<PAGE>
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
Waters Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
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:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
WATERS
March 31, 1997
Dear Stockholder:
On behalf of the Board of Directors, I cordially invite you to attend the
Annual Meeting of Stockholders of Waters Corporation (the "Company") on May 6,
1997 at 11:00 o'clock a.m., eastern standard time. The meeting will be held at
Waters Corporation, 34 Maple Street, Milford, Massachusetts 01757.
The matters scheduled to be considered at the meeting are the election of
directors of the Company and the ratification of auditors for the Company.
These matters are more fully explained in the attached Proxy Statement which
you are encouraged to read.
The Board of Directors values and encourages stockholder participation. It
is important that your shares be represented, whether or not you plan to
attend the meeting. Please take a moment to sign, date and return your Proxy
in the envelope provided even if you plan to attend the meeting.
We hope you will be able to attend the meeting.
Sincerely,
/s/ Douglas A. Berthiaume
Douglas A. Berthiaume Chairman,
President and Chief Executive
Officer
Waters Corporation 34 Maple Street Milford, MA 01757-3696 U.S.A. 508 478-
2000 FAX 508 872-1990
<PAGE>
WATERS
WATERS CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Notice is hereby given that the Annual Meeting of Stockholders of Waters
Corporation (the "Company") will be held at Waters Corporation, 34 Maple
Street, Milford, Massachusetts 01757 on May 6, 1997, at 11:00 o'clock a.m.,
eastern standard time, for the following purposes:
1. To elect directors to serve for the ensuing year and until their
successors are elected.
2. To ratify the selection of the firm of Coopers & Lybrand L.L.P., the
present auditors, as auditors for the fiscal year of 1997; and
3. To consider and act upon any other matters which may properly come
before the meeting or any adjournment thereof.
In accordance with the provisions of the Company's bylaws, the Board of
Directors has fixed the close of business on March 24, 1997 as the record date
for the determination of the holders of Common Stock entitled to notice of and
to vote at the Annual Meeting.
By order of the Board of Directors
/s/ Douglas A. Berthiaume
Douglas A. Berthiaume
Chairman, President and Chief
Executive Officer
Milford, Massachusetts March 31, 1997
Waters Corporation 34 Maple Street Milford, MA 01757-3696 U.S.A. 508 478-
2000 FAX 508 872-1990
<PAGE>
WATERS CORPORATION
34 MAPLE STREET
MILFORD, MASSACHUSETTS 01757
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 6, 1997, 11:00 O'CLOCK A.M.
The Proxy is solicited by the Board of Directors of Waters Corporation (the
"Company") for use at the 1997 Annual Meeting of Stockholders to be held on
May 6, 1997 at 11:00 o'clock a.m. at the Company's headquarters located at 34
Maple Street, Milford, Massachusetts, 01757. Solicitation of the Proxy may be
made through officers and regular employees of the Company by telephone or by
oral communications with some stockholders following the original solicitation
period. No additional compensation will be paid to such officers and regular
employees for Proxy solicitation. Corporate Investor Communications, Inc. has
been hired by the Company to do a limited broker solicitation for a fee of
$4,000. Expenses incurred in the solicitation of Proxies will be borne by the
Company.
VOTING MATTERS
The representation in person or by proxy of a majority of the outstanding
shares of common stock of the Company, par value $.01 per share (the "Common
Stock"), entitled to a vote at the meeting is necessary to provide a quorum
for the transaction of business at the meeting. Shares can only be voted if
the stockholder is present in person or is represented by a properly signed
proxy (a "Proxy"). Each stockholder's vote is very important. Whether or not
you plan to attend the meeting in person, please sign and promptly return the
enclosed Proxy card, which requires no postage if mailed in the United States.
All signed and returned Proxies will be counted towards establishing a quorum
for the meeting, regardless of how the shares are voted.
Shares represented by Proxy will be voted in accordance with your
instructions. You may specify your choice by marking the appropriate box on
the Proxy card. If your Proxy card is signed and returned without specifying
choices, your shares will be voted in favor of the proposals made by the Board
of Directors, and as the individuals named as Proxy holders on the Proxy deem
advisable on all other matters as may properly come before the meeting.
