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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
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(Name of Registrant as Specified In Its Charter)
NEWPORT CORPORATION
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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 27, 1998
----------------
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 27, 1998, at 10:00 a.m., for the purpose of
considering and acting upon the following:
1. To elect two Class II Directors to serve for four years.
2. To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for the year ending December 31, 1998.
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business April 10, 1998, 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 post-prepaid
envelope enclosed for that purpose. 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
/s/ ROBERT C. HEWITT
--------------------
Robert C. Hewitt
Secretary
Irvine, California
April 22, 1998
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 27, 1998, 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 which 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) and FOR ratification of the
Company's appointment of Ernst & Young LLP as independent auditors for the year
ending December 31, 1998 (Proposal 2). An automated system administered by the
Company's transfer agent will tabulate votes cast at 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 as votes for or against a proposal or as votes present and voting
on a proposal.
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 22, 1998. 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,
telefax, telegraph or cable. The Company has retained D. F. King & Co. to
assist in the solicitation of Proxies for a fee estimated to be $4,500, 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 April 10, 1998, the record date of the meeting, the Company had
outstanding 9,150,334 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
eight. One class of directors is elected each year for a term extending to the
fourth succeeding Annual Meeting after such election.
At the 1998 Annual Meeting, two directors, constituting the Class II
directors, will be elected to hold office for a term expiring at the Annual
Meeting in 2002. The current Class II directors, Dan L. McGurk and Louis B.
Horwitz, have informed the Company that they will retire from the Board upon
expiration of their term at the 1998 Annual Meeting and will not stand for
reelection to the Board.
It is the intention of the persons named in the enclosed Proxy to vote to
elect R. Jack Aplin and Robert L. Guyett as the Class II directors to serve for
a term expiring at the Annual Meeting in 2002. Messrs. Aplin and Guyett are
currently Class III directors, serving for a term extending until the 1999
Annual Meeting. Upon their election as Class II directors, there will be two
vacancies in Class III and the Board is seeking candidates to fill such
vacancies. Such vacancies are not eligible to be filled at the 1998 Annual
Meeting. The four remaining directors will continue in office, in accordance
with their previous elections, until the expirations of the terms of the
classes at the 2000 or 2001 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 II
(Directors nominated for office with terms expiring in 2002)
DIRECTOR
NAME PRINCIPAL OCCUPATION AGE SINCE
---- -------------------- --- --------
R. Jack Aplin....................... Independent Investor 66 1989
Robert L. Guyett.................... President and Chief Executive Officer, 61 1990
Crescent Management Enterprises
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.
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
2
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.
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 1998 Annual Meeting.
CLASS I
(Directors continuing in office with terms expiring in 2001)
DIRECTOR
NAME PRINCIPAL OCCUPATION AGE SINCE
---- -------------------- --- --------
Robert G. Deuster........... Chairman, President and Chief Executive 47 1996
Officer
John T. Subak............... Counsel, Dechert Price & Rhoads 69 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 Barry Controls Division from 1989 to 1994, President of 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 has 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 IV
(Directors continuing in office with terms expiring in 2000)
DIRECTOR
NAME PRINCIPAL OCCUPATION AGE SINCE
---- -------------------- --- --------
Richard E. Schmidt.......... Independent Investor 66 1991
C. Kumar N. Patel........... Vice Chancellor--Research, University of 59 1986
California at Los Angeles
Mr. Schmidt has been an independent investor since June 1997. He joined the
Company as Chairman and Chief Executive Officer in September 1991, and held
such positions until his retirement therefrom in June 1997 and May 1996,
respectively. From August 1993 until February 1995 and from November 1995 until
May 1996, he held the additional position of President. From September 1984 to
December 1990, Mr. Schmidt was President and Chief Executive Officer of Milton
Roy Company, an international manufacturer of measuring instruments and
systems, and served as its Chairman from 1986 to 1990. From December 1990 to
September 1991, he served as a consultant to Sundstrand Corporation, an
aerospace and power transmission corporation.
