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 [X] Definitive Proxy
Statement
[ ] Confidential, for Use of the Commission Only [ ] Definitive Additional
(as permitted by Rule 14a-6(e)(2)) Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
NANOMETRICS
----------------------------------------------------------
(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 transactions applies:
(2) Aggregate number of securities to which transactions 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:
NANOMETRICS INCORPORATED
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Nanometrics Incorporated, a California corporation (the "Company"), will be held
on Wednesday, May 16, 2001 at 1:30 p.m., local time, at the principal offices of
the Company located at 1550 Buckeye Drive, Milpitas, California 95035, for the
following purposes:
1. To elect six directors to serve until the next annual meeting of
shareholders or until their successors are elected.
2. To ratify the appointment of Deloitte & Touche LLP as independent
auditors of the Company for the fiscal year ending December 31, 2001.
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only shareholders of record at the close of business on April 2, 2001 are
entitled to notice of and to vote at the meeting and any adjournment thereof.
All shareholders are cordially invited to attend the meeting in person.
However, to ensure your representation at the meeting, you are urged to mark,
sign, date and return the enclosed proxy card as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any shareholder attending
the meeting may vote in person even if such shareholder returned a proxy.
Sincerely,
Vincent J. Coates
Secretary
Milpitas, California
April 18, 2001
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NANOMETRICS INCORPORATED
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed proxy is solicited on behalf of the Board of Directors of
Nanometrics Incorporated (the "Company") for use at the Annual Meeting (the
"Annual Meeting") of Shareholders of the Company to be held on Wednesday, May
16, 2001 at 1:30 p.m., local time, or at any adjournment thereof, for the
purposes set forth herein and in the accompanying Notice of Annual Meeting of
Shareholders. The Annual Meeting will be held at the principal offices of the
Company located at 1550 Buckeye Drive, Milpitas, California 95035. The Company's
telephone number at that address is (408) 435-9600.
These proxy solicitation materials were mailed on or about April 18, 2001 to
all shareholders entitled to vote at the meeting. A copy of the Company's 2000
Annual Report on Form 10-K accompanies this Proxy Statement.
Record Date and Shares Outstanding
Shareholders of record at the close of business on April 2, 2001 (the
"Record Date") are entitled to notice of and to vote at the meeting. At the
Record Date, 11,629,653 shares of the Company's Common Stock, no par value, were
issued and outstanding. For information concerning security ownership of
management and beneficial owners of more than 5% of the Company's Common Stock,
see "Security Ownership of Management and Certain Beneficial Owners" below.
Revocability of Proxies
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Secretary of the
Company a written notice of revocation or a duly executed proxy bearing a later
date or by attending the meeting and voting in person.
Voting and Solicitation
The candidates receiving the six highest vote totals will be elected to
serve as directors. Every shareholder voting for the election of directors may
(i) cumulate such shareholder's votes and give one candidate a number of votes
equal to the number of directors to be elected multiplied by the number of
shares that he holds or (ii) distribute the shareholder's votes on the same
principle among as many candidates as the shareholder may select, provided that
votes cannot be cast for more than six candidates. However, no shareholder shall
be entitled to cumulate votes for a candidate unless the candidate's name has
been placed in nomination prior to the voting and the shareholder, or any other
shareholder, has given notice at the meeting prior to the voting of the
intention to cumulate the shareholder's votes. On all other matters, each share
of Common Stock outstanding has one vote.
The cost of this solicitation will be borne by the Company. In addition, the
Company may reimburse brokerage firms and other persons representing beneficial
owners of shares for their expenses in forwarding solicitation material to such
beneficial owners. Proxies may also be solicited by certain of the Company's
directors, officers and regular employees, without additional compensation,
personally or by telephone.
-3-
Quorum; Abstentions: Broker Non-votes
The required quorum for the transaction of business at the Annual
Meeting is a majority of the shares of Common Stock issued and outstanding on
the Record Date. Shares that are voted "FOR," "AGAINST" or "WITHHELD FROM" a
matter are treated as being present at the meeting for purposes of establishing
a quorum and are also treated as shares "represented and voting" at the Annual
Meeting ("Votes Cast") with respect to such matter.
While there is no definitive statutory or case law authority in
California as to the proper treatment of abstentions, the Company believes that
abstentions should be counted for purposes of determining both (i) the presence
or absence of a quorum for the transaction of business and (ii) the total number
of Votes Cast with respect to a proposal. In the absence of controlling
precedent to the contrary, the Company intends to treat abstentions in this
manner. Accordingly, abstentions will have the same effect as a vote against a
proposal.