For all matters to be voted upon at the meeting, the affirmative vote of a
majority of shares present in person or represented by Proxy, and entitled to
vote on the matter, is necessary for approval. Withholding authority to vote
or an instruction to abstain from voting on a proposal will be treated as
shares present and entitled to vote and, for purposes of determining the
outcome of the vote, will have the same effect as a vote against the proposal.
A broker "non-vote" occurs when a nominee holding shares for a beneficial
holder does not have discretionary voting power and does not receive voting
instructions from the beneficial owner. Broker "non-votes" will not be treated
as shares present and entitled to vote on a voting matter and will have no
effect on the outcome of the vote.
Any stockholder giving the enclosed Proxy has the power to revoke such Proxy
prior to its exercise either by voting by ballot at the meeting, by executing
a later-dated Proxy or by delivering a signed written notice of the revocation
to the office of the Secretary of the Company before the meeting begins. The
Proxy will be voted at the meeting if the signer of the Proxy was a
stockholder of record on March 24, 1997 (the "Record Date").
On the Record Date, there were 28,929,595 shares of Common Stock outstanding
and entitled to vote at the meeting. Each outstanding share of Common Stock is
entitled to one vote. This Proxy Statement is first being sent to the
stockholders on or about March 31, 1997. A list of the stockholders entitled
to vote at the meeting will be available for inspection at the meeting for
purposes relating to the meeting.
<PAGE>
MATTERS TO BE ACTED UPON
1. ELECTION OF DIRECTORS
The Board of Directors recommends that the stockholders vote FOR each
nominee for director set forth below. Six directors are to be elected at the
meeting, each to hold office until his successor is elected and qualified or
until his earlier resignation, death or removal. Each nominee listed below is
currently a director of the Company. It is intended that the Proxies in the
form enclosed with this Proxy Statement will be voted for the nominees set
forth below unless stockholders specify to the contrary in their Proxies or
specifically abstain from voting on this matter.
The following information pertains to the nominees, their principal
occupations for the preceding five-year period, certain directorships and
their ages as of April 1, 1997:
Douglas A. Berthiaume, 48, has served as Chairman of the Board of Directors
of the Company since February 1996 and has served as President and Chief
Executive Officer of the Company since August 1994. From 1990 to 1994, Mr.
Berthiaume served as President of the Waters Chromatography Division of
Millipore (the "Predecessor"). Mr. Berthiaume is a Director of Genzyme
Corporation and the Vice-Chairman of the Analytical Instrument Association.
Joshua Bekenstein, 38, has served as a Director of the Company since August
1994. He has been a Managing Director of Bain Capital, Inc. ("Bain") since
January 1993 and a General Partner of Bain Venture Capital since its inception
in 1987. Mr. Bekenstein is a Director of Stage Stores Inc., Totes Inc., Small
Fry Snack Foods, Inc. and Bright Horizons Children's Center, Inc..
Philip Caldwell, 77, has served as a Director of the Company since August
1994. Mr. Caldwell has been a Director and Senior Managing Director of Lehman
Brothers Inc. and its predecessor, Shearson Lehman Brothers Holdings Inc.,
since 1985. Mr. Caldwell spent 32 years at Ford Motor Company where he was
Chairman of the Board of Directors and Chief Executive Officer from 1980 to
1985 and a Director from 1973 through 1990. Mr. Caldwell is a Director of
Zurich Holding Company of America, Inc., Zurich Reinsurance Centre Holdings,
Inc., American Guarantee & Liability Insurance Company (a Zurich affiliate),
The Mexico Fund, MT Investors, Inc. and Russell Reynolds Associates, Inc. He
has served as a Director of CasTech Aluminum Group Inc., the Chase Manhattan
Bank Corporation, the Chase Manhattan Bank, N.A., Digital Equipment
Corporation, Federated Department Stores Inc., Kellogg Company, Shearson
Lehman Brothers Holdings, Inc. and Specialty Codings International, Inc.
Edward Conard, 40, has served as a Director of the Company since August
1994. He has been a Managing Director of Bain since March 1993. Mr. Conard is
a Director of Medical Specialties Group, Inc. Mr. Conard has served as a
Director of Wasserstein Perella and Company, an investment banking firm that
specializes in mergers and acquisitions. Previously, he was a Vice President
of Bain & Company, where he headed the firm's operations practice area.
