SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
American Power Conversion Corporation
-------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
American Power Conversion Corporation
-----------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: not
---
applicable
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(2) Aggregate number of securities to which transactions applies: not
---
applicable
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: not applicable
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(4) Proposed maximum aggregate value of transaction: not applicable
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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: not applicable
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(2) Form, Schedule or Registration Statement No.: not applicable
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(3) Filing party: not applicable
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(4) Date filed: not applicable
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American Power Conversion Corporation
P.O. Box 278
132 Fairgrounds Road
West Kingston, RI 02892
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
______________________
To the Shareholders:
The Annual Meeting of Shareholders of American Power Conversion
Corporation, a Massachusetts corporation (the "Company"), will be held on
Wednesday, June 14, 1995 at 10:00 a.m. at Chafee Social Science Center, Room
271, on the campus of the University of Rhode Island, Kingston, Rhode Island
02881 for the following purposes:
1. To fix the number of directors at five.
2. To elect a Board of Directors for the ensuing year.
3. To ratify the selection of the firm of KPMG Peat Marwick LLP as
auditors for the fiscal year ending December 31, 1995.
4. To transact such other business as may properly come before the
meeting and any adjournments thereof.
Shareholders of record at the close of business on April 21, 1995, will be
entitled to vote at the meeting or any adjournments thereof.
By Order of the Board of Directors,
Emanuel E. Landsman,
Clerk
May 1, 1995
SHAREHOLDERS ARE REQUESTED TO SIGN THE ENCLOSED PROXY CARD AND RETURN IT IN THE
ENCLOSED STAMPED ENVELOPE BY RETURN MAIL.
AMERICAN POWER CONVERSION CORPORATION
P.O. Box 278
132 Fairgrounds Road
West Kingston, RI 02892
------------------------------
PROXY STATEMENT FOR THE ANNUAL MEETING OF SHAREHOLDERS
To Be Held on June 14, 1995
------------------------------
Proxies in the form enclosed with this proxy statement are solicited by the
Board of Directors of American Power Conversion Corporation, a Massachusetts
corporation (the "Company"), for use at the Annual Meeting of Shareholders to be
held on Wednesday, June 14, 1995 at 10:00 a.m. at Chafee Social Science Center,
Room 271, on the campus of the University of Rhode Island, Kingston, Rhode
Island 02881 (the "Meeting").
Only shareholders of record as of the close of business on April 21, 1995
will be entitled to vote at the Meeting and any adjournments thereof. As of
that date, 92,531,728 shares of Common Stock, par value $.01 per share, of the
Company were issued and outstanding. Each share of Common Stock outstanding as
of the record date will be entitled to one vote, and shareholders may vote in
person or by proxy. Execution of a proxy will not in any way affect a
shareholder's right to attend the Meeting and vote in person. Any shareholder
giving a proxy has the right to revoke it by written notice to the Clerk of the
Company at any time before it is exercised or by delivering a later executed
proxy to the Clerk of the Company at any time before the original proxy is
exercised.
Each of the persons named as attorneys in the proxy is a director and
officer of the Company. All properly executed proxies returned in time to be
cast at the Meeting will be voted. With respect to the election of a Board of
Directors, any shareholder submitting a proxy has the right to withhold
authority to vote for any individual nominee to the Board of Directors by
writing the name of such individual or group in the space provided on the proxy.
The proxies will be voted as stated below under "Election of Directors." In
addition to the election of directors, the shareholders will consider and vote
upon proposals (i) to fix the number of directors at five and (ii) to ratify the
selection of KPMG Peat Marwick LLP as the Company's auditors for 1995. Where a
choice has been specified on the proxy with respect to the foregoing matters,
the shares represented by the proxy will be voted in accordance with the
specification and will be voted FOR if no specification is indicated.
The representation in person or by proxy of at least a majority of the
outstanding shares of Common Stock entitled to vote at the Meeting is necessary
to establish a quorum for the transaction of business. Votes withheld from any
nominee, abstentions and broker non-votes are counted as present or represented
for purposes of determining the presence or absence of a quorum at the Meeting.
A "non-vote" occurs when a broker holding shares for a beneficial owner votes on
one proposal, but does not vote on another proposal because, with respect to
such other proposal, the broker does not have discretionary voting power and has
not received
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instructions from the beneficial owner. Directors are elected by a plurality of
the votes cast by shareholders entitled to vote at the Meeting. All other
matters being submitted to shareholders require the affirmative vote of the
majority of shares present in person or represented by proxy at the Meeting. An
automated system administered by the Company's transfer agent tabulates the
votes. The vote on each matter submitted to shareholders is tabulated
separately. Abstentions are included in the number of shares present or
represented and voting on each matter. Broker "non-votes" are not so included.