Broker non-votes will be counted for purposes of determining the
presence or absence of a quorum for the transaction of business, but will not be
counted for purposes of determining the number of Votes Cast with respect to a
proposal.
Deadline for Receipt of Shareholder Proposals
The attached proxy card grants the proxy holders discretionary
authority to vote on any matter raised at the 2001 Annual Meeting. Proposals of
shareholders of the Company which are intended to be presented by such
shareholders at the Company's 2002 Annual Meeting must be received by the
Company no later than December 16, 2001 in order that they may be included in
the proxy statement and form of proxy relating to that meeting.
If a shareholder intends to submit a proposal at the 2002 Annual
Meeting that is not eligible for inclusion in the proxy statement and proxy, the
shareholder must do so no later than March 13, 2002. If such a shareholder fails
to comply with the foregoing notice provision, the proxy holders will be allowed
to use their discretionary authority when the proposal is raised at the 2002
Annual Meeting.
-4-
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Nominees
A board of six directors is to be elected at the Annual Meeting, which
will leave one vacancy on the board. Unless otherwise instructed, the proxy
holders will vote the proxies received by them for the Company's six nominees
named below, all of whom are presently directors of the Company. 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. The
proxy holders intend to vote all proxies received by them in such a manner and
in accordance with cumulative voting as will ensure 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 Company is not
aware of any nominee who will be unable or will decline to serve as a director.
The term of office of each person elected as a director will continue until the
next Annual Meeting of Shareholders or until such director's successor has been
elected and qualified.
The names of the nominees and certain information about them are set
forth below:
Director
Name of Nominee Age Since
--------------------------------------------- ------ --------
Vincent J. Coates............................ 76 1975
Nathaniel Brenner............................ 75 1986
Norman V. Coates............................. 51 1988
John D. Heaton............................... 41 1995
William G. Oldham............................ 62 2000
Edmond R. Ward............................... 61 1999
Vincent J. Coates has been Chairman of the Board since the Company was
founded in 1975. He has also served as Chief Executive Officer through April
1998 and President from the founding through May 1996, except for the period
January 1986 through February 1987 when he served exclusively as Chief Executive
Officer. He was elected Secretary in February 1989. Prior to his employment at
Nanometrics, Mr. Coates co-founded Coates and Welter Instrument Corporation, a
designer of electron microscopes, which company was subsequently acquired by
Nanometrics. Mr. Coates also spent over twenty years working in engineering,
sales and international operations for the Perkin-Elmer Corporation. In 1995, he
received an award which recognized his contribution to the industry from
Semiconductor and Equipment and Materials International, an industry trade
organization.
Nathaniel Brenner has served as a director of the Company since June
1986. He joined Beckman Instruments, Inc. in 1976 where he held the positions of
Program Manager, Marketing Manager (Instruments) and General Manager
(Spectroscopy). In 1992, Mr. Brenner retired from Beckman Instruments, Inc.
Norman V. Coates has served as a director of the Company since May
1988. He has operated Gem of the River Produce, a farming and produce packing
operation in Orleans, California, as a sole proprietor since 1978. He has also
been manager of the Boise Creek Farm operation since 1985 and a manager of
Coates Vineyard since 1997.
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John D. Heaton joined the Company in September 1990 and in April 1994
he was elected Vice President of Engineering and General Manager. In July 1995,
he was appointed to the Board of Directors. In May 1996, he was elected
President and Chief Operating Officer. In April 1998, he was elected Chief
Executive Officer. Mr. Heaton served in various technical positions at National
Semiconductor from 1978 to 1990 prior to joining the Company.
William G. Oldham has served as a director of the Company since June
2000. Since 1964, Mr. Oldham has been a faculty member at the University of
California, Berkeley, where he researches EUV and Maskless Lithography and since
1996, has been the Director of the DARPA/SRC Research Network for Advanced
Lithography. He has served as a consultant in various intellectual property
matters and serves on the board of directors of Cymer, Inc.
Edmond R. Ward has served as a director of the Company since June 1999.
Since August 1999, Mr. Ward has been a General Partner of Virtual Founders. From
April 1992 to June 1997, Mr. Ward was the Vice President of Technology at
Silicon Valley Group, Inc.
Vincent J. Coates is the father of Norman V. Coates. There is no other
family relationship between any of the foregoing nominees or between any such
nominees and any of the executive officers of the Company.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS
VOTE "FOR" THE NOMINEES SET FORTH HEREIN.