Thomas P. Salice, 37, has served as a Director of the Company since July
1994. Mr. Salice is a Managing Director of AEA Investors Inc. ("AEA") and has
been associated with AEA since May 1989. Mr. Salice is also a Director of
Mettler-Toledo, Inc. and Manchester Tank & Equipment Company.
Marc Wolpow, 38, has served as a Director of the Company since August 1994.
He has been a Managing Director of Bain since January 1993 and was a Principal
of Bain Venture Capital from May 1990 through December 1992. From 1988 to
April 1990, Mr. Wolpow was a Vice President in the corporate finance
department of Drexel Burnham Lambert, Incorporated. Mr. Wolpow is a Director
of American Pad & Paper Company, Professional Services Industries, Inc.,
Miltex Instruments Inc. and Paper Acquisition Corporation.
2. RATIFICATION OF AUDITORS
The Board of Directors recommends that the stockholders vote FOR the
ratification of the firm of Coopers & Lybrand L.L.P. as the auditors to audit
the financial statements of the Company and certain of its subsidiaries for
the fiscal year ending December 31, 1997. It is intended that the Proxies in
the form enclosed with this Proxy Statement will be voted for such firm unless
stockholders specify to the contrary in their Proxies or specifically abstain
from voting on this matter.
2
<PAGE>
Representatives of Coopers & Lybrand L.L.P. are expected to be present at
the Annual Meeting of Stockholders. They will have the opportunity to make
statements if they desire to do so and will be available to respond to
appropriate questions.
3. OTHER BUSINESS
The Board of Directors does not know of any other business to be presented
at the Annual Meeting of Stockholders. If any other matters properly come
before the meeting, however, it is intended that the persons named in the
enclosed form of Proxy will vote said Proxy in accordance with their best
judgment.
DIRECTORS MEETINGS AND COMPENSATION
DIRECTORS MEETINGS
The Board of Directors held 6 meetings during the year ended December 31,
1996. The Audit Committee, which currently consists of Messrs. Bekenstein,
Caldwell and Salice, oversees actions taken by the Company's independent
auditors, recommends the engagement of auditors and reviews the Company's
internal audits. The Compensation Committee, which currently consists of
Messrs. Conard and Salice, approves the compensation of executives of the
Company, makes recommendations to the Board of Directors with respect to
standards for setting compensation levels and administers the Company's
incentive plans. There is no standing nominating committee. During fiscal year
1996, all of the Company's directors except for Mr. Wolpow participated in
excess of 75% of the aggregate of the meetings of the Board of Directors and
the meetings of committees of the Board of Directors of which such director
was a member. During fiscal year 1996, the Compensation Committee met three
times and the Audit Committee met two times.
Charles L. Brown resigned in November 1996 as a Director of the Company.
Pursuant to the provisions of the Company's Bylaws, the Board of Directors
resolved to fix the number of members of the Board of Directors at six.
COMPENSATION OF DIRECTORS
Directors who are full-time employees of the Company receive no additional
compensation for serving on the Board or its committees. Outside Directors
each receive a retainer of $15,000 per year (other than the Chairman who, if
an Outside Director, will receive an annual fee of $30,000) and $750 for each
Board meeting and committee meeting that they attend. All directors are
reimbursed for expenses incurred in connection with their attendance at
meetings.
