by all
committees of the Board on which he served during 1999.
The Audit Committee, which currently consists of Messrs. Stewart and
Manning, nominates the Corporation's independent auditing firm, reviews the
scope of the audit and approves in advance reviews by the
2
independent auditors, their activities and recommendations regarding internal
control, and meets with the independent auditors and management, each of whom
had direct and open access to the Audit Committee.
The Compensation Committee, which currently consists of Messrs. Brumme and
Stewart, determines the compensation of officers other than employee directors
(as to whom the Committee makes recommendations to the Board of Directors which
then determines their compensation). See "Compensation Committee Report to
Shareholders" below.
The Nominating Committee, which currently consists of Messrs. Manning and
Logan, nominates persons to serve as members of the Corporation's Board of
Directors, recommends directors to serve on the various Board Committees and
recommends a successor to the chief executive officer whenever a vacancy occurs
for any reason. The Nominating Committee does not consider for nomination to
the Board of Directors candidates suggested by the stockholders.
For serving the Corporation as directors, directors receive a fee of $1,000
for each board and $750 for each committee meeting attended. Additionally, upon
election to the Board of Directors, each new non-employee director shall
receive options to purchase 10,000 shares of Common Stock. Immediately
following the Annual Shareholders' Meeting each year, each non-employee
director shall automatically receive options to purchase 5,000 shares of Common
Stock. The options have a term of 5 years and are priced at the last sale price
of the Corporation's Common Stock for the day previous to the date of the
grant.
Compensation Committee Interlocks and Insider Participation
Messrs. Brumme and Stewart, each an outside director, are the members of the
Corporation's Compensation Committee. In 1997 Mr. Brumme served as a consultant
to the Corporation. Neither member of the Compensation Committee has at any
time been an officer or employee of the Corporation or any of its subsidiaries.
No executive officer of the Corporation served as a member of the compensation
committee or board of directors of any other entity which has an executive
officer serving as a member of the Corporation's Board of Directors or
Compensation Committee.
3
SECURITY OWNERSHIP
Except as set forth below, no person or group, to the knowledge of the
Corporation, owns five percent or more of the Common Stock.
The following table sets forth information as of March 10, 2000 with respect
to the amount of Common Stock held by each director, Named Executive Officer,
(as defined below), holder of 5% or more of the Corporation's Common Stock and
all directors and executive officers as a group (in each case, the beneficial
owner of the shares shown has sole voting and sole investment power):
Common Shares Percentage of
Beneficially Total Common
Name Owned Shares Owned
- ---- ------------- -------------
Lord, Abbett & Co. ................................. 1,251,167 19.3%
90 Hudson Street
Jersey City, NJ 07302
Dimensional Fund Advisors Inc. ..................... 555,700 8.6%
1299 Ocean Avenue
Santa Monica, CA 90401
State of Wisconsin Investment Board................. 550,000 8.5%
P.O. Box 7842
Madison, WI 53707
James D. Logan(1)................................... 161,598 2.5%
Peter Brumme(2)..................................... 8,000 0.1%
D. Westervelt Davis(3).............................. 229,500 3.4%
Frank Manning(4).................................... 34,000 0.5%
Edward J. Stewart, III(5)........................... 41,000 0.6%
Geoffrey P. Clear(6)................................ 97,606 1.5%
Janet M. Muto(7).................................... 43,100 0.7%
Robert J. Senior(8)................................. 54,100 0.8%
Jeffrey E. Shaw(9).................................. 42,850 0.7%
Directors and Executive Officers as a group......... 826,983 11.6%
13 individuals (includes options to acquire
660,693 shares which vest prior to 5/9/00)
- --------
(1) Consists of 120,598 shares owned directly by Mr. Logan and options to
acquire 41,000 shares which vest prior to 5/9/00.
(2) Consists of options to acquire 8,000 shares which vest prior to 5/9/00.
(3) Consists of 12,000 shares owned directly by Mr. Davis and options to
acquire 217,500 shares which vest prior to 5/9/00.
