===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
RUDOLPH TECHNOLOGIES, 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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
RUDOLPH TECHNOLOGIES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held May 21, 2002
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the 2002 Annual Meeting of Stockholders of
Rudolph Technologies, Inc. (the "Company"), a Delaware corporation, will be
held on May 21, 2002 at 11:00 a.m., local time, at the Company's corporate
headquarters, located at One Rudolph Road, Flanders, New Jersey, for the
following purposes:
1. To elect two Class III directors to serve for three-year terms
expiring upon the 2005 Annual Meeting of Stockholders or until their
successors are elected.
2. To transact such other business as may properly come before the
meeting and any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on March 29, 2002 are
entitled to notice of and to vote at the meeting and any adjournment thereof.
All stockholders 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 stockholder attending
the meeting may vote in person even if such stockholder has returned a proxy.
FOR THE BOARD OF DIRECTORS
STEVEN R. ROTH
Secretary
Flanders, New Jersey
April 24, 2002
RUDOLPH TECHNOLOGIES, INC.
-----------------
PROXY STATEMENT
-----------------
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed Proxy is solicited on behalf of the Board of Directors of
Rudolph Technologies, Inc. (the "Company") for use at the 2002 Annual Meeting
of Stockholders to be held May 21, 2002 at 11:00 a.m., local time (the "Annual
Meeting"), or at any adjournment thereof, for the purposes set forth herein and
in the accompanying Notice of Annual Meeting of Stockholders. The Annual
Meeting will be held at the Company's corporate headquarters, located at One
Rudolph Road, Flanders, New Jersey. The Company's telephone number is (973)
691-1300.
These proxy solicitation materials and the Company's Annual Report to
Stockholders for the year ended December 31, 2001, including financial
statements, were mailed on or about April 24, 2002 to all stockholders entitled
to vote at the meeting.
Record Date and Voting Securities
Stockholders of record at the close of business on March 29, 2002 are
entitled to notice of and to vote at the meeting. At the record date,
16,169,058 shares of the Company's Common Stock, $0.001 par value, were issued
and outstanding.
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 at the Company's principal executive offices 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
Each stockholder is entitled to one vote for each share of Common Stock on
all matters presented at the Annual Meeting. Stockholders do not have the right
to cumulate their votes in the election of directors.
The Company will bear the cost of soliciting proxies. 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. Solicitation of proxies by mail may be supplemented by
telephone, telegram, facsimile or personal solicitation by directors, officers
or regular employees of the Company. No additional compensation will be paid to
such persons for such services.
Quorum; Abstentions; Broker Non-votes
The required quorum for the transaction of business at the Annual Meeting is
a majority of the votes eligible to be cast by holders of shares of Common
Stock issued and outstanding on the record date. Shares that are voted
1
"FOR", "AGAINST" or "WITHHOLD AUTHORITY" with respect to a matter are treated
as being present at the meeting for purposes of establishing a quorum and are
also treated as shares entitled to vote at the Annual Meeting (the "Votes
Cast") with respect to such matter.
While there is no definitive statutory or case law authority in Delaware 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 (other than the election of directors). 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 the proposal.
Under current Delaware case law, while broker non-votes s (i.e. the votes of
shares held of record by brokers as to which the underlying beneficial owners
have given no voting instructions) should be counted for purposes of
determining the presence or absence of a quorum for the transaction of
business, broker non-votes should not be counted for purposes of determining
the number of Votes Cast with respect to the particular proposal on which the
broker has expressly not voted. Accordingly, the Company intends to treat
broker non-votes in this manner.
Deadlines for Submission of Stockholder Proposals for 2003 Annual Meeting
Stockholders of the Company are entitled to present proposals for
consideration at forthcoming stockholder meetings provided that they comply
with the proxy rules promulgated by the Securities and Exchange Commission and
the Bylaws of the Company. Stockholders wishing to present a proposal at the
Company's 2003 Annual Stockholder Meeting must submit such proposal to the
Company by December 25, 2002 if they wish for it to be eligible for inclusion
in the proxy statement and form of proxy relating to that meeting. In addition,
under the Company's Bylaws, a stockholder wishing to make a proposal at the
2003 Annual Stockholder Meeting must submit such a proposal to the Company
prior to March 10, 2003.
PROPOSAL 1--ELECTION OF DIRECTORS
Nominees
The authorized number of directors is currently established at eight. The
Company's Certificate of Incorporation provides that the directors shall be
divided into three classes, with the classes serving for staggered, three-year
terms. Currently there are three directors in each of Class I and Class II and
two directors in Class III. Each of the three Class I directors will hold
office until the 2003 Annual Meeting or until his successor has been duly
elected and qualified and each of the Class II directors will hold office until
the 2004 Annual Meeting or until his successor has been duly elected and
qualified. The two Class III directors are to be elected at this Annual Meeting.