3
<PAGE>
MANAGEMENT COMPENSATION
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table discloses, for the fiscal years
indicated, individual compensation information on Mr. Berthiaume and the four
other most highly compensated executive officers (collectively, the "named
executives") who were serving as executive officers at the end of fiscal year
1996.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------------
SECURITIES
UNDERLYING
OPTIONS/SARS ALL OTHER
FISCAL SALARY BONUS (#) OF COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) SHARES ($)
- --------------------------- ------ ------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Douglas A. Berthiaume.... 1996 299,990 352,200(1) 38,500 22,696(2)(3)(4)
Chairman, President, 1995 275,002 548,414(5)(6) -- 26,914(7)(8)(9)
Chief Executive Officer 1994 318,329 1,599,517(10)(11) 1,325,240(12) 9,550(13)(14)(15)
Arthur G. Caputo......... 1996 160,004 164,480(1) 22,000 11,446(2)(3)(4)
Senior Vice President, 1995 149,994 345,714(5)(6) -- 15,685(7)(8)(9)
Sales and Marketing 1994 170,000 601,100(10)(11) 491,410(12) 5,100(15)(16)(17)
Thomas W. Feller......... 1996 160,004 164,480(1) 22,000 13,655(2)(3)(4)
Senior Vice President, 1995 155,012 352,714(5)(6) -- 16,236(7)(8)(9)
Operations 1994 175,668 601,637(10)(11) 491,410(12) 5,270(13)(14)(15)
John R. Nelson .......... 1996 164,996 169,620(1) 22,000 11,053(2)(3)(4)
Senior Vice President, 1995 160,004 359,714(5)(6) -- 18,086(7)(8)(9)
Research and Development 1994 181,993 602,170(10)(11) 491,410(12) 5,460(14)(15)(17)
Philip S. Taymor ........ 1996 160,004 164,480(1) 22,000 10,582(2)(3)(4)
Senior Vice President, 1995 149,994 395,714(5)(6) -- 16,799(7)(8)(9)
Finance and Administra-
tion and
Chief Financial Officer 1994 138,328 601,270(10)(11) 491,410(12) 4,150(14)(15)(17)
</TABLE>
- --------
(1) Reflects bonus earned under the Company's Pay for Performance Plan in
1996 which was paid in 1997.
(2) Includes amounts contributed for the benefit of the named executive under
the Waters 401(k) Restoration Plan in 1996 as follows: Mr. Berthiaume
$18,508, Mr. Caputo $5,600, Mr. Feller $5,308, Mr. Nelson $6,933 and Mr.
Taymor $5,331.
(3) Includes amounts contributed for the benefit of the named executive under
the Waters Employee Investment Plan in 1996 as follows: Mr. Berthiaume
$1,404, Mr. Caputo $4,454, Mr. Feller $4,612, Mr. Nelson $3,296 and Mr.
Taymor $4,588.
(4) Includes amounts contributed for the benefit of the named executive under
Group Term Life Insurance in 1996 as follows: Mr. Berthiaume $2,784, Mr.
Caputo $1,392, Mr. Feller $3,735, Mr. Nelson $824 and Mr. Taymor $663.
(5) Reflects bonus earned under the Company's Pay for Performance Plan in
1995 which was paid in 1996 as follows: Mr. Berthiaume $412,700, Mr.
Caputo $210,000, Mr. Feller $217,000, Mr. Nelson $224,000 and Mr. Taymor
$210,000.
(6) Reflects one-time cash bonus earned in 1995 and paid in 1996 in
connection with certain productivity programs implemented by senior
management as follows: Mr. Berthiaume $135,714, Mr. Caputo $135,714, Mr.
Feller $135,714, Mr. Nelson $135,714 and Mr. Taymor $185,714.
(7) Includes amounts contributed for the benefit of the named executive under
the Waters 401(k) Restoration Plan in 1995 as follows: Mr. Berthiaume
$21,216, Mr. Caputo $8,504, Mr. Feller $10,422, Mr. Nelson $10,840 and
Mr. Taymor $11,503.
(8) Includes amounts contributed for the benefit of the named executive under
the Waters Employee Investment Plan in 1995 as follows: Mr. Berthiaume
$3,481, Mr. Caputo $6,367, Mr. Feller $4,809, Mr. Nelson $4,752 and Mr.
Taymor $4,867.
(9) Includes amounts contributed for the benefit of the named executive under
Group Term Life Insurance in 1995 as follows: Mr. Berthiaume $2,219, Mr.
Caputo $816, Mr. Feller $1,006, Mr. Nelson $2,494 and Mr. Taymor $429.
4
<PAGE>
(10) Includes the aggregate amount of deferred compensation and cash paid by
Millipore to the named executive in connection with the divestiture of
the Company as follows: Mr. Berthiaume $1,570,000, Mr. Caputo $585,000,
Mr. Feller $585,000, Mr. Nelson $585,000 and Mr. Taymor $585,170.