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Security Ownership of Management and Certain Beneficial Owners
The following table sets forth beneficial ownership of Common Stock of
the Company as of December 31, 2000, by each director or nominee, by each of the
Named Officers (as defined below), by all directors and Named Officers as a
group, and by all persons known to the Company to be the beneficial owners of
more than 5% of the Company's Common Stock. Unless otherwise indicated the
address of each beneficial owner of 5% of the Company's Common Stock is 1550
Buckeye Drive, Milpitas, California 95035.
Number of Shares of
Common Stock
Name of Beneficial Owner Beneficially Owned (1) Percent of Total
- ----------------------------------------------------------------- ----------------------- ----------------
Vincent J. Coates (2)............................................ 3,376,274 29.1%
Capital Group International, Inc. (3)............................ 1,585,900 13.7%
11100 Santa Monica Blvd.
Los Angeles, CA 90025
Franklin Resource, Inc (4)....................................... 675,000 5.8%
777 Mariners Island Blvd.
San Mateo, CA 94404
Nathaniel Brenner (5)............................................ 56,700 *
Norman V. Coates (6)............................................. 18,050 *
John D. Heaton (7)............................................... 201,667 1.7%
Paul B. Nolan (8)................................................ 45,000 *
Roger Ingalls, Jr. (9)........................................... 42,667 *
Edmond R. Ward (10).............................................. 3,333 *
William Oldham .................................................. 0 *
William McGahan (11)............................................. 40,333 *
All Named Officers and directors as a group (9 persons) (12)..... 3,784,024 31.6%
<FN>
- --------------------
* Represents less than 1% of outstanding shares of Common Stock.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission (the "SEC"). The number of shares
beneficially owned by a person includes shares of common stock subject
to options held by that person that are currently exercisable or
exercisable within 60 days of December 31, 2000. Such shares issuable
pursuant to such options are deemed outstanding for computing the
percentage ownership of the person holding such options but are not
deemed outstanding for the purposes of computing the percentage
ownership of each other person.
(2) Includes 3,376,154 shares of common stock held of record by the Vincent
J. Coates Separate Property Trust, U/D/T dated August 7, 1981, for
which Mr. Coates acts as trustee.
(3) According to a Schedule 13G/A filed with the Securities Exchange
Commission on February 12, 2001, Capital Group International, Inc.
("CGI") may be deemed to be the beneficial owner of 1,585,900 shares of
common stock. CGI is identified as a Parent Holding Company on its
Schedule 13G/A.
(4) According to a Schedule 13G filed with the Securities Exchange
Commission on January 31, 2001, Franklin Resources, Inc. ("FRI") may be
deemed to be the beneficial owner of 675,000 shares of Common Stock.
(5) Includes 26,700 shares of Common Stock held of record by the N&J
Brenner Living Trust, for which Mr. Brenner and his spouse act as
trustees, for the benefit of members of Mr. Brenner's immediate
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family, and 30,000 shares of common stock issuable upon exercise of
outstanding options exercisable within 60 days of December 31, 2000.
(6) Includes an aggregate of 8050 shares held as trustee on the behalf of
other family members and 10,000 shares of common stock issuable upon
exercise of outstanding options exercisable within 60 days of December
31, 2000.
(7) Includes 185,000 shares of common stock issuable upon exercise of
outstanding options exercisable within 60 days of December 31, 2000.
(8) Includes 45,000 shares of common stock issuable upon exercise of
outstanding options exercisable within 60 days of December 31, 2000.
(9) Includes 42,667 shares of common stock issuable upon exercise of
outstanding options exercisable within 60 days of December 31, 2000.
(10) Includes 3,333 shares of common stock issuable upon exercise of
outstanding options exercisable within 60 days of December 31, 2000.
(11) Includes 40,333 shares of common stock issuable upon exercise of
outstanding options exercisable within 60 days of December 31, 2000.
(12) Includes 356,333 shares of common stock issuable upon exercise of
outstanding options exercisable within 60 days of December 31, 2000.
</FN>
Board Meetings and Committees
The Board of Directors held a total of five meetings during fiscal
2000. During fiscal 2000, no incumbent directors attended less than 75% of the
aggregate of (i) the total number of meetings of the Board of Directors and (ii)
the total number of meetings of committees, if any, upon which such directors
served. The Company maintains standing committees overseeing audits,
compensation and stock options. The Company does not have a standing nominating
committee.
