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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
NEWPORT CORPORATION
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(Name of Registrant as Specified In Its Charter)
N/A
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(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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
NEWPORT CORPORATION
1791 Deere Avenue
Irvine, California 92606
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 17, 2000
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To the Stockholders of Newport Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Newport
Corporation will be held at the Corporate Headquarters, 1791 Deere Avenue,
Irvine, California, on May 17, 2000, at 10:00 a.m., for the purpose of
considering and acting upon the following:
1. To elect two Class IV Directors to serve for four years.
2. To amend the Articles of Incorporation to increase the number of
authorized common shares to 75 million from 20 million.
3. To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for the year ending December 31, 2000.
4. To transact such other business as may properly come before the meeting or
any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business March 31, 2000, will be
entitled to notice of and to vote at the meeting.
All stockholders are cordially invited to attend the meeting. However, to
assure your representation at the meeting, you are urged to mark, sign, date and
return the enclosed proxy as promptly as possible in the enclosed envelope. Any
stockholder attending the meeting may vote in person even if he or she has
returned a proxy.
By order of the Board of Directors
Robert C. Hewitt
Secretary
Irvine, California
April 14, 2000
Please sign and return the enclosed Proxy promptly.
NEWPORT CORPORATION
1791 Deere Avenue
Irvine, California 92606
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PROXY STATEMENT
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Solicitation and Revocation of Proxies
The enclosed Proxy is solicited by the Board of Directors of Newport
Corporation (the "Company" or "Newport") for use in connection with the Annual
Meeting of Stockholders to be held at the Corporate Headquarters, 1791 Deere
Avenue, Irvine, California on Wednesday, May 17, 2000, at 10:00 a.m., and at any
and all adjournments thereof for the purposes set forth herein and in the
accompanying Notice of Annual Meeting of Stockholders.
The persons named as proxies were designated by the Board of Directors (the
"Board") and are officers or directors of the Company. Any Proxy may be revoked
or superseded by executing a later Proxy or by giving notice of revocation in
writing prior to, or at, the Annual Meeting, or by attending the Annual Meeting
and voting in person. Attendance at the meeting will not in and of itself
constitute revocation of the Proxy. All Proxies that are properly completed,
signed and returned to the Company prior to the meeting, and not revoked, will
be voted in accordance with the instructions given in the Proxy. If a choice is
not specified in the Proxy, the Proxy will be voted FOR election of the director
nominees listed below (Proposal 1); FOR amendment to the Articles of
Incorporation to increase authorized common shares to 75 million from 20 million
(Proposal 2); and FOR ratification of the Company's appointment of Ernst & Young
LLP as independent auditors for the year ending December 31, 2000 (Proposal 3).
An automated system administered by the Company's transfer agent will tabulate
votes cast for the Annual Meeting. A majority of shares entitled to vote,
represented in person or by proxy, will constitute a quorum at the Annual
Meeting. Abstentions and broker non-votes are each included in the
determination of the number of shares present and voting for the purpose of
determining whether a quorum is present, and each is tabulated separately. In
determining whether a proposal has been approved, abstentions are counted as
votes against a proposal and broker non-votes are not counted.
If any other matters are properly presented at the Annual Meeting for
action, the persons named in the enclosed form of proxy will have discretion to
vote on such matters in accordance with their best judgment. The Company does
not know of any matters other than those set forth above that will be presented
at the Annual Meeting.
This Proxy Statement and the accompanying Proxy are being mailed to
stockholders on or about April 14, 2000. The entire cost of the solicitation of
Proxies will be borne by the Company. It is contemplated that this solicitation
will be primarily by mail. In addition, some of the officers, directors and
employees of the Company may solicit Proxies personally or by telephone, fax,
telegraph or cable. The Company has retained D.F. King & Co. to assist in the
solicitation of Proxies for a fee estimated to be $5,000, plus out-of-pocket
expenses. In addition, the Company has agreed to indemnify D.F. King & Co.
against any losses or liabilities arising out of D.F. King & Co.'s fulfillment
of the contract, except for such losses or liabilities arising out of D.F. King
& Co.'s own negligence or willful misconduct.
Voting at the Meeting
As of March 31, 2000, the record date of the meeting, the Company had
outstanding 9,391,047 shares of Common Stock. Each share of Common Stock is
entitled to one vote. A majority of the shares of the Company's Common Stock
present or represented and entitled to vote at the meeting is required to
approve each proposal presented at the meeting.
PROPOSAL ONE
ELECTION OF DIRECTORS
The Articles of Incorporation (the "Articles") of the Company provide that
the members of the Company's Board be divided into four classes serving
staggered four-year terms. The Articles also provide that there shall be not
less than five and not more than nine directors, the exact number to be fixed
from time to time by the Board of Directors. The current authorized number is
seven. One class of directors is elected each year for a term extending to the
fourth succeeding Annual Meeting after such election.
At the 2000 Annual Meeting, two directors, constituting the Class IV
directors, will be elected to hold office for a term expiring at the Annual
Meeting in 2004.
It is the intention of the persons named in the enclosed Proxy to vote to
elect R. Jack Aplin and Richard E. Schmidt as the Class IV directors to serve
for a term expiring at the Annual Meeting in 2004. Mr. Aplin is currently a
Class II director, serving for a term extending until the 2002 Annual Meeting.
Upon his election as a Class IV director, there will be one vacancy in Class II
and the Board is seeking candidates to fill such vacancy. Such vacancy is not
eligible to be filled at the 2000 Annual Meeting. The five remaining directors
will continue in office, in accordance with their previous elections, until the
expirations of the terms of the classes at the 2001, 2002 or 2003 Annual
Meetings, as the case may be.