The Board of Directors knows of no other matter to be presented at the
Meeting. If any other matter should be presented at the Meeting upon which a
vote may be properly taken, shares represented by all proxies received by the
Board of Directors will be voted with respect thereto in accordance with the
judgment of the persons named as attorneys in the proxies.
An Annual Report to Shareholders, containing financial statements for the
fiscal year ended December 31, 1994, is being mailed together with this proxy
statement to all shareholders entitled to vote. This Proxy Statement and the
accompanying proxy were first mailed to shareholders on or about May 10, 1995.
All share and per share information in this Proxy Statement has been
adjusted to reflect (i) a 2-for-1 stock split effected in the form of a stock
dividend in December 1991, (ii) a 2-for-1 stock split effected in the form of a
stock dividend in December 1992, and (iii) a 2-for-1 stock split effected in the
form of a stock dividend in September 1993.
-3-
MANAGEMENT AND PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth as of March 31, 1995, certain information
regarding beneficial ownership of the Company's Common Stock (i) by each person
who, to the knowledge of the Company, beneficially owned more than 5% of the
outstanding shares of Common Stock of the Company outstanding at such date, (ii)
by each director or nominee for director of the Company, (iii) by each executive
officer named in the Summary Compensation Table on page 7, and (iv) by all
directors, nominees for director and executive officers of the Company as a
group.
Amount and
----------
Nature of Percentage of
--------- -------------
Name and Address Beneficial Common Stock
---------------- ---------- ------------
of Beneficial Owner Ownership/(1)/ Outstanding/(2)/
------------------- -------------- ----------------
Rodger B. Dowdell, Jr. 9,850,782/(3)/ 10.6%
American Power Conversion
Corporation
P.O. Box 278
132 Fairgrounds Road
West Kingston, RI 02892
Neil E. Rasmussen 5,594,290/(4)/ 6.0%
American Power Conversion
Corporation
9 Executive Park Drive
North Billerica, MA 01862
Emanuel E. Landsman 2,157,948/(5)/ 2.3%
American Power Conversion
Corporation
9 Executive Park Drive
North Billerica, MA 01862
James D. Gerson 273,488/(6)/ *
Fahnestock & Co.
110 Wall Street
New York, NY 10005
Ervin F. Lyon 902,790/(7)/ 1.0%
27 Carriage Drive
Lexington, MA 02173
Edward Machala 974,310/(8)/ 1.2%
American Power Conversion
Corporation
P.O. Box 278
132 Fairgrounds Road
-4-
West Kingston, RI 02892
Asa Davis III 361,813/(9)/ *
American Power Conversion
Corporation
P.O. Box 278
132 Fairgrounds Road
West Kingston, RI 02892
David Vieau 281,901/(10)/ *
American Power Conversion
Corporation
P.O. Box 278
132 Fairgrounds Road
West Kingston, RI 02892
All directors and 20,397,322/(11)/ 22.0%
executive officers as
a group (8 persons)
________________________
*Less than 1.0%
(1) Unless otherwise indicated, the named person possesses sole voting and
investment power with respect to the shares listed.
(2) The number of shares of Common Stock deemed outstanding on March 31, 1995
includes (i) 92,531,728 shares outstanding on such date and (ii) all
options that are currently exercisable or will become exercisable within 60
days thereafter by the person or group in question.
(3) Includes 371,270 shares of Common Stock currently allocated to Mr. Dowdell
under the Company's Employee Stock Ownership Plan (the "ESOP"). Does not
include any shares held by the ESOP other than the shares allocated to Mr.
Dowdell's account. The ESOP currently holds an aggregate of 4,339,610
shares. Mr. Dowdell is a trustee of the ESOP and as such, may be deemed to
be a beneficial owner of the shares currently held by it. Mr. Dowdell
disclaims beneficial ownership of such shares, other than the shares
allocated to him.
(4) Includes 299,206 shares of Common Stock currently allocated to Mr.
Rasmussen under the Company's ESOP. Does not include any shares held by
the ESOP other than the shares allocated to Mr. Rasmussen's account. The
ESOP currently holds an aggregate of 4,339,610 shares. Mr. Rasmussen is a
trustee of the ESOP and as such, may be deemed to be a beneficial owner of
the shares currently held by it. Mr. Rasmussen disclaims beneficial
ownership of such shares, other than the shares allocated to him.
-5-
(5) Includes 246,968 shares of Common Stock currently allocated to Dr. Landsman
under the Company's ESOP. Does not include 25,000 shares held by a trust
for the benefit of certain family members or 250,000 shares held by the
Landsman Charitable Trust. Dr. Landsman disclaims beneficial ownership of
the shares held by such trusts.