Unless otherwise instructed, the proxy holders will vote the proxies
received by them for the Company's two nominees named below, each of whom is
currently a director of the Company. In the event that any nominee of the
Company becomes unable or declines to serve as a director at the time of the
Annual Meeting, the proxy holders will vote the proxies for any substitute
nominee who is designated by the current Board of Directors to fill the
vacancy. It is not expected that any nominee listed below will be unable or
will decline to serve as a director.
The names of the two Class III nominees for director and certain information
about each of them are set forth below. The names of, and certain information
about, the current Class I and Class II directors with unexpired terms are also
set forth below. All information is as of the record date.
2
Director
Name Age Principal Occupation Since
- ---- --- -------------------- --------
Nominees for Class III Directors:
David Belluck.................... 39 General Partner and Director of Riverside Partners, Inc. 1996
Aubrey C. Tobey.................. 76 President of ACT International Consulting, Inc. 1998
Continuing Class I Directors:
Paul Craig....................... 45 General Partner and Director of Riverside Partners, Inc. 1996
Paul F. McLaughlin............... 56 Chairman and Chief Executive Officer of Rudolph
Technologies, Inc. 1996
Carl E. Ring, Jr................. 64 Managing Director of Liberty Partners, L.P. 1996
Continuing Class II Directors:
Daniel H. Berry.................. 56 Industry Consultant 1998
Stephen J. Fisher................ 39 Partner, Liberty Partners, L.P. 1996
Richard F. Spanier............... 62 Retired, Chairman Emeritus 1966
Except as indicated below, each nominee or incumbent director has been
engaged in the principal occupation set forth above during the past five years.
There are no family relationships between any directors or executive officers
of the Company.
Paul F. McLaughlin has served as the Company's Chairman since January 2000
and Chief Executive Officer and as a director of the Company since June 1996.
Mr. McLaughlin has over 15 years experience in the semiconductor capital
equipment business including 6 years as Vice President at Perkin-Elmer
Corporation, a pioneer in optical lithography. Mr. McLaughlin holds a B.S. in
Metallurgical Engineering from Rensselaer Polytechnic Institute, an M.S. in
Metallurgy and Materials Science from Lehigh University and an M.B.A. from
Harvard University, Graduate School of Business Administration.
David Belluck has served as one of the Company's directors since June 1996.
Since February 1989, Mr. Belluck has been a general partner of Riverside
Partners, Inc., a private equity investment firm. Mr. Belluck holds a B.A. from
Harvard University and an M.B.A. from Harvard University, Graduate School of
Business Administration. Mr. Belluck is currently a director of Atchison
Casting Corporation.
Daniel H. Berry has served as one of the Company's directors since October
1998. Since January 2001, Mr. Berry has been a consultant to the semiconductor
industry. From May 1999 to January 2001, he served as President and Chief
Operating Officer of Ultratech Stepper, Inc., a lithography tool supplier. From
August 1998 to May 1999 he served as Executive Vice President and Chief
Operating Officer of Ultratech Stepper and from January 1994 to August 1999, he
served as a Senior Vice President of Sales and Marketing of that company.
Mr. Berry holds a B.S. in Electrical Engineering from the Polytechnic Institute
of Brooklyn.
Paul Craig has served as one of the Company's directors since June 1996.
Since February 1989, Mr. Craig has served as a general partner and a director
of Riverside Partners, Inc., a private equity investment firm. Mr. Craig holds
a B.A. from Harvard University.
Stephen J. Fisher has served as one of the Company's directors since June
1996. Since June 1998, Mr. Fisher has served as a partner of Liberty Partners,
L.P., a private equity investment firm. From June 1994 to June 1998, Mr. Fisher
served as a Vice President of Liberty Capital Partners, Inc. Mr. Fisher holds a
B.S. and an M.B.A. from Washington University and a J.D. from Boston University
School of Law.
Carl E. Ring, Jr. has served as one of the Company's directors since June
1996. Mr. Ring was a founding partner of Liberty Partners, L.P. from September
1992 through June 2001 and is currently a Managing Director of Liberty
Partners, L.P. Mr. Ring holds a B.A. in mathematics from George Washington
University and an M.B.A. from Harvard University, Graduate School of Business
Administration. Mr. Ring is currently a director of Monaco Coach Corporation.
3
Richard F. Spanier has served as Chairman Emeritus of the Company's Board of
Directors since January 2000 and prior to that the Company's Chairman of the
Board of Directors since September 1966. From September 1966 to June 1996, Mr.
Spanier served as the Company's President and Chief Executive Officer.
Mr. Spanier holds a B.S. in Physics, an M.S. in Physical Chemistry and a Ph.D.
in Chemical Physics from Stevens Institute of Technology.
Aubrey C. Tobey has served as one of the Company's directors since October
1998. Since April 1987, Mr. Tobey has served as President of ACT International
Consulting, Inc., a company which provides marketing and management services
for high technology companies. Mr. Tobey holds a B.S. in Mechanical Engineering
from Tufts University and an M.S. in Mechanical Engineering from the University
of Connecticut. Mr. Tobey is currently a director of Chartered Semiconductor
Manufacturing, Ltd.