The holders of a plurality of the shares of the Company's Common Stock
present or represented and entitled to vote at the meeting shall have the right
to elect the directors. The Proxies may not be voted for a greater number of
persons than the number of nominees named.
The nominees have indicated that they are willing and able to serve as
directors if elected. If the nominees should become unable or unwilling to
serve, it is the intention of the persons designated as proxies to vote instead,
in their discretion, for such other persons as may be designated as nominees by
the Board.
The Board of Directors recommends a vote "FOR" the nominees listed below.
Class IV
(Directors nominated for office with term expiring in 2004)
Name Principal Occupation Age Director Since
---- -------------------- --- ---------------
R. Jack Aplin Independent Investor 68 1989
Richard E. Schmidt Independent Investor 68 1991
From 1989 to the present Mr. Aplin has been an independent investor. Mr.
Aplin was Chairman of the Board, President and Chief Executive Officer of
Spectramed, Inc., an international medical products company, from 1986 to 1989.
Mr. Schmidt joined the Company as Chairman and Chief Executive Officer in
September 1991. From August 1993 until February 1995 and from November 1995
until May 1996, he held the additional position as President. Mr. Schmidt
retired from the positions of President and Chief Executive Officer in May 1996
and from the position of Chairman in June 1997. In September 1984, he left
Warner-Lambert Company, an international medical and consumer products company,
to become President and Chief Executive Officer of Milton Roy Company, an
international manufacturer of measuring instruments and systems and, in 1986, he
became Chairman. He held that position until December 1990 when Milton Roy was
acquired by Sundstrand Corporation, an aerospace and power transmission
corporation. Prior to joining the Company he served as a consultant to
Sundstrand Corporation.
Biographical Information for Directors Continuing in Office
Biographical information follows for each of the other directors of the
Company whose present terms will continue after the 2000 Annual Meeting.
-2-
Class I
(Directors continuing in office with term expiring in 2001)
Name Principal Occupation Age Director Since
---- -------------------- --- --------------
Robert G. Deuster Chairman, President and Chief Executive Officer 49 1996
John T. Subak Counsel, Dechert Price & Rhoads 71 1992
Mr. Deuster joined the Company as President and Chief Executive Officer in
May 1996 and, in June 1997, became Chairman of the Board. From 1985 to 1996 Mr.
Deuster served in various senior management positions at Applied Power, Inc., an
international manufacturer of electrical and hydraulic products, serving as
Senior Vice President of the Distributed Products Group from 1994 to 1996,
President of the Barry Controls Division from 1989 to 1994, President of the
APITECH Division from 1986 to 1989 and Vice President of Sales and Marketing of
the Enerpac Division from 1985 to 1986. From 1975 to 1985, he held engineering
and marketing management positions at General Electric Company's Medical Systems
Group.
Mr. Subak served as Counsel for Dechert Price & Rhoads, a national law
firm, since January 1994. From 1976 to 1994 Mr. Subak was Director, Group Vice
President and General Counsel for Rohm and Haas Company, an international
chemical products company.
Class II
(Director continuing in office with term expiring in 2002)
Name Principal Occupation Age Director Since
---- -------------------- --- --------------
Robert L. Guyett President and Chief Executive Officer, Crescent 63 1990
Management Enterprises, LLC
Since April 1996, Mr. Guyett has been President and Chief Executive Officer
of Crescent Management Enterprises, LLC, a financial management and investment
advisory services firm. From May 1995 to December 1996, he was a consultant to
Engelhard Corporation, an international specialty chemical and precious metals
company. Between September 1991 and May 1995, Mr. Guyett served as Senior Vice
President and Chief Financial Officer and a member of the Board of Directors of
Engelhard Corporation. From January 1987 to September 1991 he was the Senior
Vice President and Chief Financial Officer and a member of the Board of
Directors of Fluor Corporation, an international engineering and construction
firm. Mr. Guyett also currently serves as the Treasurer and a Director of the
Christopher Reeve Paralysis Foundation.
Class III
(Directors continuing in office with term expiring in 2003)
Name Principal Occupation Age Director Since
---- -------------------- --- --------------
C. Kumar N. Patel Professor of Physics, University of California 61 1986
at Los Angeles
Kenneth F. Potashner President, Chief Executive Officer and 42 1999
Chairman, S3 Incorporated
Dr. Patel was elected to the Board in January 1986. Dr. Patel was Vice
Chancellor-Research, University of California at Los Angeles from 1993 to 1999,
and in January 2000 he was appointed to the position of Professor of Physics.
Previously he was Executive Director - Research, Materials Science, Engineering
and Academic Affairs Division at AT&T Bell Laboratories, a telecommunications
corporation, since 1987 and for six years previously was Executive Director,
Physics and Academic Affairs Division. He joined Bell Laboratories in 1961.
Mr. Potashner was appointed to the Board in October 1998. He has held his
current position with S3 Incorporated, a supplier of multimedia acceleration
hardware and associated software, since November 1998. Mr. Potashner is also
Chairman of the Board of Directors of Maxwell Technologies, Inc., a manufacturer
of pulsed power based systems and components. From 1996 to October 1998 he was
also President and Chief Executive Officer of Maxwell Technologies. Mr.
Potashner was Executive Vice President and General Manager of Disk Drive
Operations for Conner Peripherals, a storage system corporation, from 1994 to
1996. From 1991 to 1994, he was Vice President, Worldwide Product Engineering
for Quantum Corporation, a disk drive corporation. From 1981 to 1991, he held
various engineering management positions with Digital Equipment Corporation, a
computer corporation, culminating in the position as Vice President of Worldwide
Product Engineering in 1991.