(6) Includes 10,000 shares of Common Stock issuable to Mr. Gerson pursuant to
options which may be exercised within the next 60 days. Does not include
4,000 shares held by Mr. Gerson's wife for the benefit of his children.
Mr. Gerson disclaims beneficial ownership of the shares held by his wife
for the benefit of his children.
(7) Includes 10,000 shares issuable to Dr. Lyon pursuant to options which may
be exercised within the next 60 days. Does not include 4,800 shares held by
Dr. Lyon's daughter. Dr. Lyon disclaims beneficial ownership of the shares
held by his daughter. Does not include 49,742 shares held by a trust for
the benefit of Dr. Lyon's daughter. Dr. Lyon disclaims beneficial
ownership of the shares held by such trust.
(8) Includes 42,110 shares of Common Stock currently allocated to Mr. Machala
under the Company's ESOP. Does not include any shares held by the ESOP
other than the shares allocated to Mr. Machala's account. The ESOP
currently holds an aggregate of 4,339,610 shares. Mr. Machala is a trustee
of the ESOP and as such, may be deemed to be a beneficial owner of the
shares currently held by it. Mr. Machala disclaims beneficial ownership of
such shares, other than the shares allocated to him.
(9) Includes 67,245 shares of Common Stock currently allocated to Mr. Davis
under the Company's ESOP and 10,000 shares issuable to Mr. Davis pursuant
to options which may be exercised within the next 60 days.
(10) Includes 3,901 shares of Common Stock currently allocated to Mr. Vieau
under the Company's ESOP and 230,000 shares issuable to Mr. Vieau pursuant
to options which may be exercised within the next 60 days.
(11) Includes (i) 260,000 shares issuable to certain officers and directors of
the Company pursuant to options which may be exercised within the next 60
days, and (ii) 1,030,700 shares allocated to the accounts of the officers
of the Company under the Company's ESOP. Also see footnotes (3) through
(10).
-6-
NUMBER AND ELECTION OF DIRECTORS
At the Meeting, the shareholders will vote on fixing the number of
directors at five and electing the entire Board of Directors. The directors of
the Company are elected annually and hold office until the next annual meeting
of shareholders and until their successors shall have been elected and
qualified.
Shares represented by all proxies received by the Board of Directors and
not so marked as to oppose or abstain from voting on fixing the number of
directors will be voted for fixing the number of directors for the ensuing year
at five. The Board of Directors recommends a vote FOR fixing the number of
directors at five.
Shares represented by all proxies received by the Board of Directors and
not so marked as to withhold authority to vote for any individual director or
for all directors will be voted (unless one or more nominees is unable or
unwilling to serve) for the election of the nominees named in the table below.
The Board of Directors knows of no reason why any such nominee should be unable
or unwilling to serve, but if such should be the case, proxies will be voted for
the election of some other person or for fixing the number of directors at a
lesser number.
All of the nominees are currently directors of the Company and were elected
at the Annual Meeting of Shareholders held on June 7, 1994. The following table
sets forth the year each nominee first became a director of the Company and the
positions each nominee currently holds with the Company.
Nominee's or Director's
-----------------------
Name and Year Nominee
---------------------
Director Position(s) Held
-------- ----------------
First Became Director with Company
--------------------- ------------
Rodger B. Dowdell, Jr. -- President, Chairman of the Board of Directors,
1985 Chief Executive Officer
Emanuel E. Landsman -- 1981 Vice President, Secretary, Clerk and Director
Neil E. Rasmussen -- 1981 Vice President and Director
Ervin F. Lyon -- 1981 Director
James D. Gerson -- 1988 Director
Meetings of the Board of Directors and Committees
The Board of Directors met four times during the fiscal year ended December
31, 1994.
The Company's Compensation and Stock Option Committee, comprised of Messrs.
Dowdell, Gerson and Lyon, met three times during the fiscal year ended December
31, 1994.
-7-
The Compensation and Stock Option Committee makes recommendations to
the Board of Directors regarding compensation and benefits for employees,
consultants and directors of the Company, determines the compensation of
executive officers and is responsible for the administration of the Company's
1987 Stock Option Plan.
The Company's Audit Committee, comprised of Messrs. Gerson and Lyon, met
one time during the fiscal year ended December 31, 1994. The Audit Committee
oversees the accounting, tax and financial functions of the Company, including
matters relating to the appointment and activities of the Company's auditors.
The Company does not currently have a standing Nominating Committee.
During the fiscal year ended December 31, 1994, all of the directors
attended at least 75% of the total number of meetings held by the Board of
Directors, and all of the members of the Compensation and Stock Option Committee
and the Audit Committee attended all of the meetings of such committees.