(11) Includes amounts of bonus earned by the named executive under the
Company's Pay for Performance Plan in 1994 which was paid in 1995 as
follows: Mr. Berthiaume $29,517, Mr. Caputo $16,100, Mr. Feller $16,637,
Mr. Nelson $17,170 and Mr. Taymor $16,100.
(12) Reflects grant of options to purchase shares of Common Stock. Certain of
such options were granted at an exercise price equal to the estimated
fair value of the Common Stock at the date of grant and the other options
were granted at an exercise price in excess of such estimated fair value.
All such options have a term of ten years. The Company amended the option
agreements in the third fiscal quarter of 1995. After giving effect to
such amendment, the named executive officers held the following options:
Mr. Berthiaume, 282,562 options at an exercise price of $4.07 per share,
282,562 options at an exercise price of $9.50 per share, and 760,116
options at an exercise price of $16.28 per share; and each of Messrs.
Caputo, Feller, Nelson and Taymor, 110,567 options at an exercise price
of $4.07 per share; 110,567 options at an exercise price of $9.50 per
share, and 270,276 options at an exercise price of $16.28 per share. The
Company also amended the option agreements in the fourth fiscal quarter
of 1995 to vest an aggregate of 1,099,535 options at the $9.50 exercise
price.
(13) Includes amounts contributed by Millipore for the benefit of the named
executive under the Millipore Supplemental Executive Retirement Plan as
follows: Mr. Berthiaume $3,720; and Mr. Feller $640.
(14) Includes amounts contributed by Millipore for the benefit of the named
executive under the Millipore Savings Plan as follows: Mr. Berthiaume
$3,080; Mr. Feller $3,080; Mr. Nelson $3,860; and Mr. Taymor $2,650.
(15) Includes amounts contributed by the Company for the benefit of the named
executive under the Waters 401(k) Restoration Plan as follows: Mr.
Berthiaume $2,750; Mr. Caputo $750; Mr. Feller $1,550; Mr. Nelson $1,200;
and Mr. Taymor $655.
(16) Includes $3,600 contributed by Millipore for the benefit of Mr. Caputo
under the Millipore Participation Plan.
(17) Includes amounts contributed for the benefit of the named executive under
the Waters Employee Investment Plan as follows: Mr. Caputo $750; Mr.
Nelson $400; and Mr. Taymor $845.
OPTION GRANTS IN FISCAL YEAR 1996
The following table shows information regarding stock option grants to the
named executives in fiscal year 1996:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
------------------------------------------------------ ---------------------------
NUMBER OF
SECURITIES PERCENT OF TOTAL
UNDERLYING OPTIONS GRANTED
OPTIONS TO EMPLOYEES IN EXERCISE PRICE EXPIRATION
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
---- ----------- ---------------- -------------- ---------- ---------------------------
<S> <C> <C> <C> <C> <C> <C>
Douglas A. Berthiaume... 38,500 10.76% 34.21 05/24/06 $ 548,606 $ 1,653,719
Arthur G. Caputo........ 22,000 6.15% 34.21 05/24/06 $ 313,489 $ 944,982
Thomas W. Feller........ 22,000 6.15% 34.21 05/24/06 $ 313,489 $ 944,982
John R. Nelson.......... 22,000 6.15% 34.21 05/24/06 $ 313,489 $ 944,982
Philip S. Taymor........ 22,000 6.15% 34.21 05/24/06 $ 313,489 $ 944,982
</TABLE>
5
<PAGE>
AGGREGATED OPTION EXERCISES, HOLDINGS AND YEAR END VALUES FOR FISCAL YEAR 1996
There were no exercises of stock options during fiscal year 1996 by the
named executives. The following table shows information regarding the number
and value of any unexercised stock options held by such executives as of
December 31, 1996:
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE
UNDERLYING UNEXERCISED MONEY OPTIONS AT
OPTIONS AT FY-END (#) FY-END ($) EXERCISABLE/
NAME EXERCISABLE/UNEXERCISABLE UNEXERCISABLE(1)
---- ------------------------- -----------------------
<S> <C> <C>
Douglas A. Berthiaume........ 699,632/664,108 $13,157,105/$10,888,003
Arthur G. Caputo............. 262,903/250,507 $ 4,995,260/$ 4,030,829
Thomas W. Feller............. 262,903/250,507 $ 4,995,260/$ 4,030,829
John R. Nelson............... 262,903/250,507 $ 4,995,260/$ 4,030,829
Philip S. Taymor............. 262,903/250,507 $ 4,995,260/$ 4,030,829
</TABLE>
- --------
(1)Value is based on the closing price of the Common Stock on December 31,
1996 of $30.375.