Audit Committee. The Audit Committee of the Board of Directors reviews
and monitors the corporate financial reporting as well as the internal and
external audits of the Company, including among other things, the Company's
internal audit and control functions, the results and scope of the annual audit
and other services provided by the Company's independent auditors, and the
Company's compliance with legal matters with a significant impact on the
Company's financial reports. In addition, the Audit Committee has the
responsibility to consider and recommend the employment of, and to review fee
arrangements with, the Company's independent auditors. The Audit Committee also
monitors transactions between the Company and its officers, directors and
employees for any potential conflicts of interest. The Board of Directors
adopted a written charter for the Audit Committee on March 27, 2001. A copy of
this charter is attached hereto as Appendix 1. The Audit Committee met three
times during fiscal 2000.
The current members of the Audit Committee are Nathaniel Brenner and
Edmond R. Ward. Messrs. Brenner and Ward are "independent directors" as that
term is defined the applicable National Association of Securities Dealers'
("NASD") listing standards.
Compensation Committee. The Compensation Committee reviews and makes
recommendations to the Board of Directors regarding the Company's compensation
policy and all forms of compensation to be provided to certain of the executive
officers of the Company. The current members of the Compensation Committee are
Nathaniel Brenner and Norman V. Coates. The Compensation Committee met
separately once during fiscal 2000.
Stock Option Committee. The Stock Option Committee of the Board of
Directors is responsible for approving the grant of stock options to the
Company's employees under the Company's 1991 Stock Option Plan and 2000 Stock
Option Plan. The current members of the Stock Option Committee are
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Norman V. Coates and Nathaniel Brenner. The Stock Option Committee did not meet
separately during fiscal 2000, but acted by written consent nine times during
fiscal 2000.
Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee of the Company's Board serves
as a member of the board of directors or compensation committee of any entity
that has one or more executive officers serving as a member of the Company's
Board of Directors or Compensation Committee.
Board Compensation
Directors who are not also employees of the Company receive an annual
retainer fee of $5,000 plus $1,000 for each Board of Directors and committee
meeting attended (unless the Board and committee meeting take place on the same
day, in which case such directors receive a $1,000 fee) and are eligible to
participate in the Company's 2000 Director Option Plan.
Compensation of Executive Officers
The following table sets forth the compensation paid by the Company
during the past three fiscal years to (i) the Chief Executive Officer of the
Company during the last fiscal year, (ii) each of the four most highly
compensated executive officers of the Company not serving as Chief Executive
Officer and (iii) up to an additional two individuals that would have been
included under item (ii) but for the fact that the individuals were not serving
as executive officers at the end of the last completed fiscal year
(collectively, the "Named Officers"):
Summary Compensation Table
Long Term
Compensation
Annual Compensation Awards
----------------------------------------- ---------------
Securities
Underlying
Fiscal Year Salary Bonus Options (#)
------------- --------------- ------------- ---------------
John D. Heaton.............................................. 2000 $ 380,370 $ 70,385 250,000
President and Chief Executive Officer 1999 $ 241,445 $ 5,338 50,000
1998 $ 206,668 $ 21,098 100,000
Vincent J. Coates........................................... 2000 $ 204,800 $ - -
Chairman of the Board and Secretary 1999 $ 204,800 $ - -
1998 $ 215,231 $ 10,431 -
Roger Ingalls Jr............................................ 2000 $ 266,475 $ 38,982 10,000
Vice President and Director of Marketing 1999 $ 178,529 $ 3,203 -
1998 $ 209,178 $ 14,723 19,000
Paul B. Nolan............................................... 2000 $ 174,809 $ 35,023 10,000
Vice President and Chief Financial Officer 1999 $ 120,870 $ 2,643 -
1998 $ 123,232 $ 13,809 -
William McGahan........................................... 2000 $ 227,084 $ 44,965 10,000
Chief Scientist and Former Vice-President 1999 $ 174,896 $ 3,681 --
1998 $ 151,315 $ 15,934 38,000
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Stock Options Granted in the Fiscal Year Ended December 31, 2000
The following table sets forth information with respect to stock
options granted during the fiscal year ended December 31, 2000 to each of the
Named Officers. All options were granted under the Company's 1991 Stock Option
Plan or 2000 Stock Option Plan.
The potential realizable value amounts in the last two columns of the
following chart represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. The assumed 5%
and 10% annual rates of stock price appreciation from the date of grant to the
end of the option term are provided in accordance with rules of the SEC and do
not represent the Company's estimate or projection of the future common stock
price. Actual gains, if any, on stock option exercises are dependent on the
future performance of the common stock, overall market conditions and the option
holder's continued employment through the vesting period.