Dr. Patel was elected to the Board in January 1986. Dr. Patel has been in
his current position since 1993. From 1961 to 1993, Dr. Patel was employed by
AT&T Bell Laboratories, a telecommunications corporation, in various positions,
including Executive Director--Research, Materials Science, Engineering and
Academic Affairs Division from 1987 to 1993 and Executive Director, Physics and
Academic Affairs Division from 1981 to 1987.
3
The following directors presently serve as directors of the following public
corporations:
Robert L. Guyett PureTec Corporation, a provider of medical tubing and
lawn and garden products; and
Smith Technology Corporation, an environmental
consulting and remediation company
Richard E. Schmidt Hycor Biomedical Inc., a manufacturer of medical
diagnostic products
COMMITTEES AND MEETINGS OF THE BOARD
The Board held four meetings during 1997. Each of the directors attended at
least 75% of the meetings of the Board and committees of the Board during 1997.
During 1997 the Audit Committee met three times. The committee, comprised of
Messrs. Guyett (Chairman), McGurk, 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, Horwitz, McGurk
(Chairman) and Subak, held two meetings during 1997 and 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.
Stockholders may recommend nominees for election as directors by writing to
the Chief Executive Officer of the Company.
4
EXECUTIVE OFFICERS
As of April 10, 1998, the Company has six executive officers elected on an
annual basis to serve at the pleasure of the Board:
Robert G. Deuster President and Chief Executive Officer
Jeffrey L. Cannon Vice President and General Manager, Precision
Motion and Metrology Systems Division
Alain Danielo Vice President, Europe Operations
Robert C. Hewitt Vice President, Chief Financial Officer and Secretary
Robert J. Phillippy Vice President and General Manager, Science and
Laboratory Products Division
Gary J. Spiegel Vice President, Sales
A biographical summary regarding Mr. Deuster has been presented earlier.
Biographical information on other executive officers follows:
NAMES AND PRINCIPAL OCCUPATION AGE
------------------------------ ---
JEFFREY L. CANNON 39
Mr. Cannon joined the Company in April 1995 as Director, Klinger Systems
Group. In January 1996 Mr. Cannon was promoted to the position of General
Manager, Precision Motion Systems Division. In November 1996 Mr. Cannon
was elected Vice President and General Manager with additional
responsibility for MikroPrecision Instruments, Inc., the Company's
subsidiary acquired in 1996. In January 1998, he was also assigned
responsibility for RAM Optical Instruments, Inc., a wholly-owned
subsidiary, at which time the division was renamed to the Precision Motion
and Metrology Division. Prior to joining the Company, from 1990 to 1995,
Mr. Cannon was Senior Marketing Manager at Coherent, Incorporated, a laser
systems manufacturer, which he joined in 1979.
ALAIN DANIELO 52
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
Europe 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.
ROBERT C. HEWITT 52
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 1995 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.
ROBERT J. PHILLIPPY 37
Mr. Phillippy joined the Company in April 1996 as Vice President and
General Manager of the Company's Science and Laboratory Products Division.
Prior to joining the Company, Mr. Phillippy was Vice President 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 47
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 April 10, 1998, 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
------------------------------------- ----------------------- --------
Prudential Insurance Company of America...... 687,800(2) 7.52
Gateway Center Three, 100 Mulberry Street,
Newark, NJ 07102
Brinson Partners, Inc........................ 474,385(2) 5.18
70 West Madison, Chicago, IL 60602
Dimensional Fund Advisors, Inc............... 502,900(2)(3) 5.50
1299 Ocean Avenue, 11th Floor, Santa Monica,
CA 90401
Michael W. Cook Asset Management, Inc........ 469,350(2) 5.13
d/b/a Cook Mayer Taylor, Investment Advisor
1613 Winchester Road, Ste 210, Memphis, TN
38116
R. Jack Aplin................................ 5,000(4) *
Jeffrey L. Cannon............................ 19,872(5) *
Alain Danielo................................ 36,144(6) *
Robert G. Deuster............................ 83,750(7) *
Robert L. Guyett............................. 41,000(8) *
Robert C. Hewitt............................. 122,723(9) 1.33
Louis B. Horwitz............................. 35,000(10) *
Dan L. McGurk................................ 30,000(11) *
C. Kumar N. Patel............................ 35,000(12) *
Robert J. Phillippy.......................... 21,630(13) *
Richard E. Schmidt........................... 255,241(14) 2.73
Gary J. Spiegel.............................. 32,173(15) *
John T. Subak................................ 39,000(16) *
All 13 directors and current executive
officers of the Company as a group.......... 756,533(17) 7.81
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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) Reflects shares held in portfolios of DFA Investment Dimensions Group Inc.,
a registered open-end investment company, or in series of the DFA
Investment Trust Company, a Delaware business trust, or the DFA Group Trust
and DFA Participation Group Trust, investment vehicles for qualified
employee benefit plans, all of which Dimensional Fund Advisors, Inc.