Board Meetings and Committees
The Board of Directors of the Company held a total of four meetings during
fiscal 2001. No director attended fewer than 75% of the meetings of the Board
of Directors and its committees upon which such director served. The Board of
Directors has an Audit Committee and a Compensation Committee. The Board of
Directors has no nominating committee or any committee performing similar
functions.
The Audit Committee of the Board of Directors currently consists of
Directors Berry, Belluck and Tobey, and held four meetings during the last
fiscal year. The Audit Committee recommends engagement of the Company's
independent accountants, and is primarily responsible for approving the
services performed by the Company's independent accountants and for reviewing
and evaluating the Company's accounting principles and its system of internal
accounting controls. The Audit Committee has adopted a written charter. Each
member of the Company's Audit Committee is "independent" as defined under
Nasdaq's listing standards. The Audit Committee's Report is set forth below at
"AUDIT DISCLOSURE--Audit Committee Report."
The Compensation Committee of the Board of Directors currently consists of
Directors Craig and Ring, and held one meeting during the last fiscal year. The
Compensation Committee establishes the policies upon which compensation of and
incentives for the Company's executive officers will be based, reviews and
approves the compensation of the Company's executive officers, and administers
the Company's stock option and stock purchase plans. The Compensation
Committee's Report is set forth below at "COMPENSATION COMMITTEE REPORT."
Compensation of Directors
Directors who are employees of the Company receive no compensation for their
services as members of the Board of Directors. Other directors received cash
compensation of $20,000 in 2001.
Vote Required
The two nominees receiving the highest number of votes of the shares
entitled to be voted for them shall be elected as directors. Votes withheld
from any director will be counted for purposes of determining the presence or
absence of a quorum for the transaction of business at the meeting, but have no
other legal effect upon election of directors under Delaware law.
The Company's Board of Directors unanimously recommends voting "for" the
nominees set forth herein.
4
EXECUTIVE COMPENSATION
Executive Compensation Tables
The table below sets forth information for the three most recently completed
fiscal years concerning the compensation of the Chief Executive Officer of the
Company and the other executive officers of the Company (the "Named Executive
Officers"):
Summary Compensation Table
Long term
Annual Compensation compensation
------------------------------ ------------
Securities
Other Annual Underlying All Other
Name and Principal Position Year Salary Bonus(1) Compensation Options Compensation(2)
--------------------------- ---- -------- -------- ------------ ------------ ---------------
Paul F. McLaughlin................. 2001 $337,952 $ -- -- 155,000 $5,829
Chairman and Chief Executive 2000 281,846 120,000 -- -- 6,020
Officer 1999 258,470 78,000 -- 143,545 4,635
Robert M. Loiterman................ 2001 214,039 -- -- 90,000 5,797
Senior Vice President of 2000 179,567 42,750 -- -- 5,912
Technology and General 1999 162,064 41,250 -- 88,909 5,207
Manager of Integrated Metrology --
Steven R. Roth..................... 2001 180,865 -- -- 65,000 5,386
Senior Vice President, Finance 2000 150,477 28,875 -- -- 5,628
and Administration and Chief 1999 129,107 26,600 -- 88,909 3,969
Financial Officer
Nathan H. Little................... 2001 79,084 -- -- 40,000 274
Vice President, Operations 2000 -- -- -- -- --
1999 -- -- -- -- --
- --------
(1) Includes bonuses earned during the fiscal year and paid in the subsequent
year.
(2) Amounts shown include (i) the following life insurance premiums paid by the
Company for each executive officer in fiscal years 1999, 2000 and 2001,
respectively: Mr. McLaughlin ($373, $770 and $729), Mr. Loiterman ($345,
$662 and $697), Mr. Roth ($272, $577 and $588) and Mr. Little ($0, $0 and
$274); and (ii) amounts contributed by the Company under the Company's
401(k) Saving and Retirement Plan for fiscal years 1999, 2000 and 2001,
respectively: Mr. McLaughlin ($4,262, $5,250 and $5,100), Mr. Loiterman
($4,862, $5,250 and $5,100) and Mr. Roth ($3,697, $5,051 and $4,798).
Option Grants
The following table sets forth certain information with respect to stock
option grants to the Named Executive Officers during the fiscal year ended
December 31, 2001.