Option Grants in Last Fiscal Year
Potential Realized Value
Individual Grants at Assumed Annual Rates of
--------------------------------------------------- Stock Price Appreciation
Number of % of Total for
Securities Options Option Term
Underlying Granted to -----------------------
Options Employees Exercise
Granted in Fiscal Price Expiration
Name (#) (1) Year (2) ($/Sh) Date 5% ($) 10% ($)
---------- ---------- -------- ---------- --------- ---------
John D. Heaton........................... 250,000 28.2% 41.375 3/17/05 2,857,787 6,314,963
Vincent J. Coates........................ -- -- -- -- -- --
Roger Ingalls Jr......................... 10,000 1.1% 28.078 6/5/05 77,574 171,419
Paul B. Nolan............................ 10,000 1.1% 28.078 6/5/05 77,574 171,419
William McGahan.......................... 10,000 1.1% 28.078 6/5/05 77,574 171,419
- -------------------------
<FN>
(1) All options granted to the Named Officers in 2000 were granted at exercise
prices equal to the fair market value of the Company's common stock on the
dates of grant. Historically, options granted become exercisable at the
rate of 33% on the first anniversary date of the option grant and 33% of
the option shares become exercisable each full year thereafter, such that
full vesting occurs three years after the date of grant. Options lapse
after 5 years or 90 days after termination of employment.
(2) Based on 886,700 options granted during the fiscal year ended December 31,
2000.
</FN>
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following table sets forth the number of shares acquired upon the
exercise of stock options during 2000 and the number of shares covered by both
exercisable and unexercisable stock options held by each of the Named Officers
at December 31, 2000.
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Number of Securities
Underlying Unexercisable Value of Unexercised
Options At Fiscal In-the-Money Options At
Year-End (#) Fiscal Year-End ($)(2)
Shares Value ------------------------- --------------------------
Acquired on Realized ($)
Exercise (#) (1) Exercisable Unexercised Exercisable Unexercised
------------ ------------ ----------- ----------- ----------- -----------
John D. Heaton....................... 16,668 164,597 184,999 316,668 1,583,176 518,594
Vincent J. Coates.................... - - - - - -
Roger Ingalls Jr..................... 5,000 220,625 42,666 16,334 342,346 40,281
Paul B. Nolan........................ 30,000 990,650 45,000 10,000 392,075 0
William McGahan...................... 10,000 421,590 40,332 22,668 303,410 86,582
<FN>
- ------------------------------
(1) The value realized upon exercise is (i) the fair market value of the
Company's common stock on the date of exercise, less the option exercise
price per share, multiplied by (ii) the number of shares underlying the
options exercised.
(2) The value of unexercised options is (i) the fair market value of the
Company's common stock on December 31, 2000 ($13.81 per share), less the
option exercise price of in-the-money options, multiplied by (ii) the
number of shares underlying such options.
</FN>
Certain Transactions
The Company is the beneficiary of an insurance policy on the life of
Vincent J. Coates in a face amount of $8,000,000. Annual premiums, which are
paid by the Company, totaled $200,000 for fiscal 2000 are fixed at $200,000 per
year upon continuation of the policy. In the event of termination of the policy,
any cash surrender value would belong to Mr. Coates. Mr. Coates and the Company
have entered into an agreement providing that in the event of Mr. Coates' death,
his estate has the option to cause the Company to use the proceeds of the policy
to purchase shares of the Company's Common Stock owned by the estate at their
then fair market value. The estate is not obligated under the terms of the
agreement to exercise the option. If the option is not exercised, the Company
would retain the proceeds of the insurance policy. The purpose of this agreement
is to provide Mr. Coates' estate, at its option, the opportunity to obtain cash
to pay estate taxes without having to liquidate its holdings in the open market.
Pursuant to the terms of an agreement dated May 1, 1985 between the
Company and Vincent J. Coates, the terms of which were then amended and restated
in August 1996 and again effective April 1998, the Company is obligated, in the
event Mr. Coates is required to resign as Chairman of the Board under certain
circumstances, including a change of control, to continue to pay Mr. Coates his
salary and benefits for five years from the date of such resignation.