Compensation of Directors
As compensation for serving on the Board of Directors, each non-employee
director is paid $1,000 by the Company for each meeting attended. Non-employee
directors are also reimbursed for reasonable expenses incurred while attending
meetings.
On February 25, 1993, the Board of Directors of the Company adopted the
1993 Non-Employee Director Stock Option Plan (the "1993 Director Plan"), subject
to approval by the Company's stockholders, which approval was granted on May 20,
1993. The 1993 Director Plan authorized the grant on February 25, 1993 of a
stock option for 20,000 shares of Common Stock to each member of the Company's
Board of Directors who is neither an employee nor officer of the Company. An
option was granted to each of Messrs. Gerson and Lyon, the two members of the
Board of Directors entitled to participate in the 1993 Director Plan. Such
options have an exercise price of $12 per share, the fair market value on the
date of grant. Each director can currently exercise an option to purchase up to
10,000 shares of Common Stock.
Occupations of Directors
The following table sets forth the names of all nominees for directors and
all current directors, their ages and present position(s) with the Company.
Name Age Position(s)
---- --- -----------
Rodger B. Dowdell, Jr.(1) 46 President, Chief Executive Officer and
Chairman of the Board of Directors
Emanuel E. Landsman 58 Vice President, Secretary, Clerk and
Director
Neil E. Rasmussen 40 Vice President and Director
-8-
Ervin F. Lyon (1)(2) 59 Director
James D. Gerson (1)(2) 51 Director
______________________
(1) Member, Compensation and Stock Option Committee
(2) Member, Audit Committee
The By-laws of the Company provide that each director is elected to hold
office until the next annual meeting of shareholders, and until his successor is
chosen and qualified. The officers of the Company are elected annually at the
first meeting of the Board of Directors following the annual meeting of
shareholders, and hold office until their respective successors are chosen and
qualified.
Rodger B. Dowdell, Jr. joined the Company in August 1985 and has been
President and a Director since that time. From January to August 1985, Mr.
Dowdell worked for the Company as a consultant, developing a marketing and
production strategy for UPS products. From 1978 to May 1984 he was President of
Independent Energy, Inc., a manufacturer of electronic temperature controls.
Emanuel E. Landsman has been Vice President, Clerk and Director of the
Company since its inception. From 1966 to 1981, Dr. Landsman worked at
Massachusetts Institute of Technology's Lincoln Laboratory ("M.I.T."), where he
was in the Space Communications Group from 1966 to 1977 and the Energy Systems
Engineering Group from 1977 to 1981.
Neil E. Rasmussen has been Vice President and a Director of the Company
since its inception. From 1979 to 1981, Mr. Rasmussen worked in the Energy
Systems Engineering Group at M.I.T.'s Lincoln Laboratory.
Ervin F. Lyon has been a Director of the Company since its inception. From
September 1986 to March 1993, Dr. Lyon worked for M.I.T's Lincoln Laboratory,
from which he retired in March 1993. From the inception of the Company through
August 1985, Dr. Lyon was President and Chairman of the Company. From 1977 to
1981, Dr. Lyon was a member of the technical staff at M.I.T's Lincoln
Laboratory.
James D. Gerson has been a Director of the Company since August 1988.
Commencing January 1986 through January 1992, Mr. Gerson was Vice President and
Manager - Corporate Finance of Josephthal & Co., Inc., and successor firms, an
investment banking and brokerage firm. From January 1992 to March 1993, Mr.
Gerson was Managing Director of Corporate Finance of Reich & Co., Inc. Since
March 1993, Mr. Gerson has been Senior Vice President of Fahnestock & Co. Mr.
Gerson is also a member of the Board of Directors of Ag Services of America,
Inc., Conceptronic, Inc., Energy Research Corporation, Hilite Industries, Inc.
and Computer Outsourcing Services, Inc.
-9-
EXECUTIVE COMPENSATION
The following table sets forth the annual and long-term compensation for
services in all capacities to the Company for the fiscal years ended December
31, 1994, 1993 and 1992, of those persons who were at December 31, 1994 (i) the
chief executive officer and (ii) the other four most highly compensated
executive officers of the Company (the "Named Officers"):
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation (1) Awards (2)
----------------------- Securities
Underlying All other
Name and Principal Position Year Salary Bonus($)(3) Options/SARs Compensation (4)
- - - - ----------------------------- ---- ------ ----------- ------------ ----------------
Rodger B. Dowdell, Jr. 1994 $392,000 $360,000 0 $32,174(6)
Chief Executive Officer, 1993 370,000 400,000 0 30,144(6)
President & Director 1992 309,000 350,000 0 --
Neil E. Rasmussen 1994 259,000 240,300 0 31,624(7)
Vice President and Director 1993 244,000 267,000 0 30,144(7)
1992 206,000 231,000 0 --
Edward W. Machala 1994 259,000 240,300 0 31,454(8)
Vice President, Operations 1993 244,000 267,000 0 30,144(8)
and Treasurer 1992 205,000 231,000 0 --
David Vieau 1994 170,000 155,700 0 30,677(9)
Vice President, Marketing 1993 160,000 173,000 0 30,144(9)
1992 125,000 150,000 0 --
Asa Davis III (5) 1994 170,000 155,700 0 30,469(10)
Vice President, Sales 1993 160,000 173,000 0 30,144(10)
1992 112,000 150,000 0 --
______________________________
(1) Excludes perquisites and other personal benefits, the aggregate annual
amount of which for each officer was less than the lesser of $50,000 or 10%
of the total salary and bonus reported.
