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SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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
|X| Definitive proxy statement Only (as permitted by Rule 14a-6(e)(2))
|_| Definitive additional materials
|_| Soliciting material
pursuant to Rule 14a-11(c) or Rule 14a-12
Semitool, Inc.
(Name of Registrant as Specified in Its Charter)
Semitool, Inc.
(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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transactions applies:
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(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):
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(4) Proposed maximum aggregate value of transaction.
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(5) Total fee paid:
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|_| Fee paid previously with preliminary materials:
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|_| 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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SEMITOOL, INC.
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Notice of Annual Meeting of Shareholders
To Be Held February 13, 1997
To the Shareholders of Semitool, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Semitool,
Inc., a Montana corporation (the "Company"), will be held at the Best Western
Outlaw Inn, 1701 Highway 93 South, Kalispell, Montana 59901, at 2:30 p.m., local
time, on February 13, 1997, for the following purposes:
1. ELECTION OF DIRECTORS. To elect five directors of the Company to serve until
the 1998 Annual Meeting of Shareholders or until their successors are elected
and qualified.
2. APPROVAL AND RATIFICATION OF THE AMENDED AND RESTATED SEMITOOL, INC. 1994
STOCK OPTION PLAN, AS AMENDED. To ratify and approve the Amended and Restated
Semitool, Inc. 1994 Stock Option Plan, as amended, to increase the number of
shares of Common Stock available for issuance thereunder by 200,000 shares from
900,000 shares to 1,100,000 shares.
3. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS. To ratify the
appointment of Coopers & Lybrand L.L.P. as the independent auditors for the
Company for the fiscal year ending September 30, 1997.
4. OTHER BUSINESS. To transact such other business as may properly come before
the Annual Meeting of Shareholders and any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy Statement
which is attached hereto and made a part hereof.
The Board of Directors has fixed the close of business on January 6, 1997 as the
record date for determining the shareholders entitled to notice of and to vote
at the 1997 Annual Meeting of Shareholders and any adjournment or postponement
thereof.
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING OF SHAREHOLDERS IN
PERSON, YOU ARE URGED TO MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AS
PROMPTLY AS POSSIBLE IN THE POSTAGE-PREPAID ENVELOPE PROVIDED TO ENSURE YOUR
REPRESENTATION AND THE PRESENCE OF A QUORUM AT THE ANNUAL MEETING. IF YOU SEND
IN YOUR PROXY CARD AND THEN DECIDE TO ATTEND THE ANNUAL MEETING TO VOTE YOUR
SHARES IN PERSON, YOU MAY STILL DO SO. YOUR PROXY IS REVOCABLE IN ACCORDANCE
WITH THE PROCEDURES SET FORTH IN THE PROXY STATEMENT.
By Order of the Board of Directors,
/s/Raymon F. Thompson
Raymon F. Thompson
Chairman of the Board,
Chief Executive Officer and
President
Kalispell, Montana
January 21, 1997
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Mailed to Shareholders on or about January 21, 1997
SEMITOOL, INC.
655 West Reserve Drive
Kalispell, Montana 59901
PROXY STATEMENT
General Information
This Proxy Statement is furnished to the shareholders of Semitool, Inc., a
Montana corporation (the "Company"), in connection with the solicitation by the
Board of Directors of the Company (the "Board" or "Board of Directors") of
proxies in the accompanying form for use in voting at the 1997 Annual Meeting of
Shareholders of the Company (the "Annual Meeting") to be held on February 13,
1997, at the Best Western - Outlaw Inn, 1701 Highway 93 South, Kalispell,
Montana 59901, at 2:30 p.m., local time, and any adjournment or postponement
thereof. The shares represented by the proxies received, properly marked, dated,
executed and not revoked will be voted at the Annual Meeting.
Revocability of Proxies
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is exercised by delivering to the Company (to
the attention of John W. Sullivan) a written notice of revocation or a duly
executed proxy bearing a later date, or by attending the Annual Meeting and
voting in person.
Solicitation and Voting Procedures
The solicitation of proxies will be conducted by mail and the Company will bear
all attendant costs. These costs will include the expense of preparing and
mailing proxy materials for the Annual Meeting and reimbursements paid to
brokerage firms and others for their expenses incurred in forwarding
solicitation material regarding the Annual Meeting to beneficial owners of the
Company's Common Stock. The Company may conduct further solicitation personally,
by telephone or by facsimile through its officers, directors and regular
employees, none of whom will receive additional compensation for assisting with
such solicitation.