("Dimensional") serves as investment manager. Dimensional disclaims
beneficial ownership of all such shares.
(4) Consists of 5,000 shares for options exercisable within 60 days.
(5) Includes 8,500 shares for options exercisable within 60 days.
(6) Includes 24,500 shares for options exercisable within 60 days.
(7) Includes 53,750 shares for options exercisable within 60 days.
(8) Includes 35,000 shares for options exercisable within 60 days.
(9) Includes 70,750 shares for options exercisable within 60 days.
(10) Includes 32,000 shares for options exercisable within 60 days.
(11) Includes 20,000 shares for options exercisable within 60 days.
(12) Consists of 35,000 shares for options exercisable within 60 days.
(13) Includes 6,250 shares for options exercisable within 60 days.
(14) Includes 199,000 shares for options exercisable within 60 days.
(15) Includes 9,500 shares for options exercisable within 60 days.
(16) Includes 36,000 shares for options exercisable within 60 days.
(17) Includes 535,250 shares for options exercisable within 60 days.
6
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, 1997, 1996 and 1995 to the Company's Chief Executive
Officer and the five other executive officers whose salary and bonus exceeded
$100,000 for the year ended December 31, 1997 (collectively, the "Named
Executive Officers").
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
---------------------------- ---------------------
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARDS OPTIONS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($) (1) ($) (2) (#) ($) (3)
------------------ ---- ------- ------- ------------ ---------- ---------- ------------
Robert G. Deuster (4) 1997 265,000 335,000 21,520 87,500 15,000 9,550
Chairman, President and 1996 162,404 125,876 7,050 192,500 100,000 142,497
Chief Executive Officer 1995 0 0 0 0 0 0
Jeffrey L. Cannon 1997 130,000 44,563 7,200 0 5,000 9,550
Vice President and 1996 119,643 36,860 1,200 0 4,000 15,274
General Manager, 1995 0 0 0 0 0 0
Precision Motion and
Metrology
Systems Division
Alain Danielo (5) 1997 205,510 30,000 6,002 22,125 8,000 0
Vice President, Europe 1996 183,766 40,566 17,615 60,000 7,500 0
Operations 1995 169,255 66,551 15,830 0 25,000 0
Robert C. Hewitt 1997 169,208 102,201 15,213 17,500 4,000 9,550
Vice President, Chief 1996 163,546 44,840 15,213 40,000 5,000 9,000
Financial Officer and 1995 155,785 75,249 17,636 52,500 7,000 9,000
Secretary
Robert J. Phillippy 1997 140,000 73,478 9,313 26,250 5,000 9,550
Vice President and 1996 103,077 45,771 4,800 0 10,000 98,782
General Manager, 1995 0 0 0 0 0 0
Science and Laboratory
Products Division
Gary J. Spiegel (6) 1997 142,692 78,071 2,495 26,250 4,000 9,015
Vice President 1996 132,828 57,602 0 24,000 3,000 9,000
1995 126,000 48,477 0 22,500 3,000 9,000
- --------
(1) Other annual compensation for 1997 consists of the following:
DISABILITY
INSURANCE AUTOMOBILE
PREMIUMS ALLOWANCE TOTAL
---------- ---------- -------
Robert G. Deuster.............................. $13,120 $8,400 $21,520
Jeffrey L. Cannon.............................. 0 7,200 7,200
Alain Danielo.................................. 0 6,002 6,002
Robert C. Hewitt............................... 8,013 7,200 15,213
Robert J. Phillippy............................ 2,113 7,200 9,313
Gary J. Spiegel................................ 0 2,495 2,495