-3-
The following directors presently serve as directors of the following public
corporations:
Robert L. Guyett Maxwell Technologies, Inc.
Kenneth F. Potashner S3 Incorporated; and Maxwell Technologies,
Inc.
Richard E. Schmidt Hycor Biomedical Inc., a manufacturer of
medical diagnostic products; and
Labconco Corporation, a manufacturer of
laboratory equipment and ventilation products
Stockholders may recommend nominees for election as directors by writing to
the Chief Executive Officer of the Company.
Committees and Meetings of the Board
The Board held four meetings during 1999. Each of the directors attended at
least 75% of the meetings of the Board and the committees of the Board on which
such director served during 1999.
During 1999 the Audit Committee met two times. The committee, comprised of
Messrs. Guyett (Chairman), Patel and Subak, has the responsibility to review and
approve the scope and results of the annual audit; to recommend to the Board the
appointment of the independent auditors; to review with the independent auditors
the Company's financial staff and the adequacy and effectiveness of the
Company's systems and internal financial controls; to discuss with management
and the independent auditors the content of financial statements presented to
stockholders; to review significant changes in accounting policies; to
investigate reports of illegal acts involving the Company; and to provide
sufficient opportunity for the independent auditors to meet with the committee
without management present.
The Compensation Committee, comprised of Messrs. Aplin (Chairman), Subak and
Potashner, held two meetings during 1999. The Compensation Committee has the
responsibility for oversight of the Company's stock option plans, reviewing and
evaluating the Company's compensation programs and plans, and making
recommendations concerning compensation for key personnel and amendments to the
stock option and certain compensation plans.
EXECUTIVE OFFICERS
As of March 31, 2000, the Company has seven executive officers elected on an
annual basis to serve at the pleasure of the Board:
Robert G. Deuster President and Chief Executive Officer
Alain Danielo Vice President and General Manager, Industrial and
Scientific Technologies Division, European Operations
Mark V. Edwards Vice President and General Manager, Video Metrology
Division
Robert C. Hewitt Vice President, Chief Financial Officer and Secretary
Dan A. Petrescu Vice President and General Manager, Fiber Optics and
Photonics Division
Robert J. Phillippy Vice President and General Manager, Industrial and
Scientific Technologies Division, U.S. Operations
Gary J. Spiegel Vice President, Sales
A biographical summary regarding Mr. Deuster has been presented earlier.
Biographical information on other executive officers follows:
4
Names and Principal Occupation Age
------------------------------ ---
Alain Danielo 54
Mr. Danielo joined the Company in January 1995 as President and General Manager
of the Company's French subsidiary Micro-Controle S.A. In November 1995 he was
elected Vice President with responsibility for the Company's European
Operations. In August 1999 he was appointed to the position of Vice President
and General Manager, Industrial and Scientific Technologies Division, European
Operations. Prior to joining the Company, Mr. Danielo was Managing Director of
the Electronics Division of Valeo S.A., an automobile parts company, from 1989
to 1995. From 1985 to 1989 he was General Manager of Molex France S.A.R.L., a
manufacturer of electronic components.
Mark V. Edwards 38
Mr. Edwards joined the Company in February 2000 as Vice President and General
Manager of the Company's Video Metrology Division. Prior to joining the
Company, Mr. Edwards was director of the Controls, Measurement and Sensing
Division of Giddings & Lewis, a manufacturer of metrology equipment, from 1997
to 2000. Prior to joining Giddings & Lewis he was a Vice President with
Professional Manufacturing, Inc., a manufacturer of protective headgear, from
1995 to 1997. From 1990 to 1995 he was Vice President of Plastic Trim, Inc.,
an automotive parts supplier. From 1986 to 1990 he held various positions at
Koch Protective Treatments, Inc., an automotive specialty chemicals supplier.
Robert C. Hewitt 54
Mr. Hewitt joined the Company in January 1987 as Vice President with
responsibility for finance. In February 1987, he was elected to the additional
positions of Secretary and Treasurer and in January 1989 he was elected Senior
Vice President. In February 1995 he was elected to the position of Vice
President and Chief Financial Officer. From February 1987 to November 1991 and
from February 1994 to November 1996 he served as Treasurer. Prior to joining
the Company, Mr. Hewitt held various financial management positions with
General Electric Company, an international industrial and consumer products
company. In February 2000 Mr. Hewitt announced that he intends to elect early
retirement later this year.
Dan A. Petrescu 48
Mr. Petrescu joined the Company in February 2000 as Vice President and General
Manager of the Company's Fiber Optics and Photonics Division. Prior to joining
the Company, Mr. Petrescu was director of manufacturing operations for Nortel
Networks, Inc., a global leader in telephony, data, eBusiness, and wireless
solutions for the Internet. He joined Nortel in 1985 and held various
management positions at that company until his promotion to manufacturing
operations director in June 1999.
Robert J. Phillippy 39
Mr. Phillippy joined the Company in April 1996 as Vice President and General
Manager of the Company's Science and Laboratory Products Division. In August
1999 he was appointed to the position of Vice President and General Manager,
Industrial and Scientific Technologies, U.S. Operations. Prior to joining the
Company, Mr. Phillippy was Vice President of Channel Marketing at Square D
Company, an electrical equipment manufacturer, from 1994 to 1996. He joined
Square D Company in 1984 as a sales engineer and held various sales and
marketing management positions with that company prior to his election as Vice
President in 1994.
Gary J. Spiegel 49
Mr. Spiegel was elected Vice President with responsibility for domestic sales
in June 1992. During 1997 he was assigned additional responsibility for export
sales as well as for sales of MikroPrecision Instruments, Inc. Previously, Mr.