The close of business on January 6, 1997 has been fixed as the record date (the
"Record Date") for determining the holders of shares of Common Stock of the
Company entitled to notice of and to vote at the Annual Meeting. As of the close
of business on the Record Date, the Company had approximately 13,662,727 shares
of Common Stock outstanding and entitled to vote at the Annual Meeting. The
presence at the Annual Meeting of a majority of these shares of Common Stock of
the Company, either in person or by proxy, will constitute a quorum for the
transaction of business at the Annual Meeting. Each outstanding share of Common
Stock on the Record Date is entitled to one (1) vote on all matters. With
respect to the election of directors, each shareholder is entitled to cumulate
his or her votes, meaning that such shareholder can multiply the number of
shares owned by the number of board positions to be filled, and allocate such
votes for all or as many director-nominees as he or she may designate.
Abstentions and broker non-votes are each included in the determination of the
number of shares present and voting, but will not be counted for or against any
of the proposals to be voted upon at the meeting.
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
As set by the Board of Directors pursuant to the Bylaws of the Company, the
authorized number of directors is set at five. Five directors will be elected at
the Annual Meeting to serve until the 1998 Annual Meeting of Shareholders or
until their successors are elected or appointed and qualified or until the
director's earlier resignation or removal. In the event that any nominee of the
Company is unable or declines to serve as a director at the time of the Annual
Meeting, the proxies will be voted for any nominee who shall be designated by
the present Board of Directors to fill the vacancy. In the event that additional
persons are nominated for election as directors, the proxy holders intend to
vote all proxies received by them in such a manner, as will assure the election
of as many of the nominees listed below as possible, and, in such event, the
specific nominees to be voted for will be determined by the proxy holders. The
Board has no reason to believe that the persons named below will be unable or
unwilling to serve as a nominee or as a director, if elected. Each of the five
nominees for director who receives the greatest number of votes will be elected.
Set forth below is the age and certain biographical information relating to the
director nominees.
Raymon F. Thompson, age 55, founded the Company and has served as Chairman,
Chief Executive Officer and President since its inception in 1979. In 1979, Mr.
Thompson designed, patented and introduced the first on-axis rinser/dryer for
the semiconductor industry.
Howard E. Bateman, age 62, has served on the Company's Board of Directors since
1990. Mr. Bateman formerly owned and operated Entech, a Pennsylvania company
that was an independent sales representative for the Company's products from
1979 to 1996.
Richard A. Dasen, age 54, has served on the Company's Board of Directors since
1984. From 1974 to 1992, Mr. Dasen owned and managed Evergreen Bancorporation, a
multi-bank holding company. Since 1992, Mr. Dasen has been an independent
businessman.
Daniel J. Eigeman, age 62, has served on the Company's Board of Directors since
1985. From 1971 to 1993, Mr. Eigeman was President of Eigeman, Hanson & Co.,
P.C., CPAs, and since 1993 has been Vice President of Junkermier, Clark,
Campanella, Stevens, P.C., CPAs. Mr. Eigeman served as President of the Montana
Society of Certified Public Accountants in 1993.
Calvin S. Robinson, age 76, has served on the Company's Board of Directors since
1982 and since February of 1996 has served as the Company's Secretary. Mr.
Robinson has been of counsel to Murphy, Robinson, Heckathorn & Phillips, P.C.
since 1989. This firm has provided legal services to the Company since 1979. Mr.
Robinson is also a director of Winter Sports, Inc.
THE BOARD RECOMMENDS A VOTE FOR
THE ELECTION OF THE NOMINEES NAMED ABOVE.
Relationships Among Directors or Executive Officers
There are no family relationships among any of the directors or executive
officers of the Company, except that Steven R. Thompson, a vice president of the
Company, is the son of Raymon F. Thompson.
Meetings and Committees of the Board of Directors
During the fiscal year ended September 30, 1996, the Board met four times. The
Board has three committees: the Audit Committee, the Compensation and Stock
Option Committee and the Nominating Committee. During the fiscal year ended
September 30, 1996, no director attended fewer than 75% of all the meetings of
the Board and its committees on which he served after becoming a member of the
Board.
The Audit Committee, which held three meetings in the fiscal year ended
September 30, 1996, consisted of Messrs. Dasen, Eigeman and Poppa. The Audit
Committee reviews and supervises the Company's financial controls, including
selecting the Company's auditors, reviewing the books and accounts of the
Company, meeting with the officers of the Company regarding the Company's
financial controls, acting upon recommendations of auditors and taking such
further action as the Audit Committee deems necessary to complete an audit of
the books and accounts of the Company, as well as other matters which may come
before it or as directed by the Board.
The Compensation and Stock Option Committee, which held five meetings in the
fiscal year ended September 30, 1996, consists of Messrs. Bateman and Robinson.
The Compensation and Stock Option Committee reviews and approves the
compensation and benefits for the Company's executive officers, administers the
Company's stock option plan and performs such other duties as may from time to
time be determined by the Board.
