================================================================================
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 Section 240.14a-11(c) or Section 240.14a-12
ETEC SYSTEMS, INC.
- --------------------------------------------------------------------------------
(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):
[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:
-------------------------------------------------------------------------
Notes:
[LOGO]
ETEC SYSTEMS, INC.
26460 CORPORATE AVENUE
HAYWARD, CA 94545
(510) 783-9210
NOVEMBER 4, 1998
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Etec Systems, Inc., which will be held on Tuesday, December 8, 1998, at 2:00
p.m., Pacific Standard Time (PST), at the Company's offices located at 26460
Corporate Avenue, Building 4, Hayward, California 94545.
The formal Notice of the Annual Meeting and the Proxy Statement are included
with this invitation.
After reading the Proxy Statement, please mark, date, sign and return, at an
early date, the enclosed proxy in the prepaid envelope addressed to Morrow &
Co., Inc., our agent, to ensure that your shares will be represented. YOUR
SHARES CANNOT BE VOTED UNLESS YOU SIGN, DATE AND RETURN THE ENCLOSED PROXY
CARD BY MAIL, PROVIDE A PROXY OVER THE INTERNET OR BY TELEPHONE, OR ATTEND THE
ANNUAL MEETING IN PERSON.
A copy of the Company's 1998 Annual Report to Stockholders is also enclosed.
The Board of Directors and management look forward to seeing you at the
meeting.
Sincerely,
/s/ STEPHEN E. COOPER
Stephen E. Cooper
Chairman of the Board, President and
Chief Executive Officer
ETEC SYSTEMS, INC.
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 8, 1998
----------------
To the Stockholders of Etec Systems, Inc.:
The Annual Meeting of Stockholders of Etec Systems, Inc., a Nevada
corporation (the "Company"), will be held on Tuesday, December 8, 1998, at
2:00 p.m. Pacific Standard Time (PST), at the Company's principal executive
offices located at 26460 Corporate Avenue, Building 4, Hayward, California,
94545, for the following purposes:
1. To elect eight directors;
2. To approve an amendment to the 1995 Omnibus Incentive Plan to increase
the number of available shares by 1,000,000;
3. To ratify the appointment of PricewaterhouseCoopers LLP as the
Company's independent accountants; and,
4. To transact such other business as may properly come before the Annual
Meeting and any adjournment of the Annual Meeting.
Stockholders of record as of the close of business on October 16, 1998 are
entitled to notice of and to vote at the Annual Meeting and any adjournment
thereof.
IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT THIS MEETING. EVEN IF
YOU PLAN TO ATTEND THE MEETING, WE HOPE THAT YOU WILL PROMPTLY MARK, SIGN,
DATE AND RETURN THE ENCLOSED PROXY CARD BY MAIL OR PROVIDE A PROXY OVER THE
INTERNET OR BY TELEPHONE. THIS WILL NOT LIMIT YOUR RIGHTS TO ATTEND THE
MEETING OR TO VOTE IN PERSON AT THE MEETING.
By Order of the Board of Directors
/s/ W. RUSSELL WAYMAN
W. Russell Wayman
Secretary
Hayward, California
November 4, 1998
ETEC SYSTEMS, INC.
----------------
PROXY STATEMENT
----------------
INFORMATION CONCERNING SOLICITATION AND VOTING
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Etec Systems, Inc., a Nevada corporation (the "Company")
of proxies in the accompanying form to be used at the Annual Meeting of
Stockholders, to be held at the Company's principal executive offices located
at 26460 Corporate Avenue, Hayward, California, 94545, on Tuesday, December 8,
1998, at 2:00 p.m., Pacific Standard Time (PST), and any adjournment thereof
(the "Annual Meeting").
The shares represented by the proxies received in response to this
solicitation and not revoked will be voted at the Annual Meeting. A proxy may
also be provided electronically or telephonically by following the
instructions printed on the proxy card. A proxy may be revoked at any time
before it is exercised by filing with the Secretary of the Company a written
revocation or a duly executed proxy bearing a later date or by voting in
person at the Annual Meeting. The Company's transfer agent, which is
tabulating votes with respect to the Annual Meeting, will count the last vote
received from a stockholder, whether by telephone, proxy card, electronically
through the Internet, or by ballot at the meeting in person. On the matters
coming before the Annual Meeting for which a choice has been specified by a
stockholder by means of a proxy, the shares will be voted accordingly. If no
choice is specified, the shares will be voted FOR the election of the nominees
for directors listed in this Proxy Statement, FOR approval of Proposals 2 and
3 described in the Notice of Annual Meeting and in this Proxy Statement, and
in the discretion of the proxyholders as to any other matter that is properly
brought before the Annual Meeting.
Stockholders of record at the close of business on October 16, 1998 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting. As
of the close of business on the Record Date, the Company had 21,154,294 shares
of Common Stock outstanding and entitled to vote. The presence in person or by
proxy of the holders of a majority of the Company's outstanding shares
entitled to vote constitutes a quorum for the transaction of business at the
Annual Meeting. Each holder of Common Stock is entitled to one vote for each
share held as of the Record Date.
Directors are elected by a plurality vote. There is no cumulative voting in
the election of directors. The other matters submitted for stockholder
approval at this Annual Meeting require that the number of votes cast in favor
of the matter exceed the number of votes cast against the matter. Abstentions
with respect to any matter are, under Nevada law, counted for quorum purposes
but do not affect the outcome of the vote. If a broker who is the record
holder of certain shares indicates on a proxy that he or she does not have
discretionary authority to vote on a particular matter as to such shares, or
if shares are not voted in other circumstances in which proxy authority is
defective or has been withheld with respect to any matter, these non-voted
shares will be counted for quorum purposes but will not affect the outcome of
the vote.
The expense of printing and mailing proxy materials will be borne by the
Company. In addition to the solicitation of proxies by mail, solicitation may
be made by certain directors, officers and other employees of the Company by
personal interview, telephone or facsimile. No additional compensation will be
paid to such persons for such solicitation. The Company will reimburse
brokerage firms and others for their reasonable expenses in forwarding
solicitation materials to beneficial owners of the Company's Common Stock. The
Company has retained Morrow & Co., Inc. to assist in the solicitation of
proxies at a cost of approximately $5,000.
This Proxy Statement and the accompanying form of proxy are being mailed to
stockholders, together with the 1998 Annual Report to Stockholders, on or
about November 4, 1998.
IMPORTANT
PLEASE MARK, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT AT YOUR EARLIEST
CONVENIENCE IN THE ENCLOSED POSTAGE-PREPAID RETURN ENVELOPE SO THAT, WHETHER
YOU INTEND TO BE PRESENT AT THE ANNUAL MEETING OR NOT, YOUR SHARES CAN BE
VOTED. THIS WILL NOT LIMIT YOUR RIGHTS TO ATTEND OR VOTE AT THE ANNUAL
MEETING.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of the Record Date, as
to shares of the Company's Common Stock beneficially owned by: (i) each of the
Company's executive officers named in the Summary Compensation Table,
(collectively the "Named Officers") (ii) each of the Company's directors,
(iii) all current directors and executive officers of the Company as a group,
and (iv) each person who is known by the Company to own beneficially more than
5% of the Company's Common Stock.