Option Grants in Last Fiscal Year
# of Individual Grants (1)
-----------------------------------------
Number of Potential Realizable Value at
Securities % of Total Assumed Annual Rates of
Underlying Options Stock Price Appreciation for
Options Granted to Option Term (2)
Granted Employees Exercise Expiration -----------------------------
Name (#) in 2001 Price Date 5% 10%
---- ---------- ---------- -------- ---------- ---------- ----------
Paul F. McLaughlin... 125,000 13.35% $40.13 01/25/11 $3,154,693 $7,994,611
30,000 3.20 23.40 10/18/11 441,484 1,118,807
Robert M. Loiterman.. 75,000 8.01 40.13 01/25/11 1,892,816 4,796,766
15,000 1.60 23.40 10/18/11 220,742 559,404
Steven R. Roth....... 50,000 5.34 40.13 01/25/11 1,261,877 3,197,844
15,000 1.60 23.40 10/18/11 220,742 559,404
Nathan H. Little..... 25,000 2.67 50.30 05/21/11 790,835 2,004,131
15,000 1.60 23.40 10/18/11 220,742 559,404
5
- --------
(1) These options were granted pursuant to the Company's 1999 Stock Plan. The
option exercise prices were at the fair market value of the Company's
Common Stock on the date of grant. These options have terms of ten years
and vest as follows: 20% of the shares subject to the option become
exercisable twelve months after the date of grant and 1/60/th of the shares
subject to the option become exercisable each month thereafter. /
(2) Potential realizable values are net of exercise price, but before taxes
associated with exercise. The amounts represent certain assumed rates of
appreciation only, based on Securities and Exchange Commission rules,
applied for the entire ten-year term of the options. Actual gains, if any,
on stock option exercises are dependent on the future performance of the
Common Stock, overall market conditions, the option holders' continued
employment through the vesting period and the date of exercise and sale of
the option shares. The amounts reflected in this table may not necessarily
be achieved and do not reflect the Company's estimate of future stock price
growth.
Option Exercises and Values
The following table sets forth information for the Named Executive Officers
relating to the number and value of securities underlying exercisable and
unexercisable options they held at December 31, 2001.
Fiscal Year-End Option Exercises and Values
Number of Securities Value of Unexercised In-the-
Shares Underlying Unexercised Money Options at
Acquired Options at December 31, 2001 December 31, 2001(1)
on Value ---------------------------- ----------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- -------- -------- ----------- ------------- ----------- -------------
Paul F. McLaughlin..... -- $ -- 383,208 227,918 $12,099,261 $1,663,458
Robert M. Loiterman.... 12,000 343,371 61,004 133,751 1,574,317 965,318
Steven R. Roth......... 16,638 662,237 51,452 108,751 1,253,021 965,318
Nathan H. Little....... -- -- -- 40,000 -- 163,800
- --------
(1) Value of unexercised options is based on the last reported sale price of
the Company's Common Stock on the Nasdaq National Market of $34.32 per
share on December 31, 2001 minus the exercise price.
Executive Officers
Set forth below is certain information regarding the executive officers of
the Company and their ages as of March 1, 2002. Information relating to Paul F.
McLaughlin is set forth above at "PROPOSAL 1--ELECTION OF DIRECTORS--Nominees."
Robert M. Loiterman, age 42, was promoted to Senior Vice President of
Technology and General Manager of Integrated Metrology in February 2002. He
served as the Company's Vice President of Engineering from June 1996 to
February 2002. From June 1993 to June 1996, Mr. Loiterman served as the
Company's Director of Engineering, from January 1990 to June 1993 he served as
a project manager and from January 1988 to January 1990 he served as a design
engineer. Mr. Loiterman holds a B.S. in Electrical Engineering from Rutgers
University.
Steven R. Roth, age 41, was promoted to Senior Vice President in February
2002 and has served as the Company's Vice President, Finance and Administration
and Chief Financial Officer since September 1996. From August 1991 to August
1996, Mr. Roth served as a Director of Corporate Finance for Bell
Communications Research, now called Telcordia, a research and development
company serving the telecommunications industry. Mr. Roth is a C.P.A. and holds
a B.S. in Accounting from Villanova University.
Nathan H. Little, age 50, has served as the Company's Vice President of
Operations since May 2001. From 1997 to 2001, Mr. Little held the following
positions for Philips Electronics North America: from 1999 to 2001 he served as
Vice President, NPR Purchasing, from 1998 to 1999 he served as Director,
Corporate Leveraging,
6
and from 1997 to 1998 he served as Cluster Manager, NPR Purchasing. From 1993
to 1997, Mr. Little served as National Sales Manager for Philips Electronic
Instruments Company. Mr. Little received a B.S. in Mechanical Engineering from
Northwestern University, an M.S. in Mechanical Engineering from the University
of Minnesota and an M.B.A. from Harvard Business School. He is a Professional
Engineer (PE) and a Certified Purchasing Manager (C.P.M.)
Employment Agreements and Change in Control Arrangements
In 2000, the Company entered into management agreements with Paul F.
McLaughlin, Robert M. Loiterman, and Steven R. Roth. The management agreements
with Mr. Loiterman and Mr. Roth provide for terms of one year with automatic
renewals for additional one-year terms unless the Company or the executive
deliver a notice of non-renewal to the other party. Mr. McLaughlin's management
agreement provides for an initial term of two years with automatic renewals for
additional two year terms. The management agreements with each of Messrs.
Loiterman and Roth prohibit the executives from competing with the Company in
any way or soliciting our employees during their terms of employment and for
one year after termination of their employment. Mr. McLaughlin's management
agreement prohibits him from competing with the Company in any way or
soliciting our employees during the term of his employment and for two years
after termination of his employment.