The Nominating Committee, which consists of Messrs. Bateman and Thompson, was
appointed by the Board of Directors in November 1996 and therefore did not hold
any meetings in the fiscal year ended September 30, 1996. The Nominating
Committee nominates directors to hold office for the ensuing year and until
their respective successors are duly elected and qualified. The Nominating
Committee may consider recommendations from shareholders if received in writing
addressed to the Secretary of the Company no later than 120 days prior to the
12-month anniversary of the previous annual meeting of shareholders.
Compensation of Directors
Upon becoming a member of the Board, non-employee directors receive options (the
"Initial Option Grants") to purchase 3,000 shares of Common Stock, and
thereafter receive an annual option grant (the "Annual Option Grants") to
purchase 2,000 shares of Common Stock. The Company's non-employee directors
receive a $1,000 monthly fee, $1,000 for each Board meeting attended and $500
for each committee meeting attended that is not held in conjunction with a Board
meeting. All non-employee directors are reimbursed for expenses incurred in
connection with attending meetings of the Board. Employee directors of the
Company do not receive compensation for their services as directors.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of the Record Date for (i)
each person who is known by the Company to beneficially own more than 5% of the
Common Stock, (ii) each of the Company's directors, (iii) each of the officers
appearing in the Summary Compensation Table below and (iv) all directors and
executive officers as a group.
Shares Beneficially Owned
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Directors, Executive Officers and 5% Shareholders Number Percent(1)
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Raymon F. and Ladeine A. Thompson(2).................... 6,681,534 48.9%
Gregory L. Perkins(3)................................... 17,250 *
Howard E. Bateman(4).................................... 8,875 *
Richard A. Dasen(4)..................................... 7,875 *
Daniel J. Eigeman(4).................................... 5,775 *
Calvin S. Robinson(4)................................... 5,625 *
Ryal R. Poppa(5)........................................ 4,500 *
Timothy C. Dodkin(6).................................... 12,750 *
James R. Gordley(6)..................................... 12,000 *
Robert W. Berner (7).................................... 9,750 *
All officers and directors as a group (13 persons)(8)... 7,215,982 52.5%
* Less than 1%.
(1)Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares of Common Stock subject to options held by that person that are currently
exercisable or exercisable within 60 days of the Record Date are deemed
outstanding. Such shares, however, are not deemed outstanding for the purpose of
computing the percentage ownership of each other person. Except as indicated in
the footnotes to this table and pursuant to applicable community property laws,
the persons named in the table have sole voting and investment power with
respect to the shares set forth opposite such person's name.
(2)Includes 318,750 shares held in the name of the Gina Thompson Trust of which
Mr. Thompson is the trustee, and includes 250,000 shares held in the name of the
Raymon F. Thompson Charitable Remainder Trust of which Mr. Thompson is the
trustee.
(3)Represents 17,250 option shares exercisable within 60 days of the Record Date
(4)Includes 4,875 option shares exercisable within 60 days of the Record Date.
(5)Represents 4,500 option shares exercisable within 60 days of the Record Date.
(6)Includes 11,250 option shares exercisable within 60 days of the Record Date.
(7)Represents 9,750 option shares exercisable within 60 days of the Record Date.
(8)Includes 92,250 option shares exercisable within 60 days of the Record Date.
PROPOSAL NO. 2
APPROVAL AND RATIFICATION OF THE AMENDED AND RESTATED SEMITOOL, INC.
1994 STOCK OPTION PLAN, AS AMENDED
The Company's shareholders are being asked to act upon a proposal to approve and
ratify the action of the Board amending the Company's Amended and Restated 1994
Stock Option Plan (the "Option Plan"). Approval and ratification of the proposal
requires the affirmative vote of a majority of the outstanding shares of the
Company's Common Stock present in person or represented by proxy and entitled to
vote at the Annual Meeting.
The Board amended the Option Plan in November 1996, subject to shareholder
approval and ratification of the amended Option Plan, to increase the number of
shares reserved for issuance under the Option Plan by 200,000 shares from
900,000 shares to 1,100,000 shares.
The Board believes that the attraction and retention of high quality personnel
are essential to the Company's continued growth and success and that an
incentive plan such as the Option Plan is necessary for the Company to remain
competitive in its compensation practices.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
APPROVAL AND RATIFICATION OF THE
OPTION PLAN, AS AMENDED.
General Description
The following is a general description of the principal terms of the Option
Plan, the amendment approved by the Board and the purpose of the amendment.
Although the Company believes that the following description provides a fair
summary of the material terms of the Option Plan, the description is qualified
in its entirety by the text of the Option Plan, as proposed to be amended.