SHARES PERCENTAGE
BENEFICIALLY BENEFICIALLY
OWNED(1) OWNED(1)(2)
------------ ------------
J. & W. Seligman & Co. ........................... 2,296,500(3) 10.9 %
Capital Guardian Trust Company.................... 2,061,700(4) 9.75%
Fidelity Management Research...................... 1,400,900(5) 6.62%
West Highland Capital Inc......................... 1,250,000(6) 5.91%
William D. Cole(7)................................ 27,005 *
Stephen E. Cooper(7).............................. 146,594 *
Edward L. Gelbach(7).............................. 27,000 *
Mark A. Gesley(7)................................. 31,214 *
John McBennett(7)................................. 11,000 *
William J. Ryan(7)................................ 4,000 *
William T. Siegle(7).............................. 4,000 *
Takeshi (John) Suzuki(7).......................... 27,083 *
Thomas M. Trent(7)................................ 14,000 *
Paul A. Warkentin(7).............................. 57,678 *
Robert L. Wehrli(7)............................... 12,000 *
All current directors and executive officers as a
group (11 persons)(7)............................ 361,574 1.78%
- --------
* Amount represents less than 1% of the Company's Common Stock.
(1) To the Company's knowledge, the Named Officers and Directors have sole
voting and investment power with respect to all shares of Common Stock
shown as beneficially owned by them, subject to community property laws
where applicable, and the information contained in the footnotes to this
table.
(2) For purposes of computing the percentage of outstanding shares held by
each person or group of persons named above on a given date, shares that
such person or group has the right to acquire within 60 days after such
date are deemed to be outstanding, but are not deemed to be outstanding
for the purposes of computing the percentage ownership of any other
person.
(3) As reported in Schedule 13G/A dated April 30, 1998 filed by J. & W.
Seligman & Co. Incorporated ("JWS"). JWS, as an investment adviser for
Seligman Communications and Information Fund, Inc. (the "Fund"), may be
deemed to beneficially own the 2,000,000 shares separately reported by the
Fund. Accordingly, the shares reported herein by JWS include those shares
separately reported by the Fund. William C. Morris, as the owner of a
majority of the outstanding voting securities of JWS, may be deemed to
beneficially own the shares reported herein by JWS.
(4) As reported in Schedule 13G dated December 31, 1997, filed by Capital
Guardian Trust Company ("CGTC") as to 1,832,300 shares, Capital
International, Inc. ("CII") as to 162,900 shares, Capital International
Limited ("CIL") as to 36,500 shares, and Capital International S.A.
("CISA") as to 30,000 shares. CGTC, CII, CIL, and CISA are affiliated
entities; however, they disclaim membership in a group for all purposes
other than making the joint filing.
(5) As reported in Schedule 13G dated September 10, 1998 by FMR Corp. Fidelity
Management & Research Company ("Fidelity"), 82 Devonshire Street, Boston,
Massachusetts 02109, a wholly-owned subsidiary of
2
FMR Corp. and an investment adviser registered under Section 203 of the
Investment Advisers Act of 1940, is the beneficial owner of 1,400,000
shares of the common stock of the Company as a result of acting as
investment adviser to various investment companies registered under Section
8 of the Investment Company Act of 1940. Edward C. Johnson 3d, FMR Corp.,
through its control of Fidelity, and the Funds each has sole power to
dispose of the 1,400,000 shares owned by the Funds. Neither FMR Corp. nor
Edward C. Johnson 3d, Chairman of FMR Corp., has the sole power to vote or
direct the voting of the shares owned directly by the Fidelity Funds, which
power resides with the Funds' Boards of Trustees. Fidelity carries out the
voting of the shares under written guidelines established by the Funds'
Boards of Trustees. Members of the Edward C. Johnson 3d family and trusts
for their benefit are the predominant owners of Class B shares of common
stock of FMR Corp., representing approximately 49% of the voting power of
FMR Corp. Mr. Johnson 3d owns 12.0% and Abigail Johnson owns 24.5% of the
aggregate outstanding voting stock of FMR Corp. Mr. Johnson 3d is Chairman
of FMR Corp. and Abigail P. Johnson is a Director of FMR Corp. The Johnson
family group and all other Class B shareholders have entered into a
shareholders' voting agreement under which all Class B shares will be voted
in accordance with the majority vote of Class B shares. Accordingly,
through their ownership of voting common stock and the execution of the
shareholders' voting agreement, members of the Johnson family may be
deemed, under the Investment Company Act of 1940, to form a controlling
group with respect to FMR Corp. Fidelity International Limited, Pembroke
Hall, 42 Crowlane, Hamilton, Bermuda, and various foreign-based
subsidiaries provide investment advisory and management services to a
number of non-U.S. investment companies (the "International Funds") and
certain institutional investors. Fidelity International Limited is the
beneficial owner of 900 shares of the common stock of the Company.
(6) As reported in Schedule 13G dated July 13, 1998, filed by West Highland
Capital, Inc. ("WHC"). Lang H. Gerhard is the sole shareholder of WHC.
(7) Includes shares issuable upon exercise of options within 60 days of the
Record Date. For the Named Officers and Directors, the amounts are as
follows: Mr. Cole, 21,500; Mr. Cooper, 55,143; Mr. Gelbach, 17,000; Mr.
Gesley, 25,500; Mr. McBennett, 11,000; Mr. Ryan, 4,000; Mr. Siegle, 4,000;
Mr. Suzuki, 13,750; Mr. Trent, 6,000; Mr. Warkentin, 23,750; Mr. Wehrli,
12,000; and all executive officers and directors as a group (11 persons)
193,643.
3
PROPOSAL 1--ELECTION OF DIRECTORS
NOMINEES
A total of eight directors are to be elected at the Annual Meeting, each to
serve for a term of one year. Directors are elected to serve until the next
annual meeting of stockholders and until their successors are elected and
qualified. If any nominee is unable or declines to serve as director at the
time of the Annual Meeting, an event not now anticipated, proxies will be
voted for any nominee designated by the Board of Directors to fill the
vacancy. Each of the Company's nominees is currently serving as a director of
the Company.
The names of the nominees, their ages as of the Record Date and certain
information about them are set forth below:
PRINCIPAL OCCUPATION
NOMINEES AGE DURING THE LAST FIVE YEARS DIRECTOR SINCE
-------- --- ------------------------------ --------------
Mr. Stephen E. Cooper...... 52 Chairman of the Board since 1993
April 1995, President since
January 1993 and Chief
Executive Officer of the
Company since July 1993. Mr.