(4) Consists of options to acquire 34,000 shares which vest prior to 5/9/00.
(5) Consists of 22,000 shares owned directly by Mr. Stewart and options to
acquire 19,000 shares which vest prior to 5/9/00. Mr. Stewart disclaims
beneficial ownership of an additional 9,000 shares owned by family members.
(6) Consists of 3,616 shares owned directly by Mr. Clear and options to acquire
93,990 shares which vest prior to 5/9/00.
(7) Consists of options to acquire 43,100 shares which vest prior to 5/9/00.
Ms. Muto resigned as an officer of the Corporation as of April 25, 2000.
(8) Consists of options to acquire 54,100 shares which vest prior to 5/9/00.
(9) Consists of options to acquire 42,850 shares which vest prior to 5/9/00.
4
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE'S REPORT TO SHAREHOLDERS
The executive compensation program for the Corporation is administered by
the Compensation Committee of the Board of Directors (the "Committee") which is
composed of the individuals listed below, who are outside, non-employee
directors of the Corporation with responsibility for all compensation matters
for the Corporation's senior management other than employee directors, as to
whom the Committee makes recommendations to the Board of Directors, which then
determines their compensation.
The program has been designed to enable the Corporation to attract, motivate
and retain senior management by providing a competitive total compensation
package based on performance. It provides for competitive base salaries, which
reflect individual performance; annual variable performance incentive
opportunities, which are payable in cash for the achievement of performance
goals established by the Committee; and long-term, stock-based incentive
opportunities, which strengthen the mutuality of interests between senior
management and the Corporation's shareholders. The annual performance incentive
opportunities and long-term incentive opportunities established by the
Committee are intended to be competitive with competitor incentive compensation
opportunities based on surveys conducted by independent compensation consulting
firms.
In designing and administering the individual elements of the executive
compensation program, the Committee strives to balance short and long-term
incentive objectives and to employ prudent judgment in establishing performance
criteria, evaluating performance and determining actual incentive payments.
Following is a discussion of each of the elements of the executive compensation
program along with a description of the decisions and actions taken by the
Committee with regard to 1999 compensation and specific discussion of the
decisions regarding the Chief Executive Officer's ("CEO's") compensation.
Annual Compensation
Annual total cash compensation for senior management consists of base salary
and the annual variable performance incentive earned under the Corporation's
Key Executive Bonus Plan. Total annual cash compensation varies each year based
on achievement of Corporation performance goals established by the Committee
under the annual incentive plan and changes in base salary.
Payment of the annual variable performance incentive award for the Executive
Officers appearing in the tabular disclosure which follows is based on
achievement of various goals, both financial and strategic. For 1999, the
Committee determined that bonus awards would be calculated as percentages of
base salary, and based upon the achievement of a revenue growth target and an
operating income target for the Executive Officers, except the CEO, whose award
is discussed separately below. Having determined that the operating income
target was not met, the Committee then determined that no bonus payment would
be made to the Executive Officers.
Long-Term Compensation
The long-term incentive program for senior management consists of awards
granted under the 1992 Equity Incentive Plan (the "Plan"), which is
administered by the Compensation Committee. The Plan provides for awards of
stock options, stock appreciation rights, restricted stock and performance
shares. To date, only stock options have been granted under the Plan. During
1999, the following stock option grants were awarded to the four most highly
compensated officers of the Corporation, other than the CEO: 1) to Janet Muto,
Vice President--Marketing, 8,000 shares; 2) to Robert J. Senior, Vice President
and General Manager--European Operations, 8,000 shares; 3) to Jeffrey E. Shaw,
Vice President--Quality and Operations, 8,000 shares; and 4) to Geoffrey P.
Clear, Vice President--Finance & Administration, Chief Financial Officer and
Treasurer, 8,000 shares.