In April 1998, the Company entered into an agreement with Mr. Heaton
under which the Company agreed to pay Mr. Heaton his usual annual salary
(excluding bonuses) for a period of one year from the date that he is required
or requested for any reason not involving good cause, including a change of
control, to involuntarily relinquish his positions with the Company as Chief
Executive Officer, President and Director. If Mr. Heaton leaves the Company
voluntarily or if he is asked to leave under certain circumstances, no such
severance payment is required.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's executive officers and directors, and persons who own
more than ten percent of a registered class of the Company's
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equity securities, to file reports of ownership and changes in ownership with
the SEC and the NASDAQ National Market. Executive officers, directors and
greater than ten percent shareholders are required by SEC regulations to furnish
the Company with copies of all Section 16(a) forms they file. Based solely on
its review of the copies of such forms received by it or written representations
from certain reporting persons, the Company believes that during fiscal 2000 its
executive officers, directors and greater than ten percent shareholders complied
with all applicable filing requirements.
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Report of the Audit Committee of the Board of Directors
The following is the report of the Audit Committee of the Board of
Directors describing its review of materials and determinations with respect to
the Company's auditors and financial statements for the fiscal year ended
December 30, 2000. The information contained in this report shall not be deemed
to be "soliciting material" or to be "filed" with the Securities and Exchange
Commission, nor shall such information be incorporated by reference into any
future filing under the Securities Act or Exchange Act, except to the extent
that the Company specifically incorporates it by reference into such filing.
In accordance with its written charter adopted by the Board of
Directors, the Audit Committee assists the Board of Directors in fulfilling its
responsibility for oversight of the quality and integrity of the accounting,
auditing and financial reporting practices of the Company. During 2000, the
Committee met three times, and the Audit Committee chair, as representative of
the Committee, discussed the interim financial information contained in
quarterly earnings announcements with the CFO, controller and independent
auditors prior to public release.
The Audit Committee received from the Company's independent auditors a
formal written statement, consistent with Independence Standards Board Standard
No. 1, "Independence Discussions with Audit Committees," which describes all
relationships between the auditors and the Company that, in the auditors'
professional opinion, might reasonably be thought to bear on the auditors'
independence. The Audit Committee discussed with the auditors these
relationships and satisfied itself as to the auditors' independence.
The Audit Committee also discussed and reviewed with the independent
auditors all communications required by generally accepted auditing standards,
including those described in Statement on Auditing Standards No. 61, as amended,
"Communication with Audit Committees" and, with and without management present,
discussed and reviewed the results of the independent auditors' examination of
the Company's financial statements.
Additionally, the Audit Committee reviewed the audited financial
statements of the Company as of and for the fiscal year ended December 30, 2000,
with management and the independent auditors. Management has the responsibility
for the preparation of the Company's financial statements and the independent
auditors have the responsibility for the examination of those statements.
Based on the foregoing review and discussions with management and the
independent auditors, the Audit Committee recommended to the Board that the
Company's audited financial statements be included in its Annual Report on Form
10-K for the fiscal year ended December 30, 2000, for filing with the Securities
and Exchange Commission. The Audit Committee also recommended the reappointment,
subject to shareholder approval, of the independent auditors and the Board
concurred in such recommendation.
Nathaniel Brenner, Chairman
Edmond Ward
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Report of the Compensation Committee and Stock Option Committee of the Board of
Directors
The following is the report of the Compensation Committee and the Stock
Option Committee of the Board of Directors describing compensation policies and
rationales applicable to certain of the Company's executive officers with
respect to the compensation paid to such executive officers for the fiscal year
ended December 30, 2000. The information contained in such report shall not be
deemed to be "soliciting material" or to be "filed" with the Securities and
Exchange Commission, nor shall such information be incorporated by reference
into any future filing under the Securities Act or Exchange Act, except to the
extent that the Company specifically incorporates it by reference into such
filing.
General. The Compensation Committee is responsible for making
recommendations to the Board of Directors with respect to cash compensation
levels for certain of the Company's executive officers. During 2000, the Stock
Option Committee was responsible for determining levels of equity-based
compensation for the Company's employees.
Compensation Philosophy. The Compensation Committee makes
recommendations as to the salaries of certain of the executive officers by
considering (i) the salaries of executive officers in similar positions at
comparably-sized peer companies, (ii) the Company's financial performance over
the past year based upon revenues and operating results and (iii) the
achievement of individual performance goals related to each executive officer's
duties and areas of responsibility. The Compensation Committee makes
recommendations as to the levels of cash bonuses awarded to certain of the
Company's executive officers and views such bonuses as being an integral part of
its performance based compensation program. Such bonuses are based on Company
profits and are determined as a percentage of the officer's salaries.