WATERS CORPORATION RETIREMENT PLANS
Substantially all full-time United States employees of Waters participate in
the Waters Corporation Retirement Plan (the "Retirement Plan"), a defined
benefit pension plan intended to qualify under Section 401(a) of the Internal
Revenue Code (the "Code"). The Retirement Plan is a cash balance plan whereby
each participant's benefit is determined based on annual pay credits and
interest credits made to each participant's notional account. In general, a
participant becomes vested under the Retirement Plan upon the completion of
five years of service. The normal retirement age under the plan is age 65.
Pay credits range from 4.0% to 9.5% of compensation, depending on the
participant's amount of compensation and length of service with the Company.
Compensation refers to pension eligible earnings of the participant (limited
to $150,000 for 1996), which includes base pay, overtime, certain incentive
bonuses, commissions and pre-tax deferrals, but excludes special items such as
stock awards, moving expense reimbursements and employer contributions to
retirement plans. Interest credits are based on the one-year constant maturity
Treasury Bill rate on the last day of the preceding plan year plus 0.5%,
subject to a 5.0% minimum and 10.0% maximum rate.
The Company also maintains a non-qualified, supplemental plan which provides
benefits that would be paid by the Retirement Plan except for the limitations
on pensionable pay and benefit amounts currently imposed by the Code.
The aggregate estimated annual benefit payable from the Retirement Plan and
supplemental plan to Messrs. Berthiaume, Caputo, Feller, Nelson and Taymor
upon normal retirement is $93,000, $60,000, $23,000 $39,000 and $79,000,
respectively. As of December 31, 1996, Messrs. Berthiaume, Caputo, Feller,
Nelson and Taymor had approximately 16, 19, 20, 20 and 16 years of credited
service, respectively, under the Retirement Plan.
COMPENSATION COMMITTEE INTERLOCKS
The Compensation Committee currently consists of Mr. Edward Conard and Mr.
Thomas Salice. Prior to the Company's initial public offering, each of Mr.
Conard and Mr. Salice also served as an officer of the Company.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors is responsible for
administering the compensation of senior executives of the Company and is
comprised of two independent non-employee directors.
The Committee's compensation philosophy is to focus management on achieving
financial and operating objectives which provide long-term stockholder value.
The Company's executive compensation programs are designed to align the
interest of senior management with those of the Company's stockholders. There
are three key components of executive compensation: base salary, pay for
performance (annual incentive), and long-term performance incentive. It is the
intent of these programs to attract, motivate and retain senior executives. It
is the philosophy of the Compensation Committee to allocate a significant
portion of cash compensation to variable performance-based compensation in
order to reward executives for high achievement.
6
<PAGE>
Base Salary
The salaries for senior executives are reviewed annually and are based upon
a combination of factors including past individual performance, competitive
salary levels, and an individual's potential for making significant
contributions to future Company performance. Increases to senior executives'
base salaries in fiscal year 1996 were determined by the Committee after
subjective consideration of the Company's financial performance in fiscal year
1995, individual position and responsibilities, and general and industry
market surveys for comparable positions. No senior executives received any
increase in base salary in fiscal year 1994 or in fiscal year 1995.
Annual Incentive
The Pay for Performance Plan, an annual incentive award plan, is the
variable pay program for officers and other senior executives of the Company.
The purpose of the Pay for Performance Plan is to provide added motivation and
direction to senior executives to achieve operating results based on operating
budgets established at the beginning of the year. The Compensation Committee
evaluates the audited results of the Company's performance against previously
established performance targets in order to determine the individual bonuses
under the Pay for Performance Plan. The Company achieved a level of
performance required to pay bonuses for fiscal year 1996 based upon overall
Company performance.
Long-Term Performance Incentive Plan
Stock options are an important component of senior executive compensation
and the Long-Term Performance Incentive Plan has been designed to motivate
senior executives and other key employees to contribute to the long-term
growth of stockholder value. Under the 1994 Amended and Restated Stock Option
Plan, stock options were also granted to the Company's senior executives and
other key individuals. The Compensation Committee authorizes awards under the
plan based upon recommendations from the Company's President.