5
Chief Executive Officer's Compensation
Mr. Davis' base salary was determined by comparing salaries of executives of
similar companies based on the Company's internal benchmarking survey
activities. Mr. Davis also participates in the Key Executive Bonus Plan and the
1992 Equity Incentive Plan, as discussed above. Mr. Davis' award is also tied
to long-range performance targets for the Corporation as well as the current
year revenue growth and operating income targets. Because the operating income
target was not met, Mr. Davis received no bonus for 1999, but did receive a
stock option grant of 50,000 shares.
The Compensation and Stock Option tables which follow in this proxy
statement, and accompanying narrative and footnotes, reflect the decisions
covered by the above discussion.
By the Compensation Committee,
Peter Brumme
Edward J. Stewart, III
The following table shows, for the fiscal years indicated, the annual
compensation paid by the Corporation, together with long-term and other
compensation, for the Chief Executive Officer and the next four most highly
compensated executive officers in 1999 (the "Named Executive Officers") of the
Corporation.
Summary Compensation Table
Long Term
Compensation
Awards
------------
Annual
Compensation Securities
----------------- Underlying
Year Salary Bonus(1) Options
---- -------- -------- ------------
D. Westervelt Davis........................ 1999 $233,077 $ -- 50,000
President, Chief Executive Officer and 1998 $207,692 $100,000 50,000
Director 1997 $200,000 $ -- 50,000
Janet Muto................................. 1999 $192,061 $ -- 8,000
Vice President--Marketing(2) 1998 $163,558 $ 57,500 8,000
1997 $107,221 $ 65,000 50,000
Robert J. Senior........................... 1999 $170,489 $ -- 8,000
Vice President & General Manager--European 1998 $154,340 $116,170 23,000
Operations 1997 $152,137 $107,941 8,000
Jeffrey E. Shaw............................ 1999 $166,539 $ -- 8,000
Vice President--Quality and Operations 1998 $155,769 $ 53,500 17,000
1997 $135,577 $ 55,000 45,000
Geoffrey P. Clear.......................... 1999 $160,000 $ -- 8,000
Vice President--Finance & Administration, 1998 $161,923 $ 53,500 25,000
Chief Financial Officer and Treasurer 1997 $138,308 $ 54,000 8,000
- --------
(1) Reflects amounts awarded for performance in the respective fiscal year,
even though the compensation may not have actually been paid until a later
date.
(2) Ms. Muto became Vice-President--Marketing in April 1997. She resigned as an
officer of the Corporation as of April 25, 2000.
6
EXECUTIVE OFFICERS
The current executive officers of the Corporation who are not also directors
are listed below. Each such person's term of office extends until the meeting
of the Board of Directors following the Annual Meeting and until his or her
successor is elected and qualified.
Mr. Robert Senior (Age: 44) has been Vice President and General Manager--
European Operations since January 1995. Before that, he was Vice President--
Sales from March 1993 until December 1994. He was General Manager of the
Company's U.K. subsidiary from January 1991 until March 1993. Mr. Senior
received a B. Ed. in Physics from Exeter University.
Mr. Barry Waxman (Age: 46) has been Vice President Worldwide Sales since
November 1999. Previously he was Vice President Worldwide Sales and Marketing
for Pixel Magic, a wholly owned subsidiary of Oak Technology, a manufacturer of
high performance image processing semiconductors and systems. Prior to that, he
was Vice President--Sales at Mylex Corporation, a publicly held manufacturer of
RAID controllers and subsystems. Mr. Waxman holds a BSc degree in Electronics
and Electrical Engineering from Paisley College of Technology, Scotland &
King's College, London.
Mr. Randall Smith (Age: 48) has been President of the Business Products
Division since March 1997. Previously he was Vice President of Marketing from
November 1996 to February 1997. From 1995 to 1996 Mr. Smith was an independent
consultant. Mr. Smith received a MBA in Marketing & Finance from Northwestern
University and a BS in Management from Purdue University.
Mr. Bernard Geaghan (Age: 52) has been Vice President--Research and
Development since May 1995. Before that he was Vice President--Engineering from
March 1990 to April 1995. Mr. Geaghan received a B.S. in Electrical Engineering
from the University of Maine.