Equity-Based Compensation. The Stock Option Committee views stock
options as an important part of its long-term, performance-based compensation
program. The Stock Option Committee bases grants of stock options to all
employees of the Company under the Company's 2000 Stock Option Plan and, until
July 12, 2001, under the Company's 1991 Stock Option Plan, upon the Committee's
estimation of each employee's contribution to the long-term growth and
profitability of the Company. The 1991 Stock Option Plan and 2000 Stock Option
Plan are intended to provide additional incentives to the executive officers to
maximize shareholder value. Options were granted under the 1991 Stock Option
Plan and the 2000 Stock Option Plan at the then-current market price and are
generally subject to three-year vesting periods to encourage key employees to
remain with the Company.
Compensation of the President and Chief Executive Officer. The
compensation of the Company's President and Chief Executive Officer was based
upon the same criteria described above. Specifically, the Compensation Committee
considered several factors in determining such compensation including progress
toward meeting the corporate plan and the objectives set for the President and
Chief Executive Officer during his tenure in the current fiscal year as well as
progress toward attaining longer range goals as a result of his leadership. In
recognition of his progress toward meeting corporate goals and to remain
competitive, based on a survey of other CEO salaries, the compensation of the
Company's President and Chief Executive Officer was increased to an annual
salary of $350,000.
STOCK OPTION COMMITTEE COMPENSATION COMMITTEE
Norman V. Coates Nathaniel Brenner
Nathaniel Brenner Norman V. Coates
-14-
Performance Graph
Set forth below is a line graph comparing the annual percentage change in
the cumulative return to the shareholders of the Company's Common Stock with the
cumulative return of the NASDAQ Stock Market Index and the JP Morgan H&Q
Technology Index for the period commencing on January 1, 1996 and ending on
December 31, 2000. The information contained in the performance graph shall not
be deemed to be "soliciting material" or to be "filed" with the Securities and
Exchange Commission, nor shall such information be incorporated by reference
into any future filing under the Securities Act or Exchange Act, except to the
extent that the Company specifically incorporates it by reference into such
filing.
[The following descriptive data is supplied in accordance with Rule 304(d) of
Regulation S-T]
NANOMETRICS INC
Cumulative Total Return
--------------------------------------------------------
12/95 12/96 12/97 12/98 12/99 12/00
NANOMETRICS INCORPORATED 100.00 64.41 111.02 105.93 272.88 187.29
NASDAQ STOCK MARKET (U.S.) 100.00 123.04 150.69 212.51 394.94 237.68
JP MORGAN H & Q TECHNOLOGY 100.00 124.29 145.71 226.64 506.17 327.22
-15-
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
The Board has appointed Deloitte & Touche LLP, independent auditors, to
audit the consolidated financial statements of the Company for the fiscal year
ending December 29, 2001. Deloitte & Touche LLP has audited the Company's
financial statements since fiscal 1991.
Representatives of Deloitte & Touche LLP are expected to be present at
the meeting with the opportunity to make a statement if they desire to do so,
and are expected to be available to respond to appropriate questions.
Audit Fees
Total audit fees paid to Deloitte & Touche LLP and their respective
affiliates (collectively, "D & T"), including fees for professional services and
expense relating to the audit of the Company's consolidated financial
statements, for the fiscal year ended December 30, 2000, including fees related
to the timely review of the Company's quarterly financial information, totaled $
214,004.
Financial Information Systems Design and Implementation Fees
The Company did not engage D & T for professional services relating to
financial information systems design and implementation for the fiscal year
ended December 30, 2000.
All Other Fees
All other fees paid to D & T, including fees and expenses for
management advisory services in connection with potential acquisition activity
and other fees and services related to the Company's registration statements
filed with the SEC, totaled $257,820.
The Audit Committee has considered the fees received by D & T for the
provision of non-audit related services before recommending Deloitte & Touche
LLP as the independent auditor for the next fiscal year.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
"FOR" THE RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE
COMPANY'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 29, 2001.
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting.
If any other matters properly come before the meeting, it is the intention of
the persons named in the enclosed proxy card to vote the shares they represent
as the Board of Directors may recommend.
THE BOARD OF DIRECTORS
Dated: April 18, 2001
-16-
APPENDIX 1
-17-
Appendix 1: Audit Committee Charter
NANOMETRICS INC.
The Audit Committee of Nanometrics Inc. is a subcommittee of
the Board of Directors. Its primary function is to assist the board in
fulfilling its oversight responsibilities by reviewing financial information
which will be provided to shareholders and others, the systems of internal
controls which management and the board have established, and the audit process.