Spiegel was Vice President, with responsibility for sales and marketing, of
Klinger Scientific Corporation, a subsidiary of the Company acquired in June
1991.
5
PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information as of March 31, 2000, with
respect to all those known by the Company to be the beneficial owners of more
than 5% of its outstanding common stock, each director, each executive officer
named on the Summary Compensation Table and other current executive officers who
own shares of common stock, and all directors and current executive officers of
the Company as a group:
Amount and nature of Percent
Name and address of beneficial owners beneficial ownership(1) of Class
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Franklin Resources, Inc.................................. 556,830(2) 5.93
777 Mariners Island Boulevard, San Mateo, CA 94403-7777
R. Jack Aplin............................................ 13,000(3) *
Alain Danielo............................................ 49,144(4) *
Robert G. Deuster........................................ 201,200(5) 2.11
Mark V. Edwards.......................................... 0 *
Robert L. Guyett......................................... 44,000(6) *
Robert C. Hewitt......................................... 113,282(7) 1.20
C. Kumar N. Patel........................................ 41,983(8) *
Dan A. Petrescu.......................................... 20,000 *
Robert J. Phillippy...................................... 34,399(9) *
Kenneth F. Potashner..................................... 11,642 *
Richard E. Schmidt....................................... 220,754(10) 2.31
Gary J. Spiegel.......................................... 37,032(11) *
John T. Subak............................................ 41,900(12) *
All 13 directors and current executive officers of the
Company as a group...................................... 828,336(13) 8.32
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* Less than one percent.
(1) This column lists voting securities, including restricted stock held by
executive officers over which the officers have voting power but no
investment power. Otherwise, each beneficial owner has sole voting and
investment power with respect to the shares shown as beneficially owned by
him, subject to community property laws where applicable, the information
contained in the footnotes to this table or otherwise as noted herein.
(2) The information is based upon data provided to the Company including
filings made with the Securities and Exchange Commission on Schedules 13D
or 13G.
(3) Consists of 13,000 shares for options exercisable within 60 days.
(4) Includes 37,500 shares for options exercisable within 60 days.
(5) Includes 161,250 shares for options exercisable within 60 days.
(6) Includes 38,000 shares for options exercisable within 60 days.
(7) Includes 58,000 shares for options exercisable within 60 days.
(8) Includes 28,000 shares for options exercisable within 60 days.
(9) Includes 16,250 shares for options exercisable within 60 days.
(10) Includes 161,500 shares for options exercisable within 60 days.
(11) Includes 15,250 shares for options exercisable within 60 days.
(12) Includes 34,000 shares for options exercisable within 60 days.
(13) Includes 562,750 shares for options exercisable within 60 days.
EXECUTIVE COMPENSATION AND OTHER
TRANSACTIONS WITH MANAGEMENT AND OTHERS
Remuneration of Officers and Others
The following table and narrative text discusses compensation paid in the
years ended December 31, 1999, 1998 and 1997 to the Company's Chief Executive
Officer and the four other executive officers whose salary and bonus exceeded
$100,000 for the year ended December 31, 1999 (collectively, the "Named
Executive Officers").
6
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation Awards
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Securities
Other Annual Restricted Underlying All Other
Name and Salary Bonus Compensation Stock Awards Options Compensation
Principal Position Year ($) ($) ($)(1) ($)(2) (#) ($)(3)
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Robert G. Deuster
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Chairman, President and Chief Executive 1999 294,481 100,000 31,815 0 0 9,600
Officer 1998 281,904 160,000 28,402 0 100,000 9,600
1997 265,000 335,000 21,520 87,500 15,000 9,550
Alain Danielo (4)
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Vice President and General Manager, 1999 162,078 15,747 11,999 0 0 0
Industrial and Scientific Technologies 1998 161,883 13,500 11,862 0 30,000 0
Division, European Operations 1997 169,508 30,000 6,002 22,125 8,000 0
Robert C. Hewitt
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Vice President, Chief Financial Officer 1999 184,461 37,670 21,225 0 0 9,600
and Secretary 1998 176,826 51,691 18,225 0 30,000 9,600
1997 169,208 102,201 15,213 17,500 4,000 9,550
Robert J. Phillippy
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Vice President and General Manager, 1999 163,978 69,427 17,601 0 0 9,600
Industrial and Scientific Technologies 1998 156,904 69,115 14,601 133,750 25,000 9,600
Division, US Operations 1997 140,000 73,478 9,313 26,250 5,000 9,550
Gary J. Spiegel
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Vice President, Sales 1999 158,688 51,719 12,076 0 0 9,600
1998 151,269 35,000 8,332 0 30,000 9,600
1997 142,692 78,071 2,495 26,250 4,000 9,015
(1) Other annual compensation for 1999 consists of the following:
Insurance Automobile
Premiums Allowance Total
--------- ---------- -------
Robert G. Deuster $19,815 $12,000 $31,815
Alain Danielo 0 11,999 11,999
Robert C. Hewitt 11,025 10,200 21,225
Robert J. Phillippy 7,401 10,200 17,601
Gary J. Spiegel 8,676 3,400 12,076
(2) Restricted stock was granted on January 2, 1998 and January 2, 1997 and
vests 25% two years after the grant and 25% per year thereafter. Amounts
represent fair market value on grant dates. Dividends totaling $0.04 per
share were paid on the restricted stock during 1999, the same rate as on the
Common Stock. The number of shares and value of restricted stock holdings at
December 31, 1999, based on fair market value of $45.75 per share, are as
shown below:
Number of Share Value at
Shares Outstanding December 31, 1999
------------------ -----------------
Robert G. Deuster 17,500 $800,625
Alain Danielo 5,625 257,344
Robert C. Hewitt 5,750 263,062
Robert J. Phillippy 12,250 560,438
Gary J. Spiegel 4,500 205,875
(3) All other compensation for 1999 consists of contribution by the Company to
the 401(k) plan for each Executive Officer except Mr. Danielo, who is not
eligible to participate.