Mr. Geoffrey Clear (Age: 50) has been Vice President--Finance &
Administration, Chief Financial Officer and Treasurer of the Company since
February 1992. Mr. Clear is a Certified Public Accountant and a member of the
Financial Executives Institute. Mr. Clear received an M.B.A. from the Amos Tuck
School of Business Administration at Dartmouth College, where he was an Edward
Tuck Scholar, and a B.A. from Dartmouth College.
Mr. Jeffrey Shaw (Age: 53) has been Vice President--Quality and Operations
since January 1997. Previously he was Vice President--Operations for ACT
Manufacturing, Inc., a contract manufacturing company. Prior to that, he was
Vice President--Operations at Xyplex, Inc., and PictureTel Corporation, as well
as Vice President of Global Support Operations at Octocom Systems. Mr. Shaw
holds a MS in Metallurgy and Materials from Lehigh University and a BS in
Electrical Engineering from Worcester Polytechnic Institute.
Mr. Robert Becker (Age: 40) has been Vice President--Engineering since July
1998. Previously he was Vice President--Engineering at PictureTel Corporation
where he was responsible for the videoconferencing company's Client Products
and Peripherals. Earlier positions at PictureTel included Engineering Group
Products Director and several Program Management positions. Mr. Becker has 10
patents to his credit for work in computer architectures. Mr. Becker received a
BS degree in Computer Science from the University of Connecticut and a BA
degree in Liberal Arts from Fairfield University.
7
There are no family relationships between any of the Corporation's
directors, executive officers or people nominated to become directors or
executive officers of the Corporation.
The following table contains information concerning the grant of stock
options to Named Executive Officers during the last fiscal year.
Option Grants in Last Fiscal Year
--------------------------------------------------------------------------
Number of Percentage of
Securities Total Options
Underlying Granted to Market Price
Options Employees in Exercise as of Expiration Grant Date
Name Granted(1) 1999 Price Grant Date Date Present Value(2)
- ---- ---------- ------------- -------- ------------ ---------- ----------------
D. Westervelt Davis..... 50,000 13.0% $12.81 $12.81 4/14/04 $373,000
Janet Muto.............. 8,000 2.1% $12.81 $12.81 4/14/04 $ 60,000
Robert J. Senior........ 8,000 2.1% $12.81 $12.81 4/14/04 $ 60,000
Jeffrey E. Shaw......... 8,000 2.1% $12.81 $12.81 4/14/04 $ 60,000
Geoffrey P. Clear....... 8,000 2.1% $12.81 $12.81 4/14/04 $ 60,000
- --------
(1) Options granted become exercisable in variable installments over 3 years.
(2) Based on the Black-Scholes option pricing model adapted for use in valuing
stock options. The actual value, if any, that an executive may realize will
depend on the excess of the stock price over the exercise price on the date
the option is exercised and there is no assurance the value realized by an
executive will be at or near the value estimated by the Black-Scholes
model. The estimated values under that model are based on arbitrary
assumptions (as required by the Black-Scholes methodology) as to variables
such as interest rates (a weighted average of 5.1%) and stock price
volatility (.64). Amounts indicated are not intended to be a forecast of
possible future appreciation, if any, in the price of the Corporation's
Common Stock.
The following table sets forth information with respect to the Named
Executive Officers concerning option exercises during the last fiscal year and
unexercised options held as of the end of the last fiscal year.