Cooper served as Chief
Operating Officer from January
1993 until July 1993. Mr.
Cooper is also a Director of
Vivid Semiconductor.
Mr. Takeshi (John) Suzuki.. 60 President and director of Etec 1994
Japan, a subsidiary of the
Company, since May 1990.
Mr. Edward L. Gelbach...... 67 Private investor for more than 1995
the past five years.
Mr. Gelbach is also a director
of Richey Electronics, Inc.
and Bell Microproducts.
Mr. John McBennett (1)..... 60 Vice President, Internal Audit 1994
of Perkin-Elmer, a
manufacturer of analytical
instrumentation, since 1977.
Mr. William J. Ryan (1).... 59 Co-founder, Executive Vice 1997
President, Operations and
director of Angstrom
Technologies, Inc., a
manufacturer of electro-
optical scanners, since 1994.
Mr. Ryan was Vice President,
Operations of SVG Lithography
Systems, Inc., a semiconductor
equipment company, from 1992
to 1994.
Mr. William T. Siegle (2).. 59 Senior Vice President for 1997
Technology Development and
Chief Scientist of Advanced
Micro Devices, Inc., a
semiconductor manufacturer,
since 1990.
Mr. Thomas M. Trent (2).... 53 Currently retired. From 1986 1994
through 1996, Mr. Trent was a
Vice President of Micron
Technology, Inc., a
semiconductor manufacturer.
Mr. Robert M. Wehrli (2)... 76 Owner and Chief Executive 1995
Officer of Chronometry, a
consulting firm, since 1977.
Mr. Wehrli is also a director
of Siliconix, Inc. and PECO
Controls Co.
- --------
(1) Member of Audit Committee
(2)Member of Compensation Committee
There are no family relationships among any directors or executive officers
of the Company.
Under the Company's Bylaws, nominations for the election of Directors may be
made by any stockholder entitled to vote in the election of Directors, but
only if written notice of such stockholder's intent to make such nominations
has been received by the Company at its principal executive office not less
than 60 days prior to the first anniversary of the day on which notice of the
date of the prior year's annual meeting was mailed. Such stockholder's notice
must set forth: (a) with respect to each proposed nominee, the name, age,
business and residence address, principal occupation or employment, class and
number of shares of stock of the Company owned, written consent to be named as
a nominee and to serve as a director of election, and any other information
4
that would be required to be disclosed in solicitations of proxies for
election of directors; and (b) with respect to the stockholder giving the
notice, the name, address and class and number of shares of the Company that
are beneficially owned by such stockholder, and a description of any
arrangements or understandings between the stockholder, the nominee and any
other person relating to the nomination. The presiding officer of the meeting
may refuse to acknowledge the nomination of any person not made in compliance
with the foregoing procedure. The Company has not received notice from any
stockholder of the intent to nominate a person from the floor at the Annual
Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR
THE ELECTION OF EACH OF THE DIRECTOR NOMINEES AS SET FORTH ABOVE.
BOARD MEETINGS AND COMMITTEES
The Board of Directors held five meetings during the fiscal year ended July
31, 1998. Each director attended at least 75% of the aggregate number of
meetings of the Board of Directors and of the committees on which such
director serves.
The Board of Directors has appointed a Compensation Committee and an Audit
Committee. The Compensation Committee and Audit Committee are comprised
entirely of non-employee directors, which are identified in the list of
directors under "Nominees" above. The Company does not have a nominating
committee or a committee performing the functions of a nominating committee.
The Compensation Committee held four meetings during fiscal 1998. The
Compensation Committee's functions are to review and approve salaries and
incentive compensation of the executive officers of the Company, and to
establish basic guidelines and generally review the Company's incentive
compensation and benefit plans for all employees. See "Report of the
Compensation Committee of the Board of Directors on Executive Compensation"
below.
The Audit Committee held four meetings during fiscal 1998. The Audit
Committee's functions are to review the annual financial statements of the
Company, the results and the scope of the annual audit and the other services
provided by the Company's independent accountants, and monitor the
effectiveness of the Company's internal financial and accounting organization
and controls and financial reporting.
DIRECTORS' COMPENSATION
Employee directors (Messrs. Cooper and Suzuki) receive no additional
compensation for service on the Board of Directors. Non-employee directors of
the Company receive an annual retainer of $10,000. In addition, they receive
$1,500 for each Board meeting and $500 for each Board committee meeting
attended in person. Directors are also reimbursed for their expenses for each
meeting attended in person and are eligible to participate in the Company's
1995 Directors' Stock Option Plan (the "1995 Directors' Plan").
Under the terms of the 1995 Directors' Plan, upon appointment to the Board,
each non-employee director receives a non-statutory option to purchase 8,000
shares of Common Stock (an "Initial Option"). These one-time grants vest in
two installments, with half of the shares vesting on the first anniversary of
the grant date and the other half vesting on the second anniversary of the
grant date. In addition, during his or her tenure, each non-employee director
receives an annual grant of an option to purchase 3,000 shares on each
anniversary (an "Annual Option"). Annual Options vest in full on the first
anniversary of the grant date. Under the 1995 Directors' Plan, each option's
exercise price is 100% of the fair market value of the underlying shares on
the grant date and its term is ten years.
5
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth compensation for services rendered to the
Company in all capacities for the three fiscal years ended July 31, 1996, 1997
and 1998 by (i) the Company's Chief Executive Officer, and (ii) the Company's
four other most highly compensated executive officers whose total annual
salary and bonus for fiscal year 1998 exceeded $100,000.
LONG-TERM
COMPENSATION
------------
AWARDS
------------
ANNUAL COMPENSATION OTHER SECURITIES
NAME AND PRINCIPAL --------------------- ANNUAL UNDERLYING
POSITION YEAR SALARY($) BONUS($)(1) COMPENSATION($) OPTIONS(#) ALL OTHER($)
------------------ ---- --------- ----------- --------------- ------------ ------------
Stephen E. Cooper....... 1998 418,655 234,500 19,127(2) 80,000 2,000(3)
Chairman of the Board, 1997 348,950 132,088 8,100(2) 100,000 2,000(3)
President and Chief 1996 242,281 123,750 6,450(2) 44,000 2,387(3)
Executive Officer
Paul A. Warkentin....... 1998 218,847 64,320 8,982(2) 90,000 1,498(3)
Senior Vice President 1997 159,432 54,600 8,100(2) 40,000 1,470(3)
and Chief Operating 1996 141,575 49,500 6,450(2) 15,000 1,158(3)
Officer
William D. Cole(4)...... 1998 200,001 80,400 9,127(2) 10,000 1,711(3)
Vice President, Sales 1997 202,187 80,400 0 16,000 1,442(3)
and Customer Support 1996 -- -- 0 70,000 --
Takeshi (John) Suzuki... 1998 175,027 55,551 7,920(5) -- (6) 42,327(7)
President, Etec Japan 1997 206,992 67,516 0 15,000 60,618(7)
1996 226,120 85,397 0 12,000 55,787(7)
Mark A. Gesley.......... 1998 179,617 64,320 10,240(2) 30,000 865(3)
Vice President, 1997 161,060 54,600 8,100(2) 40,000 759(3)
Technology Development 1996 120,251 26,322 7,395(2) 15,000 1,138(3)
- --------
(1) Amounts paid in fiscal year 1998 in respect of fiscal year 1997 SMIP Bonus
Plan.