The Option Plan was adopted by the Board and approved by the shareholders of the
Company in December 1994. The purpose of the Option Plan is to assist the
Company in attracting and retaining high quality personnel and to provide a
means whereby eligible employees (including officers and employee directors) and
non-employee directors can acquire Common Stock through the exercise of options,
thereby aligning the interests of employees, officers and directors with the
interests of shareholders. The Option Plan provides for the granting to
employees (including officers and employee directors) of incentive stock options
("Incentive Stock Options") within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended, and for the granting to employees, directors
and consultants of nonqualified stock options. The Company cannot grant an
Incentive Stock Option if as a result of the grant the optionee would have the
right in any calendar year to exercise (under all plans of the Company or its
affiliates) for the first time one or more Incentive Stock Options for shares
having an aggregate fair market value (determined as of the grant date) in
excess of $100,000. As of the Record Date, approximately 109 persons were either
participating in or eligible to participate in the Option Plan and options to
purchase 765,000 shares had been granted under the Option Plan of which options
to purchase 624,922 shares were outstanding.
The Option Plan is currently administered by the Compensation and Stock Option
Committee of the Board (the "Compensation Committee"), which, except for Initial
Option Grants and Annual Option Grants to non-employee directors, determines the
terms of the options granted under the Option Plan, including the exercise
price, the number of shares subject to the option and exercisability. Generally,
5% of the shares subject to the option granted under the Option Plan become
exercisable at the end of each three-month period commencing three months after
the grant date such that the option is fully exercisable five years after the
grant date. No Incentive Stock Option may be transferred by the optionee other
than by will or the laws of descent or distribution. Each Incentive Stock Option
may be exercised, during the lifetime of the optionee, only by such optionee.
Under the Option Plan, non-employee directors receive Initial Option Grants to
purchase 3,000 shares of Common Stock upon the date he or she becomes a
director. Thereafter, immediately following each annual meeting of shareholders,
each non-employee director who continues as such following the annual meeting
and has attended two or more meetings of the Board of Directors as of the time
of such annual meeting, receives an Annual Option Grant to purchase 2,000 shares
of Common Stock.
The Board of Directors believes there are insufficient shares of Common Stock
currently available under the Option Plan to satisfy option grants anticipated
to be effected in 1997. The shareholders of the Company are therefore being
asked to approve the Option Plan, as amended, to increase the number of shares
of Common Stock available for issuance thereunder by 200,000 shares from 900,000
shares to 1,100,000 shares.
In general, the exercise price of stock subject to the Initial Option Grants and
the Annual Option Grants is the fair market value of the Common Stock on the
date of grant. The Initial Option Grants vest and become exercisable as of the
date of grant and the Annual Option Grants vest and become exercisable as to 25%
of the shares covered thereby on the last day of each three-month period
following the date of grant such that the option becomes fully exercisable
twelve months after the grant date.
The exercise price of Incentive Stock Options granted under the Option Plan must
equal at least the fair market value of the Common Stock on the date of grant.
The exercise price of any Incentive Stock Option granted to an optionee who owns
stock possessing more than 10% of the voting power of the Company's outstanding
capital stock must equal at least 110% of the fair market value of the Common
Stock on the date of grant. The Compensation Committee determines the exercise
price of nonqualified stock options other than Initial Option Grants and Annual
Option Grants. In general, payment of the exercise price may be made in cash, by
the optionee's personal check, certified check or other specified consideration.
In general, except for options granted to non-employee directors, the Option
Plan provides that the Compensation Committee may include a provision in the
option agreement providing that, in the event of a Change in Control (as defined
in the Option Plan), any outstanding options covered by such agreement shall be
fully vested, nonforfeitable and become exercisable as of the date of the Change
in Control. If the Compensation Committee elects to include such a provision,
the option agreement will provide that, (a) in the event of a Change in Control
relating to (i) an acquisition of Common Stock resulting in the beneficial
ownership by any person or related group of persons of more than 50% of the
total combined voting power of the outstanding Common Stock, (ii) a change in
the composition of the Board over a 36 month period or (iii) approval by the
Company's shareholders of any reverse merger in which the Company survives as an
entity, but in which securities possessing more than 50% of the total combined
voting power of the Company's outstanding securities are transferred to a person
or persons different from those who held such securities immediately prior to
such merger, the option shall remain exercisable for the remaining term of the
option, and (b) in the event of a Change in Control relating to (x) approval by
the Company's shareholders of a merger or consolidation in which the Company is
not the surviving entity (except for a transaction the principal purpose of
which is to change the Company's state of incorporation) or (y) the approval by
the Company's shareholders of either the sale, transfer or other disposition of
all or substantially all of the assets of the Company or the complete
liquidation or dissolution of the Company, the option shall terminate as of the
effective date of such merger, disposition of assets, liquidation or
dissolution. As to options granted to non-employee directors, (A) in the event
of a Change in Control relating to (i), (ii) or (iii) above, any such
outstanding options become fully vested and remain exercisable for the remaining
term of such options and (B) in the event of a Change in Control relating to (x)
or (y) above, any such outstanding options terminate as of the effective date of
such merger, disposition of assets, liquidation or dissolution.