Aggregated Option Exercises in the Last Fiscal Year and Fiscal Year-End Option
Values
Number of Securities
Underlying Unexercised Value of Unexercised
Options Held at In-the Money Options at
December 31, 1999 December 31, 1999(1)
------------------------- -------------------------
Shares
Acquired Value
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------- ----------- ------------- ----------- -------------
D. Westervelt Davis..... 5,000 $63,750 167,500 200,000 $ 96,563 $ 0
Janet Muto.............. -0- -0- 27,000 39,000 $ 0 $ 0
Robert J. Senior........ -0- -0- 44,750 30,250 $187,938 $ 0
Jeffery E. Shaw......... -0- -0- 26,250 43,750 $ 0 $ 0
Geoffrey P. Clear....... -0- -0- 84,029 31,971 $647,625 $ 0
- --------
(1) Based on the difference between the closing price of the Corporation's
Common Stock as reported on the Nasdaq Stock Market as of 12/31/99 ($12.63)
and the exercise price of the respective options. Dollar values rounded to
the nearest thousand.
8
Comparative Stock Performance
The comparative stock performance graph below compares the cumulative
shareholder return on the Common Stock of the Corporation for the period from
January 1, 1995 through the fiscal year ended December 31, 1999 with the
cumulative total return for (i) the NASDAQ Market Value Index for the NASDAQ
Stock Market (the "NASDAQ Market Index"), and (ii) a group consisting of
publicly-traded U.S. companies in the Corporation's industry (based on Standard
Industrial Classification Code Number 3577, "Computer Peripheral Equipment")
(the "Peer Group Index") for the same period, assuming the investment of $100
in the Corporation's Common Stock, the NASDAQ Market Index and the Peer Group
Index on January 1, 1995 and reinvestment of all dividends. Measurement points
are on January 1, 1995 and the last trading day of the Corporation's fiscal
years ended December 31, 1995, 1996, 1997, 1998 and 1999.
[GRAPH APPEARS HERE]
- ----------------------------------------------------------------------------------------
LABEL A B C
- ----------------------------------------------------------------------------------------
LABEL MICROTOUCH SYSTEMS PEER GROUP INDEX NASDAQ MARKET INDEX
- ----------------------------------------------------------------------------------------
1 12/30/94 100 100 100
2 12/29/95 26.94 159.63 129.71
3 12/31/96 53.33 199.79 161.18
4 12/31/97 35 203.47 197.16
5 12/31/98 29.17 400 278.08
6 12/31/99 28.06 857.92 490.46
PROPOSAL II--APPROVAL OF INDEPENDENT AUDITORS
Subject to the ratification by the shareholders at the Annual Meeting, the
Board of Directors of the Corporation, on recommendation of the Audit
Committee, has appointed the firm of Arthur Andersen LLP, certified public
accountants, as the independent auditors to audit the financial statements of
the Corporation for the current fiscal year. The Board may appoint a new
accounting firm at any time if it believes that such a change would be in the
best interests of the Corporation and its shareholders.
9
Arthur Andersen LLP has been the Corporation's auditors for the last eight
years. Representatives of Arthur Andersen LLP will be present at the Annual
Meeting with the opportunity to respond to appropriate questions and to make a
statement if they desire to do so.
The Board of Directors recommends a vote FOR ratifying the selection of
Arthur Andersen LLP as independent auditors of the Corporation for 2000.
"SECTION 16(a) BENEFICAL OWNERSHIP REPORTING COMPLIANCE"
The Corporation's executive officers and directors are required, under
Section 16(a) of the Securities Exchange Act of 1934, as amended, to file
reports of ownership and changes in ownership of securities of the Corporation
with the Securities and Exchange Commission. Copies of those reports must also
be furnished to the Corporation.
Based solely on a review of (i) Forms 3, 4 and 5 relating to the fiscal year
ended December 31, 1999, and amendments thereto, furnished to the Corporation,
and (ii) written representations that no Form 5 was required, the Corporation
believes that, during 1999, the executive officers and directors of the
Corporation complied with all applicable Section 16(a) filing requirements,
except as follows: Mr. Waxman inadvertently failed to file a Form 3 upon his
employment as an officer of the Corporation but included the required
information in a timely filed Form 5; Messrs. Davis, Fisher and Logan each
inadvertently failed to file one Form 4 covering one, two and five
transactions, respectively, but included such transactions in timely filed
Forms 5; Joel Blenner, a former officer of the Corporation, inadvertently
failed to file three Forms 4 covering 22 transactions, but included such
transactions in a timely filed Form 5; and Mr. Senior inadvertently failed to
file three Forms 4 covering eight transactions, but included such transactions
in a late-filed amended Form 5.