(2) Represents medical reimbursement, car allowance and executive financial
planning program payments.
(3) Represents contributions by the Company under its 401(k) plan.
(4) Mr. Cole commenced employment with the Company on July 29, 1996.
(5) Represents housing allowance payments.
(6) Mr. Suzuki received a stock option for 16,000 shares on August 8, 1998.
(7) Represents contributions by the Company to a plan which provides for
payments to Mr. Suzuki during his retirement.
6
STOCK OPTIONS
The following table summarizes options granted to the Named Officers during
fiscal year 1998.
OPTION GRANTS IN FISCAL YEAR 1998
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL
RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(2)
------------------------------------------------------- ---------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES EXERCISE PRICE EXPIRATION
NAME GRANTED(#)(1) IN FISCAL YEAR PER SHARE($/SH) DATE 5%($) 10%($)
---- ------------- -------------- --------------- ---------- ------------- -------------
Stephen E. Cooper....... 80,000 7.27% 34.38 6/1/08 1,729,060 4,382,392
Paul A. Warkentin....... 40,000 3.64% 59.88 9/4/07 1,506,328 3,817,332
50,000 4.55% 34.38 6/1/08 1,080,663 2,738,995
William D. Cole......... 10,000 .91% 34.38 6/1/08 216,133 547,799
Takeshi (John) Suzuki... -- -- % -- -- -- --
Mark A. Gesley.......... 30,000 2.77% 34.38 6/1/08 648,398 1,643,397
- --------
(1) Standard options are granted under the 1995 Omnibus Incentive Plan. The
exercise price is the fair market value on the date of grant. Options vest
25% each year beginning one year from the date of grant and expire 10
years from the date of grant. Options are exercisable for 60 days after a
termination to the extent vested at that time. All options outstanding
will vest in the event of Stockholder approval of a merger or
consolidation of the Company with, or the sale of substantially all the
Company's assets to, any other person or corporation (except for a merger
or consolidation in which at least 80% of the total voting power after
such merger or consolidation was held by the same persons holding such
voting power immediately prior to such merger or consolidation). Options
are not transferable, except upon death by testamentary will or pursuant
to the laws of descent and distribution, or pursuant to a Qualified
Domestic Relations Order, as defined by the U.S. Internal Revenue Code.
(2) Potential realizable value is calculated based on assumptions set forth in
SEC rules and does not in any way represent the Company's estimate of
future stock price. There can be no assurance provided to any executive
officer or any other holder of the Company's securities that the actual
stock price appreciation over the 10-year option term will be at the 5%
and 10% assumed annual rates of compounded stock price appreciation or at
any other defined level. Unless the market price of the Common Stock
appreciates over the option exercise price, no value will be realized from
the option grant made to the Named Officer.
The following table summarizes exercises of options during fiscal 1998 by
the Named Officers and the value of options held by each such person at the
end of fiscal 1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES JULY 31, 1998(#) JULY 31, 1998($)(2)
ACQUIRED VALUE ------------------------- -------------------------
NAME ON EXERCISE(#) REALIZED($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------------- -------------- ----------- ------------- ----------- -------------
Stephen E. Cooper....... 26,357 949,296 55,143 188,000 640,479 552,750
Paul A. Warkentin....... 35,961 1,671,951 13,750 130,500 38,438 166,125
William D. Cole......... 17,500 676,979 21,500 57,000 196,875 393,750
Takeshi (John) Suzuki... 8,000 457,815 13,750 21,250 180,500 180,500
Mark A. Gesley.......... 4,246 165,338 25,500 75,750 333,275 341,288
- --------
(1) Calculated on the basis of the fair market value of the underlying
securities at the exercise date minus the exercise price.
(2) Calculated on the basis of the fair market value of the underlying
securities at July 31, 1998 ($33.75 per share) minus the exercise price.
7
EMPLOYMENT AGREEMENTS AND TERMINATION AGREEMENTS
None of the Named Officers has an employment agreement with the Company,
except Mr. Cooper, who is entitled to 26 weeks of salary continuance if the
Company terminates his employment other than for cause.
PENSION AND LONG-TERM INCENTIVE PLANS
The Company has no pension plans or long-term incentive plans for its
executives. However, the Company makes an annual contribution to Mr. Suzuki's
retirement plan pursuant to an agreement between the Company and Mr. Suzuki.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is comprised of Messrs. William T. Siegle, Thomas
M. Trent and Robert L. Wehrli. None of these individuals were at any time
during fiscal year 1998, or at any other time, an officer or employee of the
Company. No executive officer of the Company serves as a member of the Board
of Directors or compensation committee of any other entity that has one or
more executive officers serving as a member of the Company's Board of
Directors or Compensation Committee.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
Until December 2, 1997, the Compensation Committee of the Company's Board of
Directors (the "Committee") was comprised of three non-employee directors:
Messrs. Jack H. King, Thomas M. Trent and Robert L. Wehrli. Effective December
2, 1997, Mr. King left the Compensation Committee and was replaced by Mr.
William T. Siegle. The Committee meets regularly, prior to scheduled meetings
of the Board of Directors, and holds special meetings as required.
The charter of the Compensation Committee is to provide guidance and
leadership to the Chief Executive Officer and the Vice President of Corporate
Services to enable them to design and implement executive compensation
packages to enable the Company to attract and retain executive management. The
primary role of the Committee is to review and approve the salary, bonus,
stock options and other benefits, direct or indirect, of the Company's senior
management.
EXECUTIVE COMPENSATION OBJECTIVES
The Company's major objectives in determining executive officer compensation
are to:
. Attract and retain key executive management and leadership to ensure the
success of the Company;
. Align executive compensation targets with the annual, as well as long-
term, financial, operational and strategic objectives of the Company;
and,
. Reward key executives for their contribution to the long-term success of
the Company by providing opportunities for them to acquire an ownership
interest in the Company.
COMPONENTS OF EXECUTIVE COMPENSATION
The primary components of the Company's executive compensation package are
base salary, annual cash incentives and long-term stock-based incentives.
Base Salary. The base salary for executive officers of the Company takes
into account individual performance, the scope of the executive officer's
responsibilities and comparative compensation data for companies of a similar
size and organizational structure that are located in the Northern California
area ("Comparable Companies"). All of the Comparable Companies are included in
the companies comprising the
8
Nasdaq Stock Market Index used in the Stock Price Performance Graph. In fiscal
year 1998, certain executive officers received increases to their base
salaries as a result of changes or increases in management responsibilities
and to reflect adjustments to comparative market data.