(2) Restricted stock was granted on January 2, 1997, January 2, 1996 and
January 3, 1995 and vests at 25% per year beginning two years after the
grant. Amounts represent fair market value on grant dates. Mr. Deuster was
granted 20,000 shares on May 1, 1996, which vest at 25% per year
7
beginning May 1, 1998. Dividends totaling $0.04 per share were paid on the
restricted stock during 1997, the same rate as on the Common Stock. The
number of shares and value of restricted stock holdings at December 31,
1997, based on fair market value of $14.0625 per share, are as shown below:
NUMBER OF SHARE VALUE AT
SHARES OUTSTANDING DECEMBER 31, 1997
------------------ -----------------
Robert G. Deuster....................... 30,000 $421,875
Jeffrey L. Cannon....................... 0 0
Alain Danielo........................... 10,000 140,625
Robert C. Hewitt........................ 14,750 207,422
Robert J. Phillippy..................... 3,000 42,188
Gary J. Spiegel......................... 9,750 137,109
(3) All other compensation for 1997 consists of the following:
401(K) 401(K)
MATCHING PROFIT SHARING
CONTRIBUTION CONTRIBUTION TOTAL
------------ -------------- ------
Robert G. Deuster......................... $4,750 $4,800 $9,550
Jeffrey L. Cannon......................... 4,750 4,800 9,550
Alain Danielo............................. 0 0 0
Robert C. Hewitt.......................... 4,750 4,800 9,550
Robert J. Phillippy....................... 4,750 4,800 9,550
Gary J. Spiegel........................... 4,215 4,800 9,015
(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.
(6) Mr. Spiegel became an executive officer in November 1997.
8
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning grants of
options to each of the Named Executive Officers during the year ended December
31, 1997. The amounts shown as potential realizable values on these options are
based on arbitrarily assumed annualized rates of appreciation in the price of
Newport Common Stock of five percent and ten percent over the term of the
options, as set forth in Securities and Exchange Commission ("SEC") rules. The
Named Executive Officers will realize no gain on these options without an
increase in the price of Newport Common Stock which will benefit all
stockholders proportionately.
POTENTIAL
REALIZABLE
VALUE AT
ASSUMED ANNUAL
RATES OF STOCK
PRICE
APPRECIATION
NUMBER OF % OF FOR TEN-YEAR
SECURITIES TOTAL EXERCISE OPTION TERM
UNDERLYING OPTIONS PRICE (2)
OPTIONS GRANTED TO PER EXPIRATION --------------
NAME GRANTED (1) EMPLOYEES SHARE DATE 5% 10%
- ---- ----------- ---------- -------- ---------- ------ -------
Robert G. Deuster.... 15,000 8.65 8.75 01/02/07 82,542 209,179
Jeffrey L. Cannon.... 5,000 2.88 8.75 01/02/07 27,514 69,726
Alain Danielo........ 8,000 4.62 8.75 01/02/07 44,023 111,562
Robert C. Hewitt..... 4,000 2.31 8.75 01/02/07 22,011 55,781
Robert J. Phillippy.. 5,000 2.88 8.75 01/02/07 27,514 69,726
Gary Spiegel......... 4,000 2.31 8.75 01/02/07 22,011 55,781
- --------------------------------------------------------------------------------
Increase in market value of Newport Common Stock for all 5% 10%
stockholders at assumed rates of stock price (to $14.25/share) (to $22.70/share)
appreciation (as used in the table above) from $8.75 per $49,230,000 $124,866,000
share, over the ten-year period, based on 8,951,000
shares outstanding at December 31, 1997 (2).