The management agreements provide that if the Company terminates an
executive's employment without cause or if the executive terminates with good
cause, the Company will be required to pay that executive his base salary for
one year or two years in the case of Mr. McLaughlin. The agreements also
provide that in the event of the termination of an executive's employment upon
a change in control, which results in the executive not being offered a
management agreement on comparable terms, the executive will be entitled to
receive his base salary for one year, or two years in the case of Mr.
McLaughlin. In this context, a change of control would occur if, among other
events, the Company were sold to an independent third party and that
independent third party acquired enough of the Company's stock to elect a
majority of the Company's Board of Directors, or that independent third party
acquired all, or substantially all, of the Company's assets.
COMPENSATION COMMITTEE REPORT
The information contained in the following 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 of 1933 or the Securities Exchange Act
of 1934, except to the extent that the Company specifically incorporates it by
reference into such filing.
Introduction
The Compensation Committee of the Board of Directors (the "Committee") was
established in 1996 and is comprised solely of outside directors. In general,
the Committee is responsible for reviewing and recommending for approval by the
Board of Directors the Company's compensation practices, including executive
salary levels and variable compensation programs, both cash-based and
equity-based. With respect to the compensation of the Company's Chief Executive
Officer, the Committee reviews and approves the various elements of the Chief
Executive Officer's compensation. With respect to other executive officers, the
Committee reviews the recommendations for such individuals presented by the
Chief Executive Officer and the bases therefor and approves or modifies the
compensation packages for such individuals. Base salary levels for executive
officers of the Company have been generally established at or near the start of
each fiscal year, and final bonuses for executive officers have been determined
at the end of each fiscal year based upon such individual's performance and the
performance of the Company.
7
Executive Compensation
The Company's compensation program consists of two principal components:
cash-based compensation, both fixed and variable, and equity-based
compensation. These two principal components are intended to attract, retain,
motivate and reward executives who are expected to manage both the short-term
and long-term success of the Company.
Cash-based Compensation
The Committee believes that the annual cash compensation paid to executives
should be commensurate with both the executive's and the Company's performance.
For this reason, the Company's executive cash compensation consists of base
compensation (salary) and variable incentive compensation (annual bonus).
Base salaries for executive officers are established considering a number of
factors, including the Company's profitability; the executive's individual
performance and measurable contribution to the Company's success; and pay
levels of similar positions with comparable companies in the industry. The
Committee supports the Company's compensation philosophy of moderation for
elements such as base salary and benefits. Base salary decisions are made as
part of the Company's formal annual review process.
An executive's annual performance award generally depends on the financial
performance of the Company relative to profit targets and the executive's
individual performance. These targets are reviewed at least annually to meet
the changing nature of the Company's business. The incentive portion is set at
a higher percentage for more senior officers, with the result that such
officers have a higher percentage of their potential total cash compensation at
risk.
Equity-based Compensation
The Committee administers an option program pursuant to which members of
management, including the Company's executive officers, may receive annual
option grants as of the time of their reviews each year from a pool of shares
set aside by the Committee. The purpose of the option program is to provide
additional incentive to executives and other key employees of the Company to
work to maximize long-term return to the Company's stockholders. The allocation
of the option pool, other than the shares allocated to the Chief Executive
Officer and other than shares allocated in amounts of 10,000 or more per
recipient, is recommended by the Chief Executive Officer for approval by the
Committee. The allocation of shares from the option pool in amounts of 10,000
or less per recipient is made by the Chief Executive Officer and reviewed by
the Board of Directors at the first Board meeting following such allocation.
The allocation of shares from the option pool to the Chief Executive Officer is
determined by the Committee. In granting stock options to the executive
officers, the Chief Executive Officer and the Committee consider a number of
subjective factors, including the executive's position and responsibilities at
the Company, such executive's individual performance, the number of options
held (if any) and other factors that they may deem relevant. Options generally
vest over a five-year period to encourage optionholders to continue in the
employ of the Company. The exercise price of options is the market price on the
date of grant, ensuring that the option will acquire value only to the extent
that the price of the Company's Common Stock increases relative to the market
price at the date of grant. In 2001, options to purchase an aggregate of
350,000 shares of Common Stock were granted to the executive officers.
Chief Executive Officer Compensation
The Committee generally uses the same factors and criteria described above
for compensation decisions regarding the Chief Executive Officer. During 2001,
Mr. McLaughlin received a base salary of $337,952 for serving as the Chief
Executive Officer of the Company. Mr. McLaughlin received no cash bonus for
2001. In 2001, the Compensation Committee also granted Mr. McLaughlin options
to purchase an aggregate of 155,000 shares of the Company's Common Stock.