Annual Cash Incentives. The Company's Senior Management Incentive Plan
("SMIP") provides for annual cash bonuses that are earned according to a
formula that was designed to reward key executive officers for meeting or
exceeding certain established targets set by the Compensation Committee. For
fiscal 1998, the key targets were earnings per share and customer
satisfaction. The maximum payout under the SMIP is capped at twice each
participant's targeted percentage of salary. The targeted percentage of salary
ranges between 20% and 70%. Based on the Company's results during fiscal year
1998, the SMIP paid cash incentive compensation to executive officers in
amounts ranging from 10% to 35% of the executive's base salary. These payments
will be reflected in fiscal year 1999 compensation.
The Compensation Committee approves the SMIP target financial, operational
and performance objectives so that they are properly aligned with the
performance of the Company. In addition, the Committee approves participation
in the SMIP.
Long-Term Stock-Based Incentives. Long-term stock-based incentives are
provided through periodic stock option grants pursuant to the Company's 1995
Omnibus Incentive Plan. Such options are granted at an exercise price equal to
the market price of the Company's outstanding shares on the date of the grant.
The objective of these grants is to ensure that the interests and objectives
of the executive officers are more closely aligned with the long-term
interests and returns that will be realized by stockholders. The number of
shares to be subject to an option is determined by the Committee after a
review of grant levels of Comparable Companies. In awarding option grants, the
Committee also considers the vesting schedule of an executive officer's
current options. However, the Committee does not intend to adhere to any
specific guidelines, and may elect to vary the size of an option grant to any
executive officer in consideration of his or her overall option and
compensation package.
CHIEF EXECUTIVE OFFICER (CEO) COMPENSATION
Chief Executive Officer compensation is comprised of the same components as
the other executive officers' compensation: base salary, annual cash
incentives and long-term stock-based incentives. The compensation payable to
Mr. Stephen E. Cooper, the Chief Executive Officer, during fiscal year 1998,
was determined by the Board of Directors in consideration of comparable base
salary levels in effect for chief executive officers of Comparable Companies.
Mr. Cooper's compensation package was designed to achieve two primary
objectives: (1) to provide a base compensation level that is competitive with
that paid to other chief executive officers of Comparable Companies according
to the criteria described above, and (2) to base a significant portion of his
compensation on the annual and long-term performance of the Company. The cash
bonus paid to Mr. Cooper for the 1998 fiscal year, which has been paid in the
1999 fiscal year and will be reflected in the 1999 fiscal year compensation,
was based on the Company's achievement of a 22% year-over-year increase in
earnings per share and overall customer satisfaction. No dollar guarantee is
provided going forward.
Mr. Cooper received an increase in base salary from $350,000 in fiscal year
1997 to $420,000 in fiscal year 1998. The increase was to ensure a competitive
base salary level. A stock option for an additional 80,000 shares of Common
Stock was granted to Mr. Cooper on June 1, 1998 to bring his unvested option
holdings to a level maintaining significant incentive for him to continue in
the employment of the Company and to increase the Company's stock price.
DEDUCTIBILITY OF COMPENSATION UNDER INTERNAL REVENUE CODE SECTION 162(M)
Section 162(m) of the Internal Revenue Code (the "Code"), enacted in 1993,
generally disallows a tax deduction to a publicly-held company for certain
compensation ("162(m) compensation") in excess of $1 million paid or accrued
to certain executive officers in any year. The 162(m) compensation paid to the
Company's executive officers for the 1998 fiscal year did not exceed $1
million for any executive officer, and it is not expected that the 162(m)
compensation paid in fiscal year 1999 will exceed the $1 million limit for any
executive officer of the Company.
9
Submitted by the Compensation Committee of the Company's Board of Directors:
William T. Siegle (since December 2, 1997)
Thomas M. Trent
Robert L. Wehrli
Jack H. King (until December 2, 1997)
CERTAIN TRANSACTIONS
In fiscal 1997, the Company made loans to certain executive officers
pursuant to the Company's Executive Loan Program. Of such loans, only one
remained outstanding during any portion of fiscal year 1998. A loan in the
amount of $100,000 was outstanding during all of fiscal year 1998 to Frank
Abboud, Vice President of Product Development. Mr. Abboud's loan is due on
April 30, 2002, bears an annual interest rate of 7.375% and is secured by a
Deed of Trust on his principal residence.
STOCK PRICE PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return of the
Company's Common Stock with The Nasdaq Stock Market Index (U.S.) and Hambrecht
& Quist Semiconductor Index. The comparison assumes the investment of $100 on
October 24, 1995 (the date the Company's Common Stock became registered under
Section 12 of the Securities Exchange Act of 1934) based on the closing price
of such stock on the date of such initial public offering, and the assumption
that dividends, if any, were reinvested when paid. The comparisons in the
graph are required by the Securities and Exchange Commission and are not
intended to forecast or be indicative of possible future performance of the
Company's Common Stock.
CUMULATIVE TOTAL RETURN
-----------------------------------------------
10/24/95 7/96 7/97 7/98
ETEC SYSTEMS, INC. $100.00 $235.00 $542.50 $337.50
NASDAQ STOCK
MARKET (U.S.) $100.00 $104.71 $154.52 $182.37
HAMBRECHT & QUIST
SEMICONDUCTORS $100.00 $ 62.57 $156.33 $108.03
10
PROPOSAL 2--APPROVAL OF AN INCREASE IN SHARES UNDER THE 1995 OMNIBUS INCENTIVE
PLAN OF ETEC SYSTEMS, INC.
Since 1995, the Company has provided stock options as an incentive to its
employees to promote increased stockholder value. Management believes that
stock options are one of the prime ways to attract and retain key personnel
responsible for the continued development and growth of the Company's
business, and to motivate all employees to increase stockholder value. In
addition, stock options are considered a competitive necessity in
semiconductor equipment and other high technology industries.
The Company currently grants options to all employees worldwide upon initial
hire, and periodically to key employees or in recognition of achievement of
certain performance criteria. In the recent fiscal year, the Company
experienced revenue growth from $240.9 million in fiscal 1997 to $288.3
million in fiscal 1998. Critical hires were made in finance, administration,
engineering, service, manufacturing, operations, sales and marketing.
Consequently, the number of employees during fiscal 1998 grew from 886 to
1,085 at fiscal year end. As a result of the increase in number of employees
during fiscal year 1998, options to purchase 1,106,116 shares were granted
from the 1995 Omnibus Incentive Plan (the "1995 Plan").
The Company believes that the proposed increase in the number of shares
available under the 1995 Plan will enable the Company to provide appropriate
incentives to its current and future employees, and will be sufficient to meet
the Company's option granting requirements for the next year.