Federal Income Tax Information
If an option granted under the Option Plan is an Incentive Stock Option, the
optionee will recognize no income upon grant of the option and incur no tax
liability due to the exercise of the option unless the optionee is subject to
alternative minimum tax. The Company will not be allowed a deduction for federal
income tax purposes as a result of the exercise of an Incentive Stock Option
regardless of the applicability of the alternative minimum tax. Upon the sale or
exchange of the shares at least two years after grant of the option and one year
after exercise of the option, a gain will be treated as long-term capital gain.
If these holding periods are not satisfied, the optionee will recognize ordinary
income equal to the difference between the exercise price and the lower of the
fair market value of the stock at the date of the option exercise or the sale
price of the stock. The Company will be entitled to a deduction in the same
amount as the ordinary income recognized by the optionee. Any gain recognized on
such a premature disposition of the shares in excess of the amount treated as
ordinary income will be characterized as long-term capital gain if the sale
occurs more than one year after exercise of the option or as short-term capital
gain if the sale is made earlier. Under current law, the maximum long-term
capital gain tax rate for individuals is 28% while the maximum ordinary income
tax rate for individuals is 39.6%.
All options which do not qualify as Incentive Stock Options are referred to as
nonqualified stock options. An optionee will not recognize any taxable income at
the time he or she is granted a nonqualified stock option. However, upon its
exercise, the optionee will recognize ordinary income for tax purposes measured
by the excess, if any, of the then fair market value of the shares over the
exercise price. In certain circumstances, where the shares are subject to a
substantial risk of forfeiture when acquired, the date of taxation may be
deferred unless the optionee files an election with the Internal Revenue Service
under Section 83(b) of the Code within 30 days after the date of exercise. The
income recognized by an optionee who is also an employee of the Company will be
subject to tax withholding by the Company by payment of cash or out of the
current earnings paid to the optionee. Upon resale of such shares by the
optionee, any difference between the sale price and the exercise price, to the
extent not recognized as ordinary income as provided above, 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 foregoing is only a summary of the effect of federal income taxation upon
the optionee and the Company with respect to the grant and exercise of options
under the Option Plan and does not purport to be complete. The foregoing does
not discuss the income tax laws of any municipality, state, or foreign country
in which an optionee may reside.
PROPOSAL NO. 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Coopers & Lybrand L.L.P. has served as the Company's independent auditors since
1984 and has been appointed by the Board to continue as the Company's
independent auditors for the Company's fiscal year ending September 30, 1997. In
the event that ratification of this selection of auditors is not approved by a
majority of the shares of Common Stock voting at the Annual Meeting in person or
by proxy, management will review its future selection of auditors. A
representative of Coopers & Lybrand L.L.P. is expected to be present at the
Annual Meeting. The representative will have an opportunity to make a statement
and to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF
THE APPOINTMENT OF COOPERS & LYBRAND L.L.P. AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE FISCAL YEAR
ENDING SEPTEMBER 30, 1997.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary Compensation Table
The following table sets forth information relating to compensation received by
the Company's Chief Executive Officer and the four other most highly compensated
executive officers of the Company (the "Named Executive Officers") during the
periods indicated.
Long-Term
Compensation
Securities
Underlying All Other
Name and Principal Position Year Salary Bonus Options(#) Compensation(2)
- ---------------------------------- ------- ------------ ------------- ----------------- ------------------
$4,750
Raymon F. Thompson 1996 $230,015 -- -- 4,620
Chairman, Chief Executive 1995 227,091 $70,000(1) -- 5,638
Officer and President 1994 225,001 -- --
James R. Gordley 1996 597,449 -- -- 4,942
Vice President, Sales, 1995 291,105 2,000(1) 45,000 4,200
Thermal Products Division 1994 150,000 28,267(3) -- 4,080
Timothy C. Dodkin(4) 1996 228,565 50,000 -- 2,504
Managing Director, Semitool 1995 208,333 55,000(1) 45,000 2,534
Europe Ltd. 1994 270,414 1,600(3) -- 1,584
Gregory L. Perkins 1996 141,180 -- -- 2,573
Vice President and General 1995 127,921 70,000(1) 45,000 920
Manager 1994 110,000 15,510(3) -- 3,193
Robert W. Berner(5) 1996 140,005 -- 15,000 3,979
Vice President and
General Manager, Metallization
Group
(1) Includes bonus amounts paid in fiscal 1996 for services rendered in fiscal
1995.