7
(4) Mr. Deuster joined the Company on May 1, 1996, as President and Chief
Executive Officer upon the retirement of Mr. Schmidt from those positions.
He became Chairman in June 1997.
(5) Mr. Danielo is paid in French francs. The U.S. dollar amounts have been
calculated using the average rates for the respective years.
OPTION GRANTS IN LAST FISCAL YEAR
There were no options granted to the Named Executive Officers during the
year ending December 31, 1999.
AGGREGATED OPTIONS EXERCISED IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUE
The following table sets forth certain information concerning the exercise
of options by each of the Named Executive Officers during the year ended
December 31, 1999, including the aggregate value of gains on the date of
exercise. In addition, the table includes the number of shares covered by both
exercisable and unexercisable stock options as of December 31, 1999. Also
reported are the values for "in-the-money" options that represent the positive
spread between the exercise price of existing stock options and the closing
price of the Company's Common Stock as of December 31, 1999.
Number of Unexercised Value of Unexercised
Value Options at In-the-Money Options at
Shares Acquired Realized December 31, 1999 December 31, 1999 ($) (1)
Name on Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ----------------------- ---------------- --------- ----------- ------------- ----------- -------------
Robert G. Deuster - 0 - - 0 - 107,500 107,500 3,796,250 3,608,750
Alain Danielo - 0 - - 0 - 42,125 28,375 1,559,406 947,219
Robert C. Hewitt 12,500 82,000 69,750 25,750 2,594,000 849,625
Robert J. Phillippy - 0 - - 0 - 16,250 23,750 564,844 789,531
Gary J. Spiegel 1,500 17,609 18,000 25,250 647,531 830,750
(1) Market value of underlying securities at exercise date or year end, as the
case may be, minus the exercise or base price on "in-the-money" options.
The closing sale price for the Company's Common Stock as of December 31,
1999, on the Nasdaq National Market was $45.75.
PERFORMANCE GRAPH FOR FIVE YEARS ENDED DECEMBER 31, 1999
Comparison of Five Year Cumulative Total Return of
Newport Corporation with the Nasdaq National Market Index and the Scientific
Instruments Index published by Media General Financial Services, Inc.
[GRAPH APPEARS HERE]
- ---------------------------------------------------------------------------------------------------------
1994 1995 1996 1997 1998 1999
------ ------ ------ ------ ------ ------
Newport Corporation 100.00 105.36 115.58 183.67 220.93 600.08
Scientific Instruments Group Index 100.00 137.35 160.36 198.48 199.57 322.44
Nasdaq National Market Index 100.00 129.71 161.18 197.16 278.08 490.46
- ---------------------------------------------------------------------------------------------------------
8
The graph compares the cumulative total shareholder return on a $100
investment in the Company's Common Stock for the five years ended December 31,
1999, with the cumulative total return on $100 invested in each of (i) the
Nasdaq National Market Index and (ii) the Scientific Instruments Group Index
published by Media General Financial Services, Inc. (A listing of the companies
comprising this index is available from the Company.). The graph assumes all
investments were made at market value on December 31, 1994 and the reinvestment
of all dividends.
Compensation of Directors
Each outside director is paid an annual fee of $12,000 and is reimbursed
for expenses incurred in connection with attending Board meetings. In addition,
each outside director is paid $1,000 for each Board meeting attended and $400
for each committee meeting attended, or $600 for the Committee Chairman. Also,
each outside director receives annually, on January 1st, options for 4,000
shares of common stock which vest on the anniversary of the grant. Each new
outside director receives options on 16,000 shares upon commencement of service
as a director, which vest at the rate of 25% per year on each anniversary of the
grant.
Employment Agreements
The Company has entered into employment agreements with Messrs. Deuster,
Danielo, Edwards, Hewitt, Petrescu, Phillippy and Spiegel providing for certain
payments and benefits in the event their employment with the Company is
terminated within two years of a change of control of the Company, unless such
termination is as a result of death, disability or retirement of such officer or
is a termination for cause. In such event, each of these officers may be
entitled to a severance payment of a maximum of twelve months of such officer's
highest salary during the one-year period preceding termination (with the
exception of Mr. Deuster, who may be entitled to twenty-four months severance
payment), plus a bonus payment equal to such officer's incentive compensation
bonus paid under the Company's Incentive Plan, or other bonus plans, assuming
100% satisfaction of all performance goals. In addition, the officer would be
entitled to the continuation of benefits under the Company's medical, dental and
vision plans, and long-term disability insurance for two years, the removal of
all restrictions on restricted stock held by the officer, the acceleration of
vesting of all stock options, the payment of an amount equal to the difference
between the exercise price and fair market price of stock options held by the
officer and certain other benefits, including payment of an amount sufficient to
offset any "excess parachute payment" excise tax payable by the officer pursuant
to the provisions of the Internal Revenue Code or any comparable provision of
state or foreign law.