PROPOSED AMENDMENT
In September 1998, the Company's Board of Directors, subject to stockholder
approval, adopted an amendment to the 1995 Plan to increase the number of
shares reserved for issuance under the 1995 Plan from 2,975,000 shares to
3,975,000 shares. At the Annual Meeting, stockholders are being asked to
approve the increase in shares reserved under the 1995 Plan.
The proposed amendment amends and restates Article 4.1 of the 1995 Omnibus
Incentive Plan to read as follows:
"ARTICLE 4. SHARES AVAILABLE FOR GRANTS
4.1 Basic Limitation. Shares issued pursuant to the Plan shall be
authorized but unissued Shares and Shares acquired in the open market. The
aggregate number of Shares reserved for award as Restricted Shares, Stock
Units, and Options shall be 3,975,000 Shares, provided that no more than
10% of the preceding amount may be awarded as Restricted Shares. Any Shares
that have been reserved but not awarded as Restricted Shares, Stock Units,
and Options during any calendar year shall remain available for award in
any subsequent calendar year. The limitation of this Section 4.1 shall be
subject to adjustment pursuant to Article 10."
VOTE REQUIRED
The votes cast in favor of the increase in shares under the 1995 Plan at a
duly held meeting at which a quorum is present must exceed the votes cast
against such proposal in order to approve the amendment of the 1995 Plan.
Unless marked to the contrary, proxies received will be voted "FOR" approval
of the amendment to the 1995 Plan to increase the shares reserved thereunder
by 1,000,000.
GENERAL
The 1995 Plan provides an incentive to employees and consultants whose
present and potential contributions are important to the continued success of
the Company, affords them an opportunity to acquire a proprietary interest in
the Company, and enables the Company to enlist and retain the best available
talent for the conduct of its business. The 1995 Plan permits the granting of
incentive stock options ("ISOs"), nonstatutory stock options ("NSOs"),
restricted stock (up to 10% of the total authorized shares under the 1995
Plan) and stock units. The Company does not currently have any specific plans
to grant any awards under the 1995 Plan other than stock options.
11
ELIGIBILITY
Awards may be granted under the 1995 Plan to employees (including officers
and directors) and consultants of the Company and its subsidiaries. The 1995
Plan provides that NSOs may be granted to employees and consultants of the
Company or any majority-owned subsidiary or other entity of the Company. ISOs
may be granted only to employees of the Company or any parent or subsidiary of
the Company.
As of the Record Date, all employees of the Company worldwide, a total of
1,085 persons, are eligible for and have received stock option awards under
the 1995 Plan. In addition, approximately 63 consultants are currently
eligible for awards under the 1995 Plan, and nine consultants have received
stock options.
ADMINISTRATION
The 1995 Plan may be administered by the Board of Directors or by a
committee of the Board (the "Administrator"), and is currently administered by
the Compensation Committee, which is composed solely of non-employee
directors, for grants of options to officers, and by the Stock Option
Committee, for grants of options to non-officer, non-director employees and
consultants. The Administrator has full power to select, among the employees
and consultants eligible for awards, the individuals to whom awards will be
granted, to make any combination of awards to any participant and to determine
the specific terms of each grant, subject to the provisions of the 1995 Plan
and to guidelines approved by the full Board of Directors. The interpretation
and construction of any provision of the 1995 Plan by the Administrator shall
be final and conclusive.
In fiscal 1998, the Board of Directors amended the 1995 Plan to allow
administration of the 1995 Plan for grants of options to non-officer, non-
director employees by a one-person committee of the Board.
TERMS OF OPTIONS
Vesting of restricted shares or stock options is specified in individual
agreements. Stock options become immediately exercisable in the event of death
or total and permanent disability. Vesting of stock options may be accelerated
in the event of a merger, consolidation or sale of substantially all of the
assets of the Company that constitutes a change in the control of the Company,
or in the event of the employee's retirement or any other event, as determined
by the Administrator.
The Board of Directors has the discretion to grant NSOs under the 1995 Plan
at an exercise price up to 15% below the fair market value of the Common Stock
on the date of grant. No NSOs with exercise prices below fair market value
have been granted to date. The exercise price of an ISO cannot be less than
100% of the fair market value of the Common Stock on the date of grant, and if
the ISO is granted to a holder of more than 10% of the voting power of the
Company, not less than 110% of such fair market value. The maximum term of an
ISO is ten years, or five years if the ISO is granted to a holder of more than
10% of the voting power of the Company.
SHARES UNDER THE PLAN
At the Record Date, options to purchase 2,465,082 shares were outstanding
under the 1995 Plan and options to purchase 259,604 shares had been exercised
under the 1995 Plan. No restricted shares or stock units have been granted
under the 1995 Plan. Excluding the 1,000,000 shares that have been approved by
the Board but are subject to stockholder approval, there are currently 250,314
shares available for future grants under the 1995 Plan. If any restricted
shares or options granted under the 1995 Plan are forfeited, then they will
again become available for awards under the 1995 Plan.
TERMINATION OF EMPLOYMENT OR CONSULTING RELATIONSHIP
Under the 1995 Plan, ISOs may be exercised following an optionee's
termination for a period of up to one year from the date of termination, if
the termination was caused by death or disability, and up to 60 days from
12
the date of termination if the termination was for any other reason. Subject
to this limitation, the period of time during which an option may be exercised
following an optionee's termination of employment or consulting relationship
for any reason is as determined by the Administrator, but not longer than the
term of the option.
WRITTEN AGREEMENTS
All awards granted under the 1995 Plan are evidenced by a written agreement
between the Company and the employee or consultant to whom such award is
granted.
RIGHTS NONTRANSFERABLE
Options granted pursuant to the 1995 Plan are non-transferable by the
participant, other than by will or by the laws of descent and distribution or
pursuant to a Qualified Domestic Relations Order, as defined by the Code.
Options may be exercised, during the lifetime of the participant, only by the
participant or by a permitted transferee.
USE OF STOCK FOR TAX WITHHOLDING
The 1995 Plan permits participants to satisfy tax withholding obligations
arising from the grant, vesting or exercise of options by surrendering shares
of Common Stock already owned, or by directing the Company to withhold from
the shares of Common Stock issued or issuable pursuant to the award in
question that number of shares having a fair market value equal to the tax
withholding liability as of the applicable tax date. All elections to utilize
stock for tax withholding are subject to the approval of the Administrator.
CHANGE-IN-CONTROL PROVISIONS
The Administrator may determine, at the time of granting an option or
thereafter, that such option shall become fully exercisable as to all shares
subject to such option in the event of a change in control of the Company. A
change in control is defined as approval of a merger or consolidation of the
Company with, or the sale of substantially all of the Company's assets to, any
other person or corporation, except for a merger or consolidation that would
result in the Company's voting securities outstanding immediately prior to
such merger or consolidation continuing to represent at least 80% of the
voting securities immediately after such merger or consolidation.