(2) The Company did not grant any restricted stock awards or stock appreciation
rights ("SARs") or make any long term incentive plan payouts during the
fiscal years ended December 31, 1994, 1993 and 1992.
(3) Includes bonus payments earned by the Named Officers in the year indicated,
for services rendered in such year, which were paid in the next subsequent
year.
-10-
(4) Disclosure of All Other Compensation is not required for the fiscal year
ended December 31, 1992.
(5) Mr. Davis was elected Vice President of Sales on February 20, 1992. Mr.
Davis is a nephew of Rodger B. Dowdell, Jr.
(6) Includes $30,000, the market value of the shares of Common Stock
contributed to the Employee Stock Ownership Plan on behalf of Mr. Dowdell
and $2,174 and $144, respectively, in premiums on a term life insurance
policy for Mr. Dowdell's benefit for fiscal years ended December 31, 1994
and 1993.
(7) Includes $30,000, the market value of the shares of Common Stock
contributed to the Employee Stock Ownership Plan on behalf of Mr. Rasmussen
and $1,624 and $144, respectively, in premiums on a term life insurance
policy for Mr. Rasmussen's benefit for fiscal years ended December 31, 1994
and 1993.
(8) Includes $30,000, the market value of the shares of Common Stock
contributed to the Employee Stock Ownership Plan on behalf of Mr. Machala
and $1,454 and $144, respectively, in premiums on a term life insurance
policy for Mr. Machala's benefit for fiscal years ended December 31, 1994
and 1993.
(9) Includes $30,000, the market value of the shares of Common Stock
contributed to the Employee Stock Ownership Plan on behalf of Mr. Vieau and
$677 and $144, respectively, in premiums on a term life insurance policy
for Mr. Vieau's benefit for fiscal years ended December 31, 1994 and 1993.
(10) Includes $30,000, the market value of the shares of Common Stock
contributed to the Employee Stock Ownership Plan on behalf of Mr. Davis and
$469 and $144, respectively, in premiums on a term life insurance policy
for Mr. Davis' benefit for fiscal years ended December 31, 1994 and 1993.
-11-
OPTION GRANTS IN THE LAST FISCAL YEAR
The Company did not grant any stock options during the fiscal year ended
December 31, 1994 to the Named Officers listed in the Summary Compensation
Table.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth information with respect to options to
purchase the Company's Common Stock granted under the 1987 Stock Option Plan
including (i) the number of shares purchased upon exercise of options in 1994,
(ii) the net value realized upon such exercise, (iii) the number of unexercised
options outstanding at December 31, 1994 and (iv) the value of such unexercised
options at December 31, 1994:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND DECEMBER 31, 1994 OPTION VALUES
Number of Unexercised Value of Unexercised In-the-
Shares Options at Money Options at
Acquired on Value Realized December 31, 1994 (#) December 31, 1994 ($)(1)
Name Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ -------------- ----------- ------------- ----------- -------------
Rodger B. Dowdell, Jr. -- -- -- -- -- --
Neil E. Rasmussen -- -- -- -- -- --
Edward W. Machala 30,000 $ 718,110 -- -- -- --
David Vieau 72,000 1,643,616 230,000 50,000 $2,835,440 $616,400
Asa Davis III 25,000 502,337 10,000 5,000 130,310 65,155
___________________________
(1) Value is based on the difference between option exercise price and the fair
market value at 1994 fiscal year-end ($16.375 per share as quoted on The
Nasdaq Stock Market) multiplied by the number of shares underlying the
option.
-12-
AMERICAN POWER CONVERSION CORPORATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the three-
member Compensation and Stock Option Committee of the Board of Directors (the
"Compensation Committee"). Two members of the Compensation Committee are non-
employee directors. Pursuant to the authority delegated by the Board of
Directors, the Compensation Committee establishes each year the compensation of
senior management.