8
Tax Deductibility of Executive Compensation
The Internal Revenue Code limits the federal income tax deductibility of
compensation paid to the Company's Chief Executive Officer and to each of the
other four most highly compensated executive officers. For this purpose,
compensation can include, in addition to cash compensation, the difference
between the exercise price of stock options and the value of the underlying
stock on the date of exercise. Under this legislation, the Company may deduct
such compensation with respect to any of these individuals only to the extent
that during any fiscal year such compensation does not exceed $1 million or
meets certain other conditions (such as stockholder approval). The Company's
policy is to qualify, to the extent reasonable, its executive officers'
compensation for deductibility under applicable tax laws. However, the
Committee believes that its primary responsibility is to provide a compensation
program that will attract, retain and reward the executive talent necessary to
the Company's success. Consequently, the Committee recognizes that the loss of
a tax deduction may be necessary in some circumstances.
Summary
The Committee believes that its compensation program to date has been fair
and motivating, and has been successful in attracting and retaining qualified
employees and in linking compensation directly to the Company's success. The
Committee intends to review this program on an ongoing basis to evaluate its
continued effectiveness.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee consists of Directors Craig and Ring, none of
whom has interlocking relationships as defined by the Securities and Exchange
Commission.
THE COMPENSATION COMMITTEE
PAUL CRAIG
CARL E. RING, JR.
9
AUDIT DISCLOSURE
Independent Public Accountants
The firm of Arthur Andersen LLP audited the Company's financial statements
for the fiscal year ended December 31, 2001 and has served as the Company's
independent public accountants since May 14, 2001. In light of recent events
affecting Arthur Andersen LLP, the Company has not yet selected independent
public accountants to audit its financial statements for the fiscal year ending
December 31, 2002. The Audit Committee is currently evaluating the matter.
Representatives of Arthur Andersen LLP are expected to be present at the Annual
Meeting with the opportunity to make statements if they desire to do so and are
expected to be available to respond to appropriate questions. If the Board of
Directors selects new independent public accountants prior to the Annual
Meeting, the Company intends to also invite a representative of the new
accounting firm to attend the Annual Meeting.
On May 14, 2001, the Company engaged Arthur Andersen, LLP as its independent
accountants in place of PricewaterhouseCoopers LLP. The Company's Audit
Committee and Board of Directors participated in and approved the decision to
change independent accountants.
The reports of PricewaterhouseCoopers LLP on the financial statements for
the years ended December 31, 1999 and 2000 contained no adverse opinion or
disclaimer of opinion and were not qualified or modified as to uncertainty,
audit scope or accounting principle. In connection with the Company's audits
for the fiscal years ended December 31, 1999 and 2000 and through May 14, 2001,
there were no disagreements (within the meaning of Instruction 4 of Item 304 of
Regulation S-K promulgated by the Securities and Exchange Commission) with
PricewaterhouseCoopers LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements if not resolved to the satisfaction of PricewaterhouseCoopers LLP
would have caused them to make reference thereto in their report on the
financial statements for the fiscal years ended December 31, 1999 and 2000.
During the fiscal years ended December 31, 1999 and 2000 and through May 14,
2001, there were no reportable events (as defined in Item 304(a)(1)(v) of
Regulation S-K). PricewaterhouseCoopers LLP's letter to the Securities and
Exchange Commission stating its agreement with the statements in this paragraph
is filed as Exhibit 16 to the Company's Current report on Form 8-K/A, dated May
18, 2001.
Audit Committee Report
The following is the audit committee's report submitted to the Board of
Directors for the fiscal year ended December 31, 2001.
The Audit Committee of the Board of Directors has:
. reviewed and discussed the Company's audited financial statements for the
fiscal year ended December 31, 2001 with the Company's management;
. discussed with Arthur Andersen LLP, the Company's independent auditors,
the materials required to be discussed by Statement of Auditing Standard
61; and
. reviewed the written disclosures and the letter from Arthur Andersen LLP
required by Independent Standards Board No. 1 and has discussed with
Arthur Andersen LLP its independence.
Based on the foregoing review and discussion, the Audit Committee
recommended to the Board of Directors that the audited financial statements be
included in the Company's 2001 Annual Report on Form 10-K.
THE AUDIT COMMITTEE
DANIEL H. BERRY
DAVID BELLUCK
AUBREY C. TOBEY
10
Fees billed to the Company by Arthur Andersen LLP during Fiscal 2001
Audit Fees:
Audit fees billed to the Company by Arthur Andersen LLP for review of the
Company's annual financial statements and those financial statements included
in the Company's quarterly reports on Form 10-Q for the fiscal year ended
December 31, 2001 totaled $119,485.
Financial Information Systems Design and Implementation Fees:
The Company did not engage Arthur Andersen LLP to provide advice to the
Company regarding financial information systems design and implementation
during the fiscal year ended December 31, 2001.
All Other Fees:
Fees billed to the Company by Arthur Andersen LLP for all other services
rendered to the Company during the Company's 2001 fiscal year totaled $21,750
including audit-related fees of $15,000 and other fees of $16,470.
Audit-related fees include a benefit plan audit. Other fees include tax-related
services and assistance with foreign regulatory filings.
The Audit Committee has determined that the provision of other services is
compatible with Arthur Andersen LLP's independence.