AMENDMENT AND TERMINATION
The Board may amend, alter, suspend or discontinue the 1995 Plan at any
time, but any such amendment, alteration, suspension or discontinuation shall
not adversely affect any outstanding option under the 1995 Plan without the
consent of the holder thereof. To the extent required to comply with
applicable laws and regulations, the Company shall obtain stockholder approval
of amendments to the 1995 Plan. Because the 1995 Plan permits the granting of
ISOs, tax regulations require stockholder approval of any increase in shares
under the 1995 Plan or any change in the class of persons eligible to receive
awards under the 1995 Plan. The 1995 Plan will terminate by its terms on July
18, 2005.
Subject to applicable laws and the specific terms of the 1995 Plan, the
Administrator may accelerate any option or waive any condition or restriction
pertaining to such option at any time. The Administrator may also substitute
new options for previously granted options, for the same or a different number
of shares and at the same or a different exercise price, provided that the
Administrator may not alter or impair the rights of any optionee without his
or her consent.
STOCK PRICE
The closing price of the Company's Common Stock on the NASDAQ Stock Market
on the Record Date was $26.75 per share.
13
FEDERAL TAX INFORMATION FOR STOCK OPTIONS
An optionee will recognize no taxable income upon grant or exercise of an
ISO under the 1995 Plan, unless the alternative minimum tax rules apply. The
Company will not be allowed a deduction for federal income tax purposes in
connection with the grant or exercise of an ISO. Upon an optionee's sale or
other disposition of the underlying shares (assuming that the sale occurs no
sooner than two years after grant of the option and one year after exercise of
the option (the "statutory holding periods")), any gain or loss will be taxed
to the optionee as long-term capital gain or loss. If the statutory holding
periods are not satisfied (i.e., the optionee makes a "disqualifying
disposition"), the optionee will recognize compensation income equal to the
difference between the exercise price and the lower of (i) the fair market
value of the stock at the date of the option exercise or (ii) the sale price
of the stock, and the Company will be entitled to a deduction in the same
amount. Any additional gain or loss recognized on a disqualifying disposition
of the shares will be characterized as capital gain or loss.
An Optionee will not recognize any taxable income at the time he or she is
granted an NSO under the 1995 Plan. However, upon exercise of the NSO, the
optionee will generally recognize compensation income for federal tax purposes
measured by the excess, if any, of the then fair market value of the shares
over the exercise price. The Company will be entitled to a tax deduction in
the same amount, subject to certain limitations of Code Section 162(m) with
respect to below market options. Upon an optionee's resale of such shares, any
difference between the sale price and fair market value of such shares on the
date of exercise will be treated as capital gain or loss and will qualify for
long-term capital gain or loss treatment if the shares have been held for more
than one year.
The compensation income recognized upon exercise of an NSO by an optionee
who is also an employee will be treated as wages for tax purposes and will be
subject to tax withholding by the Company out of the current compensation paid
to such person, if any. If such current compensation is insufficient to
satisfy the tax-withholding obligation, such person will be required to make
direct payment to the Company for the tax liability. Any required withholding
in connection with the exercise of any NSO may, with the consent of the
Administrator, be satisfied by an optionee, in whole or in part, by
surrendering to the Company shares of Common Stock previously owned by such
person or shares issued upon exercise of the option. For such purpose, the
surrendered shares are valued at their fair market value at the time of
surrender.
In order for compensation in excess of $1 million realized by any of the
Named Officers with respect to options granted under the 1995 Plan to be
deductible by the Company, IRS regulations require, among other things, that
the plan state a limit on the number of shares that can be granted to any one
individual. The 1995 Plan has a limit of 100,000 shares subject to options per
employee per fiscal year. While the Company does not expect to grant this
number of options to an individual on a regular basis, the Company does expect
that this would be the maximum number of options that would be necessary to
recruit or retain any outstanding top executive.
PARTICIPATION IN THE 1995 PLAN
The grant of options, stock units and restricted stock awards under the 1995
Plan to employees, including Named Officers, is subject to the discretion of
the Board and the Administrator. As of the date of this proxy statement, there
has been no determination by the Board or Administrator with respect to future
awards under the 1995 Plan. Accordingly, future awards are not determinable.
Non-employee directors are not eligible to participate in the 1995 Plan.
14
The following table sets forth information with respect to the grant of
options to the Named Officers, to all current executive officers as a group,
and to all other employees as a group during the last fiscal year.
1995 OMNIBUS INCENTIVE PLAN
NAME OF INDIVIDUAL OR OPTIONS WEIGHTED AVERAGE EXERCISE
IDENTITY OF GROUP AND POSITION GRANTED(#) PRICE PER SHARE($/SH)
- ------------------------------ --------- -------------------------
Stephen E. Cooper.......................... 80,000 34.38
Chairman of the Board, President and
Chief Executive Officer
Paul A. Warkentin.......................... 90,000 45.71
Senior Vice President and Chief Operating
Officer
William D. Cole............................ 10,000 34.38
Vice President, Sales and Customer
Support
Takeshi (John) Suzuki...................... 0 0
President, Etec Japan
Mark A. Gesley............................. 30,000 34.38
Vice President, Technology Development
All current executive officers as a group
(9)....................................... 446,000 43.31
All other employees as a group............. 653,810 39.77
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS THAT THE
STOCKHOLDERS VOTE FOR PROPOSAL 2, APPROVAL OF AN INCREASE IN SHARES UNDER THE
1995 OMNIBUS INCENTIVE PLAN OF ETEC SYSTEMS, INC.
PROPOSAL 3--TO RATIFY THE APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Upon the recommendation of the Audit Committee, the Board of Directors has
appointed the firm of Price- waterhouseCoopers LLP as the Company's
independent accountants for the fiscal year ended July 31, 1999.
Representatives of PricewaterhouseCoopers LLP are expected to be present at
the Company's Annual Meeting. They will have an opportunity to make a
statement, if they desire to do so, and will be available to respond to
appropriate questions. PricewaterhouseCoopers LLP (or its predecessor) has
audited the Company's financial statements since April 10, 1995.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS THAT THE
STOCKHOLDERS VOTE FOR PROPOSAL 3, THE RATIFICATION OF APPOINTMENT OF
INDEPENDENT ACCOUNTANTS OF ETEC SYSTEMS, INC.
STOCKHOLDER PROPOSALS FOR THE 1999 ANNUAL MEETING
Proposals of stockholders of the Company that are intended to be presented
by such stockholders at the Company's 1999 Annual Meeting and that the
stockholder desires to have included in the Company's proxy statement must be
received by the Secretary of the Company no later than June 25, 1999 in order
that they may be considered for possible inclusion in the Company's proxy
statement and form of proxy relating to that meeting.