Under the supervision of the Compensation Committee, the Company has
developed and implemented compensation policies. The Compensation Committee's
executive compensation policies are designed to (i) enhance profitability of the
Company and shareholder value, (ii) integrate compensation with the Company's
annual and long-term performance goals, (iii) reward above-average long-term
corporate performance, (iv) recognize individual initiative and achievement, as
well as teamwork and (v) assist the Company in attracting and retaining
qualified executive officers. Compensation under the executive compensation
program is comprised of cash compensation in the form of annual base salary and
performance-based bonuses, and long term incentive compensation in the form of
stock options.
In setting cash compensation levels for executive officers (including the
Chief Executive Officer), the Compensation Committee prepares a salary plan
annually. The base salaries are fixed at levels comparable to the amounts paid
to senior executives with comparable qualifications, experience and
responsibilities at other companies of similar size and engaged in a similar
business to that of the Company. In addition, the base salaries take into
account the Company's relative financial performance as compared to comparable
companies. The financial performance measures utilized include sales growth,
return on equity and pre-tax earnings levels. The Chief Executive Officer's
employment agreement provides that his cash compensation shall be in accordance
with the American Electronics Association's (AEA) standards for chief executive
officers of similar size companies for salary and bonus. The AEA standards,
which are published annually, are used to determine the base salary of chief
executive officers of companies in the electronics industry which are of
comparable size in terms of annual revenues. The Compensation Committee has the
discretion to increase or decrease the AEA standards when arriving at
compensation levels for the Company's executives based upon its comparison of
the Company's performance to that of similar companies.
During fiscal 1994, the Compensation Committee referred to the American
Electronics Association's Executive Compensation Survey (the "AEA Survey")
results to establish annual salaries for executives, including the Chief
Executive Officer. The actual base salaries established for 1994 were increased
from the AEA standards to reflect the Company's better financial performance
compared to the financial performances, on average, of the companies which
comprised the AEA Survey. The Compensation Committee's assessment of the
Company's relative financial performance placed the Company above the 75th
percentile of similar companies participating in the AEA Survey. Accordingly,
the base salaries for the
-13-
executive officers were set at a level intended to be comparable with similar
companies above the 75th percentile.
The Compensation Committee relies on incentive compensation in the form of
performance-based bonuses and stock options to retain and motivate executive
officers. Incentive compensation in the form of performance-based bonuses for
the Chief Executive Officer and the Company's other executive officers is based
upon management's success in meeting the Company's financial and strategic
goals. Financial goals include sales growth, pre-tax profits, return on equity
and cash flow, while strategic goals focus on product development and
introductions, and increasing market share. The Compensation Committee assigns
approximately equal weight to each of the financial and strategic goals. The
Company also utilizes the AEA Survey results to determine comparable amounts
paid in the form of incentive bonuses to executive officers, subject to
adjustment (upward or downward) based upon the Company's performance in relation
to the AEA Survey participants. The Compensation Committee concluded that the
Company's financial and strategic goals were substantially achieved and, as
discussed above, the Company's performance, on average, was better than similar
companies. As a result, the Compensation Committee determined the 1994 cash
bonuses in an amount which, when combined with base salaries, represented a
total cash compensation award intended to be comparable with similar companies
above the 75th percentile.
Incentive compensation in the form of stock options is designed to provide
long term incentives to executive officers and other employees, to encourage the
executive officers and other employees to remain with the Company and to enable
optionees to develop and maintain a significant, long-term stock ownership
position in the Company's Common Stock. The Company's 1987 Stock Option Plan,
administered by the Compensation Committee, is the vehicle for the granting of
stock options.
The 1987 Stock Option Plan permits the Compensation Committee to grant
stock options to eligible employees, including executive officers. During 1994,
the Compensation Committee granted stock options to various employees. Options
become exercisable based upon a vesting schedule tied to years of service. The
value realizable from exercisable options is dependent upon the extent to which
the Company's performance is reflected in the market price of the Company's
Common Stock at any particular point in time. The Compensation Committee
believes that the executive officers of the Company who are members of the Board
of Directors continue to have significant stock ownership in the Company based
on their status as founders of the Company. The Compensation Committee
therefore has not granted any stock options to such individuals to date. With
respect to the Company's other executives, option grants are intended to last
for several years and new grants are generally not made until previously granted
options are substantially vested. No stock options were granted to executive
officers in 1994.
The Company also maintains an Employee Stock Ownership Plan (the "ESOP") in
which all executives participate on the same terms as non-executive employees
who meet applicable eligibility criteria, subject to any legal limitations on
the amounts that may be contributed or the benefits that may be payable under
the ESOPs. The ESOP's assets are invested exclusively in the Company's Common
Stock so as to further align employees' and shareholders' long-term financial
interests. The Board of Directors approves the contributions to the ESOP.