(2) Represents Company contributions to the Company's 401(k) plan on
behalf of the Named Executive Officer, except that amounts for Mr. Dodkin
represent Company contributions to a United Kingdom employee benefit plan that
is similar to the Company's 401(k) plan on behalf of Mr. Dodkin.
(3) Includes bonus amounts paid in fiscal 1995 for services rendered in fiscal
1994.
(4) Mr. Dodkin's compensation is paid in UK Pounds Sterling. The average UK
Pound Sterling exchange rates for fiscal 1994, 1995 and 1996 were 1.509, 1.584
and 1.565, respectively.
(5) Mr. Berner became an officer of the Company during the fiscal year ended
September 30, 1996.
Option Grants in Last Fiscal Year
The following table provides certain information with respect to stock options
granted to the Named Executive Officers during the fiscal year ended September
30, 1996. In addition, as required by the Securities and Exchange Commission
rules, the table sets forth the hypothetical gains that would exist for the
respective options based on assumed rates of annual compound price appreciation
during the option term.
Individual Grants
---------------------------------------------------
Potential Realizable
Number of % of Total Value at Assumed
Securities Options Annual Rate of Stock
Underlying Granted to Exercise Price Appreciation for
Options Employees in Price Per Expiration Option Term(1)
Name Granted(2) Fiscal Year Share Date 5% 10%
Raymon F. Thompson........... -- -- -- -- -- --
James R. Gordley............. -- -- -- -- -- --
Timothy C. Dodkin............ -- -- -- -- -- --
Gregory L. Perkins........... -- -- -- -- -- --
Robert W. Berner............. 15,000 8.38% $13.00 1-2-06 $122,634 $310,780
- -------------------------------
(1) Potential realizable value is determined by applying an amount equal to the
fair market value on the date of grant to the stated annual appreciation rate
compounded annually for the remaining term of the option, subtracting the
exercise price at the end of the period and multiplying the remaining number by
the number of shares subject to the option. Actual gains, if any, on stock
option exercise and Common Stock holdings are dependent upon a number of
factors, including the future performance of the Common Stock, overall stock
market conditions, and the timing of option exercises, if any. There can be no
assurance that the amounts reflected in this table will be achieved.
(2) Reflects options that have a ten year term and vest and become exercisable
at the rate of 5% per quarter.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
The following table discloses for each of the Named Executive Officers certain
information relating to options to purchase the Company's Common Stock exercised
during the fiscal year ended September 30, 1996 and options to purchase the
Company's Common Stock held at the end of such period.
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at September 30, at September 30, 1996($)(1)
1996(#)
------------------------------ -----------------------------
Shares
Acquired on Value
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
----------------------- ------------ ----------- ----------- ------------- ----------- -------------
Raymon F. Thompson.... 0 $0 0 0 $0 $0
James R. Gordley...... 0 0 6,750 29,250 21,654 93,834
Timothy C. Dodkin..... 0 0 6,750 29,250 21,654 93,834
Gregory L. Perkins.... 0 0 12,750 29,250 40,902 93,834
Robert W. Berner...... 0 0 6,750 23,250 16,842(2) 31,278(3)
(1) Based on the fair market value of the Company's Common Stock as of
September 30, 1996 ($11.875 per share), minus the exercise price of
$8.6667, multiplied by the number of shares underlying the options.
(2) Of the 6,750 shares exercisable at September 30, 1996, 5,250 were
in-the-money with an exercise price of $8.6667 per share, and 1,500
shares were not in-the-money with an exercise price of $13.00 per share.
(3) Of the 23,250 shares not exercisable at September 30, 1996, 9,750 were
in-the-money with an exercise price of $8.6667 per share, and 13,500
shares were not in-the-money with an exercise price of $13.00 per share.
Compensation Committee Interlocks and Insider Participation
During the fiscal year ended September 30, 1996, Messrs. Bateman and Robinson
served on the Compensation Committee of the Board of Directors. No interlocking
relationship exists between any member of the Company's Board of Directors or
Compensation Committee and any member of the Board of Directors or compensation
committee of any other company, nor has such interlocking relationship existed
in the past.
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
This section is not "soliciting material," is not deemed "filed" with the
Commission and is not incorporated by reference in any filing of the Company
under the Securities Act of 1933, as amended, or the Securities and Exchange Act
of 1934, as amended, whether made before or after the date hereof and
irrespective of any general language to the contrary.
The Compensation Committee of the Board was formed in 1995 and consists of
Messrs. Bateman and Robinson. Decisions concerning the compensation of the
Company's executive officers are made by the Compensation Committee and reviewed
by the full Board (excluding any interested director).