With respect to stockholder proposals that are not sought to be included in
the Company's proxy statement and form of proxy relating to the 1999 Annual
Meeting, the Company's Bylaws require that advance notice of such proposals be
given to the Company no later than August 24, 1999. See "Other Matters" for a
description of such Bylaw provision. Proposals received after that date will
not be eligible to be raised or voted upon at the meeting.
15
COMPLIANCE WITH SECTION 16 OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
that the Company's executive officers and directors, and persons who own more
than ten percent of a registered class of the Company's equity securities,
file reports of ownership on Forms 3, 4 and 5 with the Securities and Exchange
Commission (the "SEC"). Officers, directors and greater than ten percent
stockholders are required by SEC regulations to furnish the Company with
copies of all Forms 3, 4 and 5 they file.
Based solely on the Company's review of the copies of such forms it has
received and written representations from certain reporting persons that they
were not required to file Form 5 for specified fiscal years, the Company
believes that all of its officers, directors and greater than ten percent
beneficial owners complied with all filing requirements applicable to them
with respect to transactions during fiscal year 1998, except that: (i) William
D. Snyder, Vice President Finance and Chief Financial Officer, filed his
initial Form 3 report late, (ii) Takeshi (John) Suzuki, Director, filed a late
Form 4 report for two transactions, and (iii) Mark Gesley, Vice President
Technology Development, filed a late Form 4 report for one transaction.
OTHER MATTERS
The Company knows of no other business that will be presented at the Annual
Meeting. If any other business is properly brought before the Annual Meeting,
it is intended that proxies in the enclosed form will be voted in accordance
with the judgment of the persons voting the proxies. Under the Company's
Bylaws, commencing with the Company's 1999 Annual Meeting of Stockholders, in
order to be deemed properly presented, notice must be delivered to, or mailed
and received by, the Company not less than 60 days prior to the first
anniversary of the day on which notice of the prior year's annual meeting was
mailed to stockholders. The stockholder's notice must set forth, as to each
proposed matter: (a) a brief description of the business and reason for
conducting such business at the meeting; (b) the name and address of the
stockholder proposing such business; (c) a lawful representation that the
stockholder is entitled to vote at the meeting and intends to appear in person
or by proxy at the meeting to present the matter; (d) any material interest of
the stockholder in such business; and (e) such other information with respect
to such matter as would be required in a proxy statement soliciting proxies
regarding such matter. The presiding officer of the meeting may refuse to
acknowledge any matter for which notice was not provided in compliance with
the foregoing procedure.
Whether or not you intend to be present at the Annual Meeting, we urge you
to return your signed proxy promptly.
By Order of the Board of Directors.
/s/ W. RUSSELL WAYMAN
W. Russell Wayman
Secretary
Hayward, California
November 4, 1998
UPON WRITTEN REQUEST OF ANY STOCKHOLDER ENTITLED TO RECEIVE THIS PROXY
STATEMENT, THE COMPANY WILL PROVIDE, WITHOUT CHARGE, A COPY OF ITS ANNUAL
REPORT ON FORM 10-K AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. ANY
SUCH REQUEST SHOULD BE ADDRESSED TO THE COMPANY AT 26460 CORPORATE AVENUE,
HAYWARD, CALIFORNIA 94545, ATTENTION: INVESTOR RELATIONS. THE REQUEST MUST
INCLUDE A REPRESENTATION BY THE STOCKHOLDER THAT AS OF OCTOBER 16, 1998, THE
STOCKHOLDER WAS ENTITLED TO VOTE AT THE ANNUAL MEETING.
16
4380-PS-98
ETEC SYSTEMS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby authorizes Stephen E. Cooper, W. Russell
P Wayman, and Saul E. Arnold as Proxies with full power in each to act
R without the other and with the power of substitution in each, to
O represent and to vote all the shares of the stock the undersigned is
X entitled to vote at the Annual Meeting of Stockholders of Etec Systems,
Y Inc. to be held on December 8, 1998 or at any postponement or
adjournment thereof with respect to the matters set forth on the reverse
side.
This proxy will be voted in accordance with specifications made
on the reverse side.
IF YOU DO NOT INDICATE HOW YOU WISH THIS PROXY TO BE VOTED, THE
PROXYHOLDERS WILL VOTE "FOR" ALL OF MANAGEMENT'S NOMINEES FOR DIRECTOR,
"FOR" THE INCREASE IN SHARES UNDER THE 1995 OMNIBUS INCENTIVE PLAN,
"FOR" THE RATIFICATION OF THE ACCOUNTANTS, AND IN THEIR DISCRETION ON
SUCH OTHER MATTERS AS ARE PROPERLY BROUGHT BEFORE THE MEETING.
-------------
(Continued and to be signed on the reverse side) |SEE REVERSE|
| SIDE |
-------------
INSTRUCTIONS FOR VOTING YOUR PROXY
You may now vote your proxy 24 hours a day, seven days a week, through either a
touch-tone telephone or the Internet. Etec Systems, Inc. encourages you to take
advantage of these cost-effective and convenient ways to vote your shares for
matters to be covered at the 1998 Annual Meeting of Etec Systems, Inc. To vote
your proxy by telephone or the Internet, have your proxy card ready and then
either...
Dial the toll-free number... 1-888-xxx-xxxx
or
Point your browser to... http://equiserve.com/proxy/
Then... Enter the control number, when
requested, and follow the simple
instructions.
To vote by mail, simply mark, sign and date your proxy card and return it in the
postage-paid envelope. If you are voting by telephone or the Internet, please do
not mail your proxy card.
THANK YOU FOR VOTING.
DETACH HERE
[X] Please mark
votes as in this
example.
PLEASE VOTE, SIGN, DATE AND PROMPTLY RETURN THIS CARD
1. Election of eight Directors.
MARK HERE
FOR WITHHELD FOR ADDRESS
ALL FROM ALL CHANGE AND
NOMINEES NOMINEES NOTE BELOW
[ ] [ ] [ ]
NOMINEES: Stephen E. Cooper, Takeshi (John) Suzuki, Edward L. Gelbach, John
- --------
McBennet, William J. Ryan, William T. Siegle, Thomas M. Trent, Robert M. Wehrli
[ ] ____________________________________________________________________________
For all nominees except as noted on the line above.
--------------------
CONTROL NUMBER |XXXX XXXX XXXX XXX|
--------------------
2. To approve an amendment to the 1995 Omnibus Incentive Plan to increase the
number of available shares by 1,000,000.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. To ratify the appointment of PricewaterhouseCoopers, LLP, as the Company's
independent accountants.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. To transact such other business as may properly come before the meeting or
any adjournment(s) thereof.
This proxy should be signed by the stockholder(s) exactly as his or her name(s)
appear(s) hereon, dated and returned promptly in the enclosed envelope. Persons
signing in a fiduciary capacity should so indicate. If shares are held by joint
tenants or as community property, both persons should sign.
SIGNATURE_______________________________________________ DATED__________________
SIGNATURE_______________________________________________ DATED__________________