-14-
The Compensation Committee is satisfied that the executive officers of the
Company are dedicated to achieving significant improvements in the long-term
financial performance of the Company and that the compensation policies and
programs implemented and administered have contributed and will continue to
contribute towards achieving this goal.
Certain executive officers of the Company will be subject to the $1 million
limitation on deductibility of compensation under Section 162(m) of the Internal
Revenue Code, beginning in 1994. All of the compensation received by executive
officers (including the Chief Executive Officer) was deductible by the Company
for income tax purposes. It is not anticipated that any executive officer will
receive compensation during 1995 which will not be deductible by reason of the
limitation. This limitation will continue to be considered by the Compensation
Committee when it determines the amounts of compensation to be paid to executive
officers in 1996 and subsequent calendar years.
This report has been submitted by the members of the Compensation and Stock
Option Committee.
Rodger B. Dowdell, Jr.
(Chairman, President and Chief Executive Officer)
James D. Gerson
Ervin F. Lyon
-15-
PERFORMANCE GRAPH
The following graph illustrates a five year comparison of cumulative total
stockholder return among the Company, the University of Chicago's Center for
Research in Security i.e. Prices ("CRSP") Index for the Nasdaq Stock Market and
the CRSP Index for Nasdaq Electronic Components Stocks (SIC 367, a peer group
index which includes electronic components companies). The comparison assumes
$100 was invested on December 31, 1989 in the Company's Common Stock and in each
of the foregoing indices and assumes reinvestment of dividends, if any.
[GRAPH APPEARS HERE]
1989 1990 1991 1992 1993 1994
- - - - --------------------------------------------------------------------------------
Broad Market Index (1) $100.00 $84.90 $136.30 $158.60 $180.90 $176.90
Peer Group Index (2) 100.00 97.00 138.20 215.90 296.50 328.30
APCC 100.00 317.40 930.40 1,947.80 3,304.30 2,278.30
- - - - --------------------------------------------------------------------------------
Assumes $100 invested on 12/31/89.
(1) CRSP Index for Nasdaq Stock Market
(2) CRSP Index for Nasdaq Electronic Components Stocks
-16-
EMPLOYMENT CONTRACT
The Company has entered into an employment agreement with its Chief
Executive Officer. The agreement is automatically renewed annually unless
either party notifies the other 60 days prior to the renewal date. Pursuant to
the agreement, the Company pays the Chief Executive Officer an annual salary and
a bonus which are based on the salaries and bonuses paid to Chief Executive
Officers of electronics companies having approximately the same revenues as the
Company. The Chief Executive Officer is obligated under the agreement not to
compete with the Company while he is employed by the Company and for a period of
one year thereafter. The Company does not have employment agreements with any
other executive officers.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1994, Messrs. Dowdell, Gerson and Lyon served on the Compensation
Committee. The Compensation Committee was responsible for determining the non-
equity and equity compensation of executive officers of the Company. Rodger B.
Dowdell, Jr., the President and Chief Executive Officer of the Company,
participated in deliberations concerning executive officer compensation, but was
not present during discussions of and abstained from voting with respect to
decisions concerning his own compensation as Chief Executive Officer. Mr.
Dowdell is not eligible for equity compensation while a member of the
Compensation Committee.
SECTION 16 REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and officers, and persons who own more than 10% of a
registered class of the Company's equity securities, to file initial reports of
ownership and reports of changes in ownership with the Securities and Exchange
Commission (the "SEC"). Such persons 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 with
respect to fiscal 1994, or written representations from certain reporting
persons, the Company believes that all of its directors, officers and persons
who own more than 10% of a registered class of the Company's equity securities
complied with all filing requirements applicable to them with respect to
transactions during 1994.
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has selected the firm of KPMG Peat Marwick LLP
("KPMG"), independent certified public accountants, to serve as auditors for the
fiscal year ending December 31, 1995. KPMG Peat Marwick has served as the
Company's auditors since fiscal 1991.
-17-
It is expected that a member of the firm of KPMG will be present at the
Annual Meeting of Shareholders with the opportunity to make a statement if so
desired and will be available to respond to appropriate questions.
The Board of Directors recommends a vote FOR ratification of the selection
of KPMG for the fiscal year ending December 31, 1995.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended for inclusion in the proxy statement to
be furnished to all shareholders entitled to vote at the next annual meeting of
the Company must be received at the Company's principal executive offices no
later than January 2, 1996. It is suggested that proponents submit their
proposals by Certified Mail - Return Receipt Requested.