The Audit Committee shall:
1. Provide communication among the independent auditor, the Chief
Financial Officer, and the Board of Directors.
2. Recommend to the Board the nomination, compensation, and discharge of
the independent auditor. Review annually with the independent auditors
any significant relationships they have with the Company which could
impair the auditor's independence.
3. Check with management, the CFO, and the independent auditor about
significant financial risks and assess the steps being taken to
minimize such risks to the Company.
4. Consider and review with the independent auditor and the CFO the
adequacy of the Company's internal controls.
5. Review with management and the independent auditor at the annual
examination:
a. The Company's annual financial statements and related footnotes.
b. The independent auditor's audit and report of the financial
statements.
c. Any serious difficulties or disagreements with management
encountered during the audit.
d. Recommendations by the independent auditor for changes and additions
to Company financial procedures.
6. Consider and review with management and the CFO:
a. Compliance with the recommendations made as a result of the audit
report and review.
b. Any changes required in the scope of the audit plan.
7. Review filings with the SEC and other published documents to assure
consistency with information contained in the financial statements.
8. Meet privately with the CFO, the independent auditor, or management to
discuss matters deemed to require such privacy.
-18-
9. Meet at least four times per year, and may ask members of management to
attend to provide pertinent information as required, including one
meeting prior to, and for review of the 10Q submission.
The committee shall include in its membership three or more
directors as determined by the Board, each of whom shall be independent
non-employee directors. A chairman of the Audit Committee shall be
designated by majority vote of the committee. The chairman will prepare
or approve the agenda for meetings and shall prepare and distribute to
the Board the summary of each meeting.
10. Review and approve quarterly financial releases and review with the
independent auditor the Company's annual audited financial statements
prior to filing and distribution. The review should include issues
regarding accounting principles and practices.
11. Perform other duties as required by law, the Company's charter, or the
Board of Directors.
12. Review and assess the adequacy of this Charter each year to assure that
it reflects new responsibilities consistent with the growth of the
Company or major changes in operations or organization. Submit the
revised Charter to the Board of Directors for approval and have the
Charter published at least every three years in accordance with SEC
regulations.
Nathaniel Brenner
Member, Audit Committee
March 27, 2001
-19-
NANOMETRICS INCORPORATED
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
2001 ANNUAL MEETING OF SHAREHOLDERS
May 16, 2001
The undersigned shareholder(s) of Nanometrics Incorporated, a
California corporation, hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders and Proxy Statement, each dated April 18, 2001, and
hereby appoints Vincent J. Coates and Paul B. Nolan, and each of them, Proxies
and Attorneys-in-Fact, with full power to each of substitution, on behalf and in
the name of the undersigned, to represent the undersigned at the 2001 Annual
Meeting of Shareholders of Nanometrics Incorporated to be held on Wednesday, May
16, 2001 at 1:30 p.m., local time, at the principal offices of the Company
located at 1550 Buckeye Drive, Milpitas, California, 95035 and at any
adjournments thereof, and to vote all shares of Common Stock which the
undersigned is entitled to vote on the matters set forth below:
ITEM 1. ELECTION OF DIRECTORS:
( ) FOR all nominees listed below (except as indicated)
( ) WITHHOLD AUTHORITY to vote for all nominees listed below
IF YOU WISH TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THAT NOMINEE'S NAME IN THE LIST BELOW:
Vincent J. Coates Nathaniel Brenner Norman V. Coates John D. Heaton
William G. Oldham Edmond R. Ward
ITEM 2. PROPOSAL TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS
INDEPENDENT AUDITORS OF THE COMPANY FOR THE 2001 FISCAL YEAR.
( ) FOR ( ) AGAINST ( ) ABSTAIN
(Continued and to be signed, on reverse side)
-20-
(Continued from other side)
In their discretion the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS BALLOT WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED "FOR" THE ELECTION OF DIRECTORS NAMED HEREIN, "FOR"
EACH PROPOSAL LISTED, AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS
AS MAY COME BEFORE THE MEETING.
-------------------------------------------------------------
Typed or Printed Name(s)
-------------------------------------------------------------
Signature
-------------------------------------------------------------
Signature
-------------------------------------------------------------
Title, if applicable
-------------------------------
Type and Number of Shares owned
Dated: , 2001
------------------------
THIS PROXY SHOULD BE MARKED, DATED, SIGNED BY THE SHAREHOLDER(S) EXACTLY AS HIS
OR HER NAME APPEARS HEREON 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 SHOULD SIGN.
21