11
COMPANY'S STOCK PERFORMANCE
Set forth below is a line graph comparing the annual percentage change in
the cumulative return to the stockholders of the Company's Common Stock with
the cumulative return of the Nasdaq composite index and a peer group index for
the period commencing on the first day the Company's Common Stock was traded on
the Nasdaq Stock Market, November 12, 1999, and ending on December 31, 2001.
The information contained in the performance graph shall not be deemed to be
"soliciting material" or to be "filed" with the SEC, nor shall such information
be incorporated by reference into any future filing under the Securities Act of
1933 or the Securities Exchange Act of 1934, except to the extent that the
Company specifically incorporates it by reference into such filing.
The graph assumes that $100 was invested on November 12, 1999 in the
Company's Common Stock and in each index (based on prices from the close of
trading on November 12, 1999), and that all dividends were reinvested. No cash
dividends have been declared or paid on the Company's Common Stock. Stockholder
returns over the indicated period should not be considered indicative of future
stockholder returns. The Company operates on a 52 week fiscal year which ended
on Monday, December 31, 2001. Under the assumptions stated above, over the
period from November 12, 1999 to December 31, 2001 the total return on an
investment in the Company would have been 214.5%, as compared to 60.2% for the
Nasdaq Stock Market index and 92.8% for the JP Morgan H & Q Semiconductor index
shown below.
PERFORMANCE GRAPH FOR
RUDOLPH TECHNOLOGIES, INC.
[CHART]
COMPARISON OF 25 MONTH CUMULATIVE TOTAL RETURN*
AMONG RUDOLPH TECHNOLOGIES, INC.,
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE JP MORGAN H & Q SEMICONDUCTORS INDEX
11/12/99 12/99 12/00 12/01
RUDOLPH TECHNOLOGIES, INC. 100.00 209.38 188.68 214.50
NASDAQ STOCK MARKET (U.S.) 100.00 126.13 75.87 60.20
JP MORGAN H & Q SEMICONDUCTORS 100.00 114.78 95.75 92.81
*$100 INVESTED ON 11/12/99 IN STOCK OR INDEX-
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
12
SECURITY OWNERSHIP
The following table sets forth certain information with respect to
beneficial ownership of the Company's Common Stock as of March 1, 2002 (except
as otherwise indicated), by: (i) each person who is known by the Company to own
beneficially more than five percent of the Common Stock, (ii) each of the Named
Executive Officers, (iii) each of the Company's directors, and (iv) all
directors and executive officers as a group. Except as indicated in the
footnotes to this table, the persons named in the table have sole voting and
investment power with respect to all shares of Common Stock shown as
beneficially owned by them, subject to community property laws where applicable.
Number of
Beneficial Owner Shares(1) Percentage(2)
- ---------------- --------- -------------
Liberty Partners Holdings, 11, L.L.C............................... 4,127,540 25.6%
c/o Liberty Capital Partners, Inc.
1370 Avenue of the Americas
New York, NY 10019
Franklin Resources, Inc.(3)........................................ 1,755,095 10.9
One Franklin Parkway
San Mateo, CA 94403
Paul F. McLaughlin(4).............................................. 479,982 2.9
Robert M. Loiterman................................................ 94,577 *
Steven R. Roth..................................................... 68,018 *
Nathan H. Little................................................... -- *
David Belluck...................................................... 197,407 1.2
Daniel H. Berry.................................................... 6,783 *
Paul Craig......................................................... 155,285 *
Stephen J. Fisher(5)............................................... 4,130,540 25.6
c/o Liberty Capital Partners, Inc.
1370 Avenue of the Americas
New York, NY 10019
Carl E. Ring, Jr.(5)............................................... -- *
c/o Liberty Capital Partners, Inc.
1370 Avenue of the Americas
New York, NY 10019
Richard F. Spanier(6).............................................. 264,112 1.6
Aubrey C. Tobey.................................................... 3,783 *
All directors and executive officers as a group (eleven persons)(7) 5,400,487 32.3
- --------
* Less than 1%.
(1) Includes the number of shares subject to options which are exercisable
within 60 days of March 1, 2002 by the following persons: Mr. McLaughlin,
(422,792 shares), Mr. Loiterman (84,754 shares), Mr. Roth (63,952 shares),
Mr. Berry (1,783 shares), Mr. Tobey (1,783 shares) and all directors and
executive officers as a group (575,064 shares).
(2) Applicable percentage ownership is based on 16,141,433 shares of common
stock outstanding as of March 1, 2002. Beneficial ownership of shares is
determined in accordance with the rules of the Securities and Exchange
Commission and generally includes shares as to which a person holds sole or
shared voting or investment power. Shares of common stock subject to
options that are presently exercisable or exercisable within 60 days of
March 1, 2002 are deemed to be beneficially owned by the person holding
such options for the purpose of computing the percentage ownership of such
person but are not treated as outstanding for the purpose of computing the
percentage ownership of any other person. Unless otherwise noted the
address for the stockholders named in this table is c/o Rudolph
Technologies, Inc., One Rudolph Road, Flanders, NJ 07836.