EXPENSES AND SOLICITATION
The cost of solicitation of proxies will be borne by the Company. In
addition to soliciting shareholders by mail or by its regular employees, the
Company may request banks and brokers to solicit their customers who have stock
of the Company registered in the name of a nominee and, if so, will reimburse
such banks and brokers for their reasonable out-of-pocket costs. Solicitation
by officers and employees of the Company, none of whom will receive additional
compensation therefor, may also be made of some shareholders in person or by
mail, telephone or telegraph, following the original solicitation. The Company
has retained Morrow & Co. Incorporated to assist in the solicitation of proxies,
and will pay this company a fee of approximately $3,500, plus expenses.
AMERICAN POWER CONVERSION CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
Voting Instruction for Annual Meeting
of Shareholders-June 14, 1995
SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby instructs Rodger B. Dowdell, Jr., Neil E. Rasmussen and
Edward Machala, as Trustees under the American Power Conversion Corporation
Employee Stock Ownership Plan, to vote in person, or to grant a proxy appointing
Rodger B. Dowdell, Jr. and Emanuel E. Landsman, and each of them, proxies, with
full power of substitution, to vote all shares of stock of American Power
Conversion Corporation (the "Company") allocated to the account of the Company
to be held on Wednesday, June 14, 1995 at 10:00 a.m. local time, at Chafee
Social Science Center on the campus of the University of Rhode Island, Kingston,
Rhode Island 02881 and at any adjournment thereof, upon matters set forth in the
Notice of Annual Meeting and Proxy Statement dated May 1, 1995, a copy of
which has been received by the undersigned.
1. To fix the number of directors at five.
[_] FOR [_] AGAINST [_] ABSTAIN
2. To elect a Board of Directors for the ensuing year.
Nominees: Rodger B. Dowdell, Jr., Emanuel E. Landsman, Neil E. Rasmussen,
Ervin F. Lyon and James D. Gerson.
[_] FOR all nominees [_] WITHHELD from all nominees
For, except vote withheld from the following nominee(s):
- - - - --------------------------------------------------------------------------------
3. To consider and act upon the matter of ratifying the selection of the firm of
KPMG Peat Marwick as auditors for the fiscal year ending December 31, 1995.
[_] FOR [_] AGAINST [_] ABSTAIN
4. To transact such other business as may properly come before the meeting and
any adjournment thereof.
Signature________________________________
Print Name_______________________________
Date_____________________________________
AMERICAN POWER CONVERSION CORPORATION
Proxy for Annual Meeting of Shareholders
June 14, 1995
P SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
R
O The undersigned hereby appoints Rodger B. Dowdell, Jr. and Emanuel E.
X Landsman, and each of them, proxies, with full power of substitution, to
Y vote all shares of stock of American Power Conversion Corporation (the
"Company") which the undersigned is entitled to vote at the Annual Meeting
of Shareholders of the Company to be held on Wednesday, June 14, 1995, at
10:00 a.m. local time, at the Chafee Social Science Center on the campus of
the University of Rhode Island, Kingston, Rhode Island 02881, and at any
adjournments thereof, upon matters set forth in the Notice of Annual
Meeting of Shareholders and Proxy Statement dated May 1, 1995, a copy of
which has been received by the undersigned. The proxies are further
authorized to vote, in their discretion, upon such other business as may
properly come before the meeting or any adjournments thereof. Execution of
a proxy will not in any way affect a shareholder's right to attend the
meeting and vote in person. Any shareholder giving a proxy has the right to
revoke it by written notice to the Clerk of the Company at any time before
it is exercised or by delivering a later executed proxy to the Clerk of the
Company at any time before the original proxy is exercised.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE
Please mark
[X] votes as in
this example.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO
DIRECTION IS GIVEN, WILL BE VOTED "FOR" THE ELECTION OF DIRECTORS AND "FOR" THE
PROPOSALS IN ITEMS 1 AND 3.
1. To fix the number of directors of five.
FOR AGAINST ABSTAIN
/ / / / / /
2. To elect the Board of Directors for the ensuing year:
Nominees: Rodger B. Dowdell, Jr., Emanuel E. Landsman, Neil E. Rasmussen,
Ervin F. Lyon and James D. Gerson
FOR WITHHELD
/ / / /
3. To ratify the selection of the firm of KPMG Peat Marwick LLP as auditors for
the fiscal year ending December 31, 1995.
FOR AGAINST ABSTAIN
/ / / / / /
4. To transact such other business as may properly come before the meeting and
any adjournment thereof.
MARK HERE FOR ADDRESS / / MARK HERE IF YOU PLAN / /
CHANGE AND NOTE AT LEFT TO ATTEND THE MEETING
/ / _____________________________________
For all nominees except as noted above
If signing as attorney, executor, trustee or guardian, please
give your full title as such. If stock is held jointly, each
owner should sign.
Signature: __________________________________ Date ___________
Signature: __________________________________ Date ___________