Executive Officer Compensation Programs
The objectives of the executive officer compensation program are to attract,
retain, motivate and reward key personnel who possess the necessary leadership
and management skills, through competitive base salary, annual cash bonus
incentives, long-term incentive compensation in the form of stock options, and
various benefits, including medical and life insurance plans.
The executive compensation policies of the Compensation Committee are intended
to combine competitive levels of compensation and rewards for above average
performance and to align relative compensation with the achievements of key
business objectives, optimal satisfaction of customers, and maximization of
shareholder value. The Compensation Committee believes that stock ownership by
management is beneficial in aligning management and shareholder interests,
thereby enhancing shareholder value.
Base Salaries. Salaries for the Company's executive officers are determined
primarily on the basis of the executive officer's responsibility, general salary
practices of peer companies and the officer's individual qualifications and
experience. The base salaries are reviewed annually and may be adjusted by the
Compensation Committee in accordance with certain criteria which include
individual performance, the functions performed by the executive officer, the
scope of the executive officer's on-going duties, general changes in the
compensation peer group in which the Company competes for executive talent, and
the Company's financial performance generally. The weight given each such factor
by the Compensation Committee may vary from individual to individual.
Incentive Bonuses. The Compensation Committee believes that a cash incentive
bonus plan can serve to motivate the Company's executive officers and management
to address annual performance goals, using more immediate measures for
performance than those reflected in the appreciation in value of stock options.
The bonus amounts are based upon recommendations by management and a subjective
consideration of factors including such officer's level of responsibility,
individual performance, contributions to the Company's success and the Company's
financial performance generally.
Stock Option Grants. Stock options are granted to executive officers and other
employees under the Option Plan. Because of the direct relationship between the
value of an option and the stock price, the Compensation Committee believes that
options motivate executive officers to manage the Company in a manner that is
consistent with shareholder interests. Stock option grants are intended to focus
the attention of the recipient on the Company's long-term performance which the
Company believes results in improved shareholder value, and to retain the
services of the executive officers in a competitive job market by providing
significant long-term earning potential. To this end, stock options generally
vest and become fully exercisable over a five-year period. The principal factors
considered in granting stock options to executive officers of the Company are
prior performance, level of responsibility, other compensation and the executive
officer's ability to influence the Company's long-term growth and profitability.
However, the Option Plan does not provide any quantitative method for weighting
these factors, and a decision to grant an award is primarily based upon a
subjective evaluation of the past as well as future anticipated performance.
Other Compensation Plans. The Company has adopted certain general employee
benefit plans in which executive officers are permitted to participate on parity
with other employees. The Company also provides a 401(k) deferred compensation
pension plan. Benefits under these general plans are indirectly tied to the
Company's performance.
Deductibility of Compensation. Section 162(m) of the Internal Revenue Code
("IRC") disallows a deduction by the Company for certain compensation exceeding
$1.0 million paid to any Named Executive Officer, excluding, among other things,
certain performance based compensation. Because the compensation figures for the
Named Executive Officers have not approached the limitation, the Compensation
Committee has not had to use any of the available exemptions from the deduction
limit. However, the Option Plan is designed to qualify any compensation realized
by Named Executive Officers from the exercise of an option as performance based
compensation. The Compensation Committee remains aware of the existence of the
IRC Section 162(m) limitations, and the available exemptions, and will address
the issue of deductibility when and if circumstances warrant the use of such
exemptions in addition to the exemption contemplated under the Option Plan.
Chief Executive Officer Compensation
The compensation of the Chief Executive Officer is reviewed annually on the same
basis as discussed above for all executive officers. Mr. Thompson's base salary
for the fiscal year ended September 30, 1996 was $230,015. Mr. Thompson's base
salary was established in part by comparing the base salaries of chief executive
officers at other companies of similar size. Mr. Thompson's base salary was at
the approximate median of the base salary range for Presidents/Chief Executive
Officers of comparative companies. Mr. Thompson received no stock options or
bonuses during the fiscal year ended September 30, 1996.
MEMBERS OF THE COMPENSATION COMMITTEE
Howard E. Bateman
Calvin S. Robinson
CERTAIN TRANSACTIONS
The following is a description of certain transactions and relationships entered
into or existing during the fiscal year ended September 30, 1996 between the
Company and certain affiliated parties. The Company believes that the terms of
such transactions were no less favorable to the Company than could have been
obtained from an unaffiliated party.
Pursuant to an agreement, dated June 7, 1983 (the "Representative Agreement"),
between the Company and Entech, Entech has the right to sell the Company's
products in Delaware, Long Island, New Jersey, New York City and Pennsylvania.
The Representative Agreement was terminated by the parties in 1996. Howard E.