13
(3) Information provided herein is based on the group filing of Schedule 13G/A
on February 14, 2002 by Franklin Resources, Inc., Charles B. Johnson,
Rupert H. Johnson, Jr. and Franklin Advisers, Inc. The shares are
beneficially owned by one or more open or closed-end investment companies
or other managed accounts which are advised by direct and indirect
investment advisory subsidiaries (the "Advisor Subsidiaries") of Franklin
Resources, Inc. Such advisory contracts grant to such Advisor Subsidiaries
all investment and/or voting power over the securities owned by such
advisory clients. Therefore, such Advisor Subsidiaries may be deemed to be
the beneficial owner of the shares.
(4) Includes 20,000 shares held by Mr. McLaughlin's wife.
(5) The number of shares of common stock beneficially owned by Mr. Fisher
consists of 4,127,540 shares of our common stock held by Liberty Partners
Holdings 11, L.L.C. Mr. Fisher is a director and stockholder of Liberty
Capital Partners, Inc., which is the general partner of Liberty Partners,
L.P. Liberty Partners, L.P. is a partner of Liberty Investment Partnership
11, which is the managing member of Liberty Partners Holdings 11, L.L.C.
Mr. Fisher disclaims beneficial ownership of all shares except to the
extent of his pecuniary interest in Liberty Partners Holdings 11, L.L.C.
(6) Includes 2,715 shares held by Mr. Spanier's wife and 198,445 shares held by
the Lord Rudolph Spanier Foundation.
(7) The number of shares of common stock beneficially owned by our directors
and executive officers as a group includes 4,127,540 shares of our common
stock held by Liberty Partners Holdings 11, L.L.C.
14
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's executive officers and directors and persons who own
more than ten percent of a registered class of the Company's equity securities
to file an initial report of ownership on Form 3 and changes in ownership on
Form 4 or Form 5 with the Securities and Exchange Commission (the "SEC"). Such
persons are also required by SEC rules 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 the fiscal year ended December 31,
2001, all officers, directors and greater than ten percent beneficial owners
complied with all Section 16(a) filing requirements, except as follows: (i)
Nathan Little filed a late Form 3 after his appointment as an executive officer
of the Company, (ii) each of Paul F. McLaughlin, Nathan Little, Robert M.
Loiterman, Steven R. Roth and Richard F. Spanier filed a late Form 5 for the
fiscal year ended December 31, 2001 covering two transactions and (iii) each of
Stephen J. Fisher, Carl E. Ring, Jr., Liberty Capital Partners, Inc., Liberty
Partners, L.P. and Liberty Partners Holdings, 11, L.L.C. filed a late Form 4 to
report two transactions made by Liberty Partners Holdings, 11, L.L.C.
OTHER MATTERS
The Company knows of no other matters to be submitted to the Annual Meeting.
If any other matters properly come before the Annual Meeting, it is the
intention of the persons named in the enclosed Proxy to vote the shares they
represent as the Board of Directors may recommend.
BY ORDER OF THE BOARD OF DIRECTORS
STEVEN R. ROTH
Secretary
Dated: April 24, 2002
15
- --------------------------------------------------------------------------------
RUDOLPH TECHNOLOGIES, INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS OF RUDOLPH TECHNOLOGIES, INC.
The undersigned hereby constitutes and appoints David Belluck and Daniel H.
Berry, or either of them, as and for his proxies, each with the power to appoint
such proxy's substitute, and hereby authorizes them, or either of them, to vote
all of the shares of Common Stock of Rudolph Technologies, Inc. held of record
by the undersigned on March 29, 2002, at the Annual Meeting of Stockholders of
Rudolph Technologies, Inc. to be held Tuesday, May 21, 2002 and at any and all
adjournments thereof as follows:
(Continued and to be signed on reverse side.)
\/ Please Detach and Mail in the Envelope Provided \/
- ------------------------------------------------------------------------------------------------------------------------------------
A [X] Please mark your
votes as in this
example
FOR all nominees WITHHOLD
listed at right AUTHORITY
(except as marked to to vote for all nominees
the contrary below) listed at right
1. ELECTION [_] [_] Nominees: David Belluck 2. IN THEIR DISCRETION, THE PROXIES ARE
OF Aubrey C. Tobey AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS
DIRECTORS AS MAY PROPERLY BE BROUGHT BEFORE THE
MEETING OR ANY ADJOURNMENT THEREOF.
To withhold authority to vote for any individual
nominee, write that nominee's name in the space This proxy, when properly executed, will be
provided below: voted in the manner described herein by the
undersigned. If no direction is made, this proxy
will be voted FOR all nominees listed.
- -----------------------------------------------
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
Dated , 2002
- ----------------------------------------------------- ----------------------------------------------------- -------------
SIGNATURE OF STOCKHOLDER SIGNATURE IF HELD JOINTLY
Note: Please sign exactly as your name appears on this proxy cared. When shares are held by joint tenants, both should sign. When
signing as an attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by
authorized person.
- ------------------------------------------------------------------------------------------------------------------------------------