Retirement Agreement
Effective January 1, 1997, the Company entered into a twelve-month
consulting agreement with Mr. Schmidt pursuant to which Mr. Schmidt provided
advice and consultation regarding strategic planning, management, financial
analysis, product planning and other corporate matters. The agreement provided
for the payment of $100,000 for each twelve-month term, payable quarterly, which
agreement was renewable annually at the option of the Board of Directors for a
period not to exceed five years. The Board renewed such agreement for 1998 and
1999. The Compensation Committee of the Board terminated the agreement during
January 2000. At that time the Compensation Committee granted Mr. Schmidt 3,013
shares of restricted stock which fully vest one year after the grant. In
addition, the Company has agreed to pay for supplemental health care insurance
for Mr. Schmidt for life. The Board also accelerated the vesting of a total of
33,750 unvested options held by Mr. Schmidt effective January 1, 1997.
Indemnification of Officers and Directors
The Company has entered into agreements (the "Indemnification Agreements")
with each officer and director of the Company providing for contractual
protection of certain rights of indemnification by the Company.
The Indemnification Agreements provide for indemnification of officers and
directors to the fullest extent permitted by its Articles of Incorporation, By-
Laws and applicable law. They cover all fees, expenses, liabilities and losses
(including attorney's fees, judgments, fines, and amounts paid in any settlement
approved by the Company) actually and reasonably incurred in connection with any
investigation, claim, action, suit or proceeding to which the officer or
director is a party by reason of any action or inaction in the officer's or
director's capacity as an officer or director of the Company or by reason of the
fact that the officer or director is or was serving as a director, officer,
employee, agent or fiduciary of the Company, or of any subsidiary or division,
or is or was serving at the request of the Company as the Company's
representative with respect to another entity. Indemnification would not be
available, however, for expenses and the payment of profits arising from the
purchase and sale by the officer or director of securities in violation of
Section 16(b) of the Securities Exchange Act of 1934, as amended.
9
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers and persons who own more than ten percent of a
registered class of the Company's equity securities to file with the SEC initial
reports of ownership and reports of changes in ownership of Common Stock and
other equity securities of the Company. Officers, directors and greater than
ten percent stockholders are required by SEC regulations to furnish the Company
with copies of all Section 16(a) forms they file. To the Company's knowledge,
based solely on the review of copies of such reports furnished to the Company
and written representations that no other reports were required, during the
years ended December 31, 1999 and 1998, there was compliance with all Section
16(a) filing requirements applicable to the Company's officers, directors and
greater than ten percent stockholders with the following exception: a Statement
of Changes in Beneficial Ownership on Form 4 prepared on behalf of Gary J.
Spiegel, an executive officer of the Company during such fiscal year, to report
Mr. Spiegel's stock sale in August 1999, was not timely filed. The delinquent
form was subsequently filed in October 1999.
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
Committee
The Compensation Committee of the Board of Directors is comprised entirely
of non-employee, independent directors, none of whom serve as an executive
officer of any entity for which any executive officer of the Company serves as a
director or a member of its compensation committee. The Committee is responsible
for reviewing, recommending and approving changes to the Company's compensation
policies and programs, as applicable to the Company's officers and senior
personnel.
Compensation Policy and Objectives
Our primary goal as members of the Compensation Committee is to assure that
the compensation provided to executives is linked to the Company's business
strategies and objectives, thereby aligning the financial interest of senior
management with that of the stockholders. Beyond that, our priorities are to
assure that the executive compensation programs enable the Company to attract,
retain and motivate the high caliber executives required for the success of the
business. These objectives are achieved through a variety of compensation
programs, summarized below, which support the current and long-term performance
of the business. The Company has not paid, and does not expect to pay, any
qualifying compensation under Section 162(m) of the Internal Revenue Code.
Base Salary
Base salaries for executive officers are determined by evaluating the
responsibilities of the position and comparing it with similar executive
positions in other companies in the Company's industry. The Committee reviews
compensation surveys of similar companies and surveys of national scope
encompassing electronics and other high technology organizations. The Company's
compensation levels are set at approximately the 50th percentile, or market
average. Individual salaries vary based upon the individual's performance and
contributions to Company success, time on the job and internal equity. Annual
salary adjustments are determined by individual performance within an annual
budget approved by the Committee. During February 1999, the Committee approved
increases averaging 4.9% and ranging from 3.0% to 6.0% effective January 1,
1999. In February 2000, the Committee reviewed executive salaries and approved
increases averaging 6.6% and ranging from 1.0% to 12.6% effective January 1,
2000. The CEO's salary increase is separately determined and approved by the
Committee.
Annual Incentives for Officers other than the Chief Executive Officer
Officers have an opportunity to earn annual incentives ("Incentive Plan")
based on performance targets. The Compensation Committee may also award bonuses
in cases where such performance targets are not met if it determines that the
circumstances warrant such action. During 1999, the Committee continued to use
a combined management measure (CMM) that included operating income as the
primary measure and also included a second measure related to working capital.
The intent of the CMM is to provide an incentive for officers to control working
capital. One executive officer had earnings per share as an additional measure
for his annual incentive. Additionally, each officer has a discretionary
portion of the annual incentive linked to achievement of individual non-
financial goals. The target incentives for each officer range from 40% to 50%
of annual salary. For over-achievement of goals, officers can earn up to 200%
of the target incentive. For 1999, the Compensation Committee
10
awarded incentive payments based upon performance to specific goals established
at the beginning of the year, ranging from 20.5% to 105.8% of the target
incentive to executive officers.
Long-Term Incentives
To further align the interests of stockholders and managers, the Company
grants stock options and restricted stock to its employees, including officers
and executive officers. Stock options for a total of 193,700 shares were
granted to approximately 134 employees including officers during 1999. The
number of shares awarded is established based upon a recommendation by the
employee's supervisor and approved by the Compensation Committee. The exercise
price for stock options is the fair market value of the stock on the date of the
grant. Options generally vest at a rate of 25% per year starting on the first
anniversary date of the option grant. In November 1997, the Committee
determined that it was desirable to establish greater management equity interest
in the Company and decided that the grants to the executive officers for 1998
would be larger than normal with the intent that no additional options would be
granted for a two-year period. No additional options were granted to Executive
Officers in 1999 and a total of 115,000 options and restricted shares were
granted to Executive Officers in January 2000.