CERTAIN TRANSACTIONS
On September 25, 1997, Mr. Peter Brumme, a Class III Director of the
Corporation, received an option to purchase 5,000 shares of Common Stock as
consideration for consulting services. The option exercise price was $26.50 per
share and the option vests in its entirety on September 25, 2003.
OTHER MATTERS
Management does not know of any matters to be presented at the Annual
Meeting other than the matters described in this Proxy Statement. If, however,
other business is properly presented to the meeting, the proxy holders named in
the accompanying form of Proxy will vote the Proxy in accordance with their
best judgment. To be considered for inclusion in the proxy statement related to
the Annual Meeting of Stockholders to be held in 2001, Stockholder proposals
must be received no later than January 25, 2001. To be considered for
presentation at the Annual Meeting, although not included in the proxy
statement, proposals must be received no later than April 9, 2001. All
Stockholder proposals should be marked for the attention of Chief Financial
Officer, MicroTouch Systems, Inc., 300 Griffin Brook Park Drive, Methuen, MA
01844.
D. Westervelt Davis
IMPORTANT
Whether you own one share or many, you are urged to sign and return promptly
the enclosed proxy in the postage paid envelope provided.
10
SKU # MTSI-PS-2000
Proxy
MicroTouch Systems, Inc.
(the "Corporation")
The undersigned, revoking previous proxies relating to the shares subject
hereto,hereby acknowledges receipt of the Notice and Proxy Statement dated May
24, 2000 in connection with the Corporation's 2000 Annual Meeting of
Shareholders to be held at 10:00 a.m. on June 22, 2000 at the offices of
MicroTouch Systems, Inc., 300 Griffin Brook Park Drive, Methuen Massachusetts
and hereby appoints Geoffrey P. Clear and Diane Burak and each of them (with
full power to act alone), the attorneys and proxies of the undersigned, with
power of substitution to each, to vote all shares of the Common Stock of the
Corporation which the undersigned is entitled to vote at said Annual Meeting of
Shareholders, and at any adjournment thereof, with all the powers the
undersigned would have if personally present. Without limiting the general
authorization hereby given, said proxies are, and each of them is, instructed to
vote or act as follows on the proposals set forth in said Proxy Statement. In
addition, in their discretion, the proxies are authorized to vote upon such
other matters as may properly come before said Annual Meeting. Signed but
unmarked proxies will be voted in favor of each proposal.
Dear Shareholder:
Please take note of the important information enclosed with this Proxy. There
are a number of issues related to the operation of the Corporation that require
your immediate attention.
Your vote counts, and you are strongly encouraged to exercise your right to vote
your shares.
Please mark the boxes on the proxy card to indicate how your shares will be
voted. Then sign the card, detach it and return your proxy in the enclosed
postage- paid envelope.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
MicroTouch Systems, Inc.
[X] Please mark votes as in this example
This Proxy, when executed, will be voted in the manner directed herein. If no
direction is made, this Proxy will be voted FOR the election of the nominee for
Class II Director and FOR Proposal 2. The Board of Directors recommends a vote
FOR Proposals 1 and 2.
1. Election of one Class II Director (or, if the nominee is not available for
election, the shares represented hereby will be voted for such substitute
as the Board may designate)
Nominee: Edward J. Stewart, III
FOR NOMINEE [ ] [ ] WITHHELD FROM NOMINEE
[ ]_________________________________________
For nominee except as noted above
2. Ratification of Independent Auditors (Arthur Andersen LLP)
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
MARK HERE FOR
ADDRESS CHANGE
AND NOTE AT LEFT [ ]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE CORPORATION.
Please sign exactly as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, officer, trustee, or guardian,
please give full title as such.
Signature:___________________________ Date:_____________
Signature:____________________________ Date:_____________