Bateman, a director of the Company, formerly owned Entech. Sales of the
Company's products by Entech during the fiscal year ended September 30, 1996
amounted to $1,784,000. The terms of the Representative Agreement were
negotiated at arms length between the Company and Entech prior to Mr. Bateman
becoming a director of the Company.
During the fiscal year ended September 30, 1996, the Company leased, and
continues to lease, airplanes from Raymon F. Thompson. Under these lease
agreements, the Company made rental payments to Raymon F. Thompson of $1,158,000
during the fiscal year ended September 30, 1996. The Company currently leases
four airplanes from Mr. Thompson with an aggregate monthly rental charge of
$109,500. One of these lease agreements expires in 1998, one expires in 1999 and
two expire in 2000. The terms of the lease agreements were based on quotes from
independent aircraft leasing dealers for the same type of aircraft. The Company
believes that these lease agreements are on terms no less favorable to the
Company than could have been obtained from an unaffiliated party.
Fastener's West, Inc. ("FWI"), 76% of which is owned by Raymon F. Thompson,
supplies some of the fasteners used by the Company. During the fiscal year ended
September 30, 1996, total purchases by the Company from FWI amounted to
approximately $651,000. Prices paid by the Company are comparable to the list
price paid by other FWI customers.
STOCK PERFORMANCE GRAPH
The following graph compares the percentage change in the cumulative total
shareholder return on the Company's Common Stock from February 2, 1995, the date
of the Company's initial public offering, through the end of the Company's
fiscal year ended September 30, 1996, with the percentage change in the
cumulative total return for the Nasdaq Composite Index (U.S. Companies), the
Hambrecht & Quist Technology Index and the Hambrecht & Quist Semiconductor
Index. The comparison assumes an investment of $100 on February 2, 1995 in the
Company's Common Stock and in each of the foregoing indices and assumes
reinvestment of dividends. The stock performance shown on the graph below is not
necessarily indicative of future price performance.
STOCK PERFORMANCE GRAPH APEARS HERE
COMPARISON OF 20 MONTH CUMULATIVE TOTAL RETURN*
AMONG SEMITOOL, INC., THE NASDAQ STOCK MARKET-US INDEX,
THE HAMBRECHT & QUIST TECHNOLOGY INDEX
AND THE HAMBRECHT & QUIST SEMICONDUCTORS INDEX
Following is a listing of each of the plot points illustrated in the graph:
DOLLARS 2/02/95 3/95 6/95 9/95 12/95 3/96 6/96 9/96
SEMITOOL, INC. 100 162 246 288 150 173 150 137
- -----------------------------------
NASDAQ STOCK MARKET-US 100 107 123 137 139 146 157 163
- -----------------------------------
HAMBRECHT & QUIST TECHNOLOGY 100 110 134 152 149 152 158 169
- -----------------------------------
HAMBRECHT & QUIST SEMICONDUCTORS 100 115 161 182 132 125 120 136
- -----------------------------------
* $100 INVESTED ON 2/02/95 IN STOCK OR INDEX-INCLUDING REINVESTMENT OF DIVIDENDS. FISCAL YEAR ENDING SEPTEMBER
30.
- --------------------------------------------------------------------------------
SHAREHOLDER PROPOSALS
- --------------------------------------------------------------------------------
To be considered for presentation to the annual meeting of the Company's
shareholders to be held in 1998, a shareholder proposal must be received by John
W. Sullivan, Chief Financial Officer, Vice President, Finance and Assistant
Secretary, 655 West Reserve Drive, Kalispell, Montana 59901, no later than
September 23, 1997.
OTHER MATTERS
Section 16(a) Beneficial Ownership Reporting Compliance. Section 16(a) of the
Exchange Act requires the Company's directors, executive officers and persons
who own more than 10% of the Company's Common Stock (collectively, "Reporting
Persons") to file reports of ownership and changes in ownership of the Company's
Common Stock. Reporting Persons are required by Securities and Exchange
Commission regulations to furnish the Company with copies of all Section 16(a)
reports they file. Based solely on its review of the copies of such reports
received or written representations from certain Reporting Persons, the Company
believes that during the fiscal year ended September 30, 1996, all Reporting
Persons complied with all applicable filing requirements.
Other Matters. The Board of Directors knows of no other business which 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 respect thereof in accordance with the judgments of the persons
voting the proxies.
It is important that the proxies be returned promptly and that your shares be
represented. Shareholders are urged to mark, date, execute and promptly return
the accompanying proxy card in the enclosed envelope.
By Order of the Board of Directors,
/s/Raymon F. Thompson
Raymon F. Thompson
Chairman of the Board,
Chief Executive Officer and
President
January 21, 1997
Kalispell, Montana