Compensation of the Chief Executive Officer
The Chief Executive Officer participates in the compensation program
discussed above. His base salary is set, in the same way as other executive
officers, as determined by comparable positions in companies of similar size and
profitability to the Company in the marketplace. In February 1999, the Committee
approved a 5.4% increase effective January 1, 1999. At its February 2000
meeting, the Compensation Committee approved a 13.7% increase effective January
1, 2000.
Each year the Compensation Committee approves a performance based bonus
plan for the Chief Executive Officer. For 1999, the incentive for Mr. Deuster
was based on CMM, earnings per share targets and over-achievement incentives
established prior to the beginning of the year. He also had a discretionary
portion of the annual incentive linked to achievement of non-financial goals
also determined prior to the beginning of the year. The Compensation Committee
awarded an incentive payment totaling $100,000 based on the fact that Mr.
Deuster had achieved the non-financial goals in the discretionary portion of the
incentive. Because the financial goals of the incentive were not achieved in
1999, no payment was made for this portion of the incentive. In 1998 in order to
establish greater management equity interest in the Company, the Committee
decided that option grants that year for the Chief Executive Officer would be
larger than normal with the intent of issuing no additional options for a two-
year period; therefore no additional options were granted to Mr. Deuster in
1999. At its February 2000 meeting, the Compensation Committee awarded him
options for 60,000 shares with a grant date of January 3, 2000.
Respectfully submitted,
R. Jack Aplin, Chairman
John T. Subak
Kenneth F. Potashner
Notwithstanding anything to the contrary set forth in any of the Company's
previous or future filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate by reference
previous or future filings, including the Proxy Statement, in whole or in part,
the preceding report and the Performance Graph on page 8 shall not be
incorporated by reference into any such filings.
11
PROPOSAL TWO
AMENDMENT TO ARTICLES OF INCORPORATION TO
INCREASE THE NUMBER OF AUTHORIZED COMMON SHARES
The Company's Articles of Incorporation currently authorize the issuance of
twenty million (20,000,000) common shares. The Board of Directors on February
9, 2000, adopted a resolution proposing that the Articles of Incorporation be
amended to increase the authorized number of common shares to seventy-five
million (75,000,000), subject to stockholder approval of the amendment.
The purpose of the proposed increase is to permit a 3-for-1 split of all of
the outstanding shares of the Company's common stock and to make additional
shares available for issuance from time to time as and when the Board of
Directors deems it advisable. The proposed stock split was approved by the
Board of Directors on February 9, 2000. The Board believes that the proposed
3-for-1 split in the common stock would result in a market price that should be
more attractive to a broader spectrum of investors and therefore should benefit
the Company and its stockholders.
As of March 31, 2000, the Company had 9,391,047 shares of common stock
outstanding and 1,882,170 shares of common stock reserved for issuance under its
stock option and stock purchase plans. Based on these figures, immediately
following the effectiveness of the stock split, of the 75,000,000 common shares
which would be authorized, 28,173,141 shares would be issued and outstanding and
5,646,510 shares would be reserved for issuance under the Company's stock option
and stock purchase plans. The Company's common stock does not have preemptive
rights. The remaining shares, if so authorized, could be issued at the
discretion of the Board of Directors without any further action by the
stockholders, except as required by applicable law or regulation, in connection
with acquisitions, future financings and other corporate purposes. The
additional shares could also be used to render more difficult or prevent a
merger, tender offer, proxy contest or other change in control of the Company.
Such shares will only be issued upon a determination by the Board of Directors
that a proposed issuance is in the best interests of the Company. Except for
the stock split, the Board of Directors has no immediate plans, intentions, or
commitments to issue additional shares of common stock in excess of the
20,000,000 shares currently authorized.
The stock split would be accomplished by mailing a certificate to registered
shareholders and by a credit through their respective broker for beneficial
shareholders for two additional shares for each share held as of the close of
business on the effective date of the split to each stockholder of record on
that date. Each present certificate will continue to represent the number of
shares shown on its face. Present certificates will not be exchanged for new
certificates. Do not destroy your present certificates or return them to the
Company or its transfer agent. If the proposed amendment is approved by the
stockholders, the Company will apply to Nasdaq for the continued listing of the
stock on an as-split basis. The split will become effective on the date on
which the amendment to the Company's Certificate of Incorporation is accepted
for filing by the Secretary of State of Nevada. This date is presently expected
to be May 18, 2000. Stockholders of record at the close of business on that
date will be entitled to receive two additional shares for each share then held.
The Company expects to mail the certificates for the additional shares on May
31, 2000, or as soon thereafter as practicable. The Company has been advised by
its tax counsel that, under U.S. federal income tax laws: the receipt of
additional shares of common stock in the stock split will not constitute taxable
income to the stockholders; the cost or other tax basis to a stockholder of each
old share held immediately prior to the split will be divided equally among the
corresponding three shares held immediately after the split; and the holding
period for each of the three shares will include the period for which the
corresponding old share was held. The laws of jurisdictions other than the
United States may impose income taxes on the receipt by a stockholder of
additional shares of common stock resulting from the split; stockholders are
urged to consult their tax advisors.
No change in total stockholder's equity would result from the stock split. In
accordance with the terms of the company's stock option and employee stock
purchase plans, appropriate adjustments would be made upon the stock split to
the number of shares reserved for under such plans and the exercise prices and
number of shares covering outstanding options.