- --------
(1) Twenty-five percent of the option shares granted in 1997 are exercisable 12
months after the grant date, with an additional 25% of the option shares
becoming exercisable on each successive anniversary date, with full vesting
occurring on the fourth anniversary date. All options become exercisable on
a change-in-control as defined in the optionees Employment Agreements
(described below). The options were granted for a term of 10 years, subject
to earlier termination in certain events related to termination of
employment.
(2) The dollar amounts in these columns are the result of calculations at the
five percent and ten percent rates set by the SEC and are not intended to
forecast future appreciation of Newport Common Stock, which will depend on
market conditions and the Company's future performance and prospects.
9
AGGREGATED OPTIONS EXERCISED IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUE
The following table sets forth certain information concerning the exercise of
options by each of the Named Executive Officers during the year ended December
31, 1997, including the aggregate value of gains on the date of exercise. In
addition, the table includes the number of shares covered by both exercisable
and unexercisable stock options as of December 31, 1997. Also reported are the
values for "in-the-money" options that represent the positive spread between
the exercise price of existing stock options and the closing price of the
Company's Common Stock as of December 31, 1997.
SHARES NUMBER OF VALUE OF UNEXERCISED
ACQUIRED ON VALUE UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
EXERCISE REALIZED AT DECEMBER 31, 1997 AT DECEMBER 31, 1997 ($)(1)
NAME (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- -------- ------------------------- ---------------------------
Robert G. Deuster....... 0 0 25,000 / 90,000 110,938 / 412,500
Jeffrey L. Cannon....... 0 0 4,500 / 11,500 25,969 / 64,656
Alain Danielo........... 0 0 14,375 / 26,125 93,398 / 158,633
Robert C. Hewitt........ 11,500 87,875 65,500 / 12,500 377,125 / 77,500
Robert J. Phillippy..... 0 0 2,500 / 12,500 10,781 / 58,906
Gary J. Spiegel......... 0 0 6,250 / 8,500 48,375 / 51,063
- --------
(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,
1997, on the Nasdaq National Market was $14.0625.
PERFORMANCE GRAPH FOR FIVE YEARS ENDED DECEMBER 31, 1997
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.
[PERFORMANCE GRAPH APPEARS HERE]
1992 1993 1994 1995 1996 1997
------ ------ ------ ------ ------ ------
Newport Corporation 100.00 98.37 146.13 153.96 168.90 268.40
Scientific Instruments Group Index 100.00 110.54 107.27 166.82 184.64 207.59
Nasdaq National Market Index 100.00 119.95 125.94 163.35 202.99 248.30
10
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,
1997, 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, 1992 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.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with Messrs. Deuster,
Cannon, Danielo, Hewitt, 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 equal to twelve months of such officer's highest salary
during the one-year period preceding termination 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 shall provide advice
and consultation regarding strategic planning, management, financial analysis,
product planning or other corporate matters. The agreement provides for the
payment of $100,000 for the twelve-month term, payable quarterly, which
agreement is renewable annually at the option of the Board of Directors for a
period not to exceed five years. In the event of a change in control of the
Company (as defined in the agreement) while the agreement is in force, the term
of the agreement shall automatically be extended to December 31, 2001. The
Board renewed the agreement effective January 1, 1998 for a twelve-month
period. In addition the Company has agreed to pay for supplemental health care
insurance for life. The Board also accelerated the vesting of a total of 33,750
unvested options 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.
11
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.
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, 1997 and 1996, all Section
16(a) filing requirements applicable to the Company's officers, directors and
greater than ten percent stockholders were complied with.
12
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 have served 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 November 1996, the Committee approved
increases averaging 6.5% and ranging from 4% to 9% effective December 1, 1996.
In February 1998, the Committee reviewed executive salaries and approved
increases ranging from 0% to 19.2%. The CEO's salary increase is separately
determined and approved by the Committee.
ANNUAL INCENTIVES
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. Since 1987, the Company has generally used
corporate operating income as its primary measure of corporate performance.