The Board of Directors recommends a vote "FOR" this proposal.
The Board of Directors recommends a vote "FOR" the proposal to amend the
Company's Articles of Incorporation to increase the number of authorized shares
of common stock from twenty million (20,000,000) to seventy-five million
(75,000,000). The affirmative vote of the holders of a majority of outstanding
common stock is necessary for approval of the proposal. Proxies received in
response to this solicitation will be voted in favor of the Amendment unless
otherwise specified in the proxy.
12
PROPOSAL THREE
APPOINTMENT OF INDEPENDENT AUDITORS
Ernst & Young LLP was selected to audit the financial statements of the
Company as of December 31, 1999, and for the year then ended, and has been
selected by the Board of Directors to audit the financial statements of the
Company for 2000. Nevada General Corporation Law does not require the approval
of the selection of the independent auditors by the Company's stockholders, but
in view of the importance of the financial statements to stockholders, the Board
of Directors deems it desirable that stockholders pass upon the selection of
auditors.
The Board of Directors recommends a vote "FOR" this proposal.
Proxies received in response to this solicitation will be voted in favor of
the approval of such firm unless otherwise specified in the Proxy. A
representative of Ernst & Young LLP will be present at the Annual Meeting and
will be given the opportunity to make a statement if he so desires and will be
available to respond to appropriate questions. If this proposal is not approved
the Audit Committee shall reconsider the proposal and submit its recommendation
to the Board of Directors.
STOCKHOLDER PROPOSALS
Any stockholder desiring to submit a proposal for action at the 2001 Annual
Meeting of Stockholders and presentation in the Company's proxy statement with
respect to such meeting should arrange for such proposal to be delivered to the
Company's offices, 1791 Deere Avenue, Irvine, California 92606, addressed to the
Corporate Secretary, no later than December 18, 2000 in order to be considered
for inclusion in the Company's proxy statement relating to the meeting. Matters
pertaining to such proposals, including the number and length thereof,
eligibility of persons entitled to have such proposals included and other
aspects are regulated by the Securities Exchange Act of 1934, Rules and
Regulations of the Securities and Exchange Commission and other laws and
regulations to which interested persons should refer. The Company anticipates
that its next annual meeting will be held in May 2001.
On May 21, 1998, the Securities and Exchange Commission adopted an amendment
to Rule 14a-4, as promulgated under the Securities and Exchange Act of 1934, as
amended. The amendment to Rule 14a-4(c)(1) governs the Company's use of its
discretionary proxy voting authority with respect to a stockholder proposal
which is not addressed in the Company's proxy statement. The new amendment
provides that if a proponent of a proposal fails to notify the Company at least
45 days prior to the month and day of mailing of the prior year's proxy
statement, then the Company will be allowed to use its discretionary voting
authority when the proposal is raised at the meeting, without any discussion of
the matter in the proxy statement.
With respect to the Company's 2001 Annual Meeting of Stockholders, a
stockholder proposal not previously submitted for the Company's proxy statement
may be submitted until March 2, 2001; thereafter, the Company will use its
voting authority as described above.
OTHER MATTERS
The Company has enclosed with this Proxy Statement a copy of the Annual Report
to Stockholders for the year ended December 31, 1999.
Management knows of no other matters to come before the meeting. If, however,
any other matter properly comes before the meeting, the persons named in the
enclosed Proxy form will vote in accordance with their judgment upon such
matter.
Stockholders who do not expect to attend in person are urged to promptly
execute and return the enclosed Proxy.
By order of the Board of Directors
Robert C. Hewitt
Secretary
Irvine, California
April 14, 1999
13
PROXY
NEWPORT CORPORATION
1791 Deere Avenue, Irvine, California 92606
Proxy for Annual Meeting of Stockholders - May 17, 2000
(This Proxy is Solicited on Behalf of the Board of Directors)
The undersigned hereby appoint ROBERT G. DEUSTER and ROBERT C. HEWITT, and
each of them, as proxy or proxies for the undersigned, with full power of
substitution, who may act by unanimous vote of said proxies or their substitutes
as shall be present at the meeting, or, if only one be present, then the one
shall have all the powers hereunder, to represent and to vote, as designated on
the other side (If no direction is made, this Proxy will be voted FOR Proposals
1, 2 and 3), all of the shares of Newport Corporation (the "Company") standing
in the name of the undersigned on March 31, 2000, at the Annual Meeting of
Stockholders of the Company to be held on Wednesday, May 17, 2000, at 10:00 a.m.
at the Company's Corporate Headquarters, 1791 Deere Avenue, Irvine, California
92606, and any adjournment thereof. In their discretion, the proxies are
authorized to vote upon such other business as may properly come before the
meeting.
(Continued, and to be marked, dated and signed, on the other side)
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Please mark
your votes as
indicated in
this example
The Board of Directors recommends a vote FOR Items 1, 2 and 3.
WITHHELD
FOR FOR ALL FOR AGAINST ABSTAIN
ITEM 1- ELECTION OF DIRECTORS ITEM 2 - AMENDMENT TO ARTICLES
Nominees: OF INCORPORATION TO
Class IV: R. Jack Aplin INCREASE THE NUMBER OF
Richard E. Schmidt AUTHORIZED COMMON
SHARES
WITHHELD FOR: (Write that nominee's name
in the space provided below).
_____________________________________-
FOR AGAINST ABSTAIN
ITEM 3 - APPOINTMENT OF
INDEPENDENT AUDITORS
Signature(s) ________________________________________________________________ Date ____________________
NOTE: Please sign as name appears hereon. Joint owners should each sign.
When signing as 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.
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