During 1997, the Committee adopted 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. Two executive officers had
earnings per share as the primary measure for their 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 35% to 100% of such officer's annual salary. For
over-achievement of goals, officers can earn up to 200% of the target
incentive. For 1997, the Compensation Committee awarded incentive payments
based upon performance to specific goals established at the beginning of the
year. Specifically, based upon the fact that the Company reached 42% of the
over-achievement target for earnings per share, 14% to 100% of the over-
achievement target for certain CMM goals and 0% of another CMM goal, the
Compensation Committee awarded incentive payments ranging from 30% to 155% of
the target incentive to executive officers.
13
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 173,500 shares were
granted to approximately seventy-seven employees, including officers and
executive officers, during 1997. 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 anniversary date of the option grant.
Options on a total of 41,000 shares were granted on January 2, 1997, to six
officers and executive officers. Restricted stock grants generally vest at a
rate of 25% per year starting on the second anniversary of the restricted
stock grant. Restricted stock grants totaled 20,500 shares and were granted on
January 2, 1997, to five officers and executive officers.
In November 1997, the Committee determined that it was desirable to
establish greater management equity interest in the Company and decided that
the grants for 1998 would be larger than normal with the intent that no
additional options would be granted for a two-year period. Therefore, the
Committee granted options for a total of 240,000 shares to six executive
officers and 20,000 shares of restricted stock to two of such executive
officers as of January 2, 1998.
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. Mr. Deuster's base salary
was raised 6% effective December 1, 1996. During 1997, the Compensation
Committee took no action with respect to salary increases, although in
February 1998, the Committee approved a 5.7% increase.
Each year the Compensation Committee approves a performance based bonus plan
for the Chief Executive Officer. For 1997, the incentive for Mr. Deuster was
based on earnings per share targets and over-achievement targets 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 determined also
prior to the beginning of the year. The Compensation Committee awarded an
incentive payment totaling $335,000 based upon the fact that the Company
reached 42% of the over-achievement target for earnings per share and that Mr.
Deuster had achieved the non-financial goals in the discretionary portion of
the incentive. The Committee also awarded him options for 15,000 shares and
10,000 shares of restricted stock on January 2, 1997.
Respectfully submitted,
Dan L. McGurk, Chairman
R. Jack Aplin
Louis B. Horwitz
John T. Subak
14
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.
PROPOSAL TWO
APPOINTMENT OF INDEPENDENT AUDITORS
Ernst & Young LLP was selected to audit the financial statements of the
Company as of December 31, 1997, and for the year then ended, and has been
selected by the Board of Directors to audit the financial statements of the
Company for 1998. 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
Stockholder proposals intended to be submitted at the next annual meeting of
stockholders must be submitted in writing to the Company on or before December
15, 1998, in order for them to be included in the Company's Proxy Statement
and Proxy relating to such meeting. The Company anticipates that its next
annual meeting will be held in May 1999.
OTHER MATTERS
The Company has enclosed with this Proxy Statement a copy of the Annual
Report to Stockholders for the year ended December 31, 1997.
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
/s/ ROBERT C. HEWITT
--------------------
Robert C. Hewitt
Secretary
Irvine, California
April 22, 1998
15
PROXY
NEWPORT CORPORATION
1791 DEERE AVENUE, IRVINE, CALIFORNIA 92606
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS - MAY 27, 1998
(THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS)
The undersigned hereby appoints 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 and 2), all of the shares of Newport Corporation (the "Company") standing in
the name of the undersigned on April 10, 1998, at the Annual Meeting of
Stockholders of the Company to be held on Wednesday, May 27, 1998, 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)
PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2
WITHHELD
FOR FOR ALL
ITEM 1- ELECTION OF DIRECTORS [_] [_]
Nominees: Class II:
R. Jack Aplin
Robert L. Guyett
WITHHELD FOR: (Write that nominee's name in the space provided below).
________________________________________________________________________________
FOR AGAINST ABSTAIN
ITEM 2- APPOINTMENT OF INDEPENDENT [_] [_] [_]
AUDITORS
Signatures(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.