Other Compensation
The Company's senior executives are also eligible to participate in other
compensation plans that are generally offered to other employees, such as the
Company's investment and savings plan, the retirement plan, the employee stock
purchase plan, and the supplemental employee retirement plans.
Chief Executive Compensation
Based on its evaluation of the Company's overall performance and the
salaries and compensation practices of peer companies of comparable size, the
Compensation Committee elected to increase Mr. Berthiaume's annual base salary
for fiscal year 1996 to $300,000 from $275,000. Under the Pay for Performance
Plan, the Compensation Committee awarded Mr. Berthiaume a bonus of $352,200
for fiscal year 1996 based upon the Company's performance as compared to pre-
established criteria and targets. Mr. Berthiaume received a stock option grant
of 38,500 shares (at an option price equal to 115% of the fair market value on
the date of grant), based on the subjective considerations described under the
1994 Amended and Restated Stock Option Plan.
Limit on Deductible Compensation
The Compensation Committee has considered the application of Section 162(m)
of the Code to the Company's compensation practices. Section 162(m) limits the
tax deduction available to public companies for annual compensation paid to
senior executives in excess of $1 million unless the compensation qualifies as
performance-based. The annual cash compensation paid to individual executives
does not approach the $1 million threshold, and its is believed that the stock
incentive plans of the Company qualify as performance-based. Therefore, the
Committee does not believe any further action is necessary in order to comply
with Section 162(m). From time to time, the Committee will reexamine the
Company's compensation practices and the effect of Section 162(m).
Mr. Edward Conard Mr. Thomas Salice
7
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total return on $100 invested on
November 17, 1995 (the first day of public trading of the Common Stock)
through December 31, 1996 (the last day of public trading of the Common Stock
in fiscal year 1996) in the Common Stock of the Company, the NYSE Market Index
and the SIC Code 3823 Index. The return of the indices is calculated assuming
reinvestment of dividends during the period presented. The Company has not
paid any dividends since its initial public offering. The stock price
performance shown on the graph below is not necessarily indicative of future
price performance.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
AMONG WATERS CORPORATION
NYSE MARKET INDEX AND SIC CODE INDEX
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
New York Process Control
Waters Stock Exchange Instruments Index
Date Corporation Market Index (SIC Code 3823)
- ---- ----------- -------------- -----------------
<S> <C> <C> <C>
11/17/95 100.00 100.00 100.00
12/31/95 120.66 102.31 99.05
12/31/96 200.83 123.24 116.41
</TABLE>
8
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The table below sets forth certain information regarding beneficial
ownership of Common Stock as of March 24, 1997, by each person or entity known
to the Company who owns of record or beneficially five percent or more of the
Common Stock, by each named executive officer and director nominee and all
executive officers and director nominees as a group.
<TABLE>
<CAPTION>
PERCENTAGE OF
OUTSTANDING
NUMBER OF SHARES COMMON
NAME OF COMMON STOCK(1) STOCK(1)
---- ----------------- -------------
<S> <C> <C>
5% STOCKHOLDERS
Pilgrim Baxter & Associates, Ltd. ........... 2,392,900 8.27
1255 Drummers Lane, Suite 300
Wayne, Pennsylvania 19087-1590
DIRECTORS AND EXECUTIVE OFFICERS
Douglas A. Berthiaume (2).................... 1,356,001 4.58
Arthur G. Caputo (2)......................... 408,764 1.40
Thomas W. Feller (2)......................... 393,290 1.35
John R. Nelson (2)........................... 323,228 1.11
Philip S. Taymor (2)......................... 406,763 1.39
Joshua Bekenstein (3)........................ 0 *
Philip Caldwell (3)(4)....................... 32,143 *
Edward Conard (5)............................ 0 *
Thomas P. Salice (3)(5)(6)................... 38,592 *
Marc Wolpow.................................. 0 *
All Directors and Executive Officers as a
group (12 persons)........................... 3,651,154 11.77
</TABLE>
- --------
*represents less than 1% of the total.
(1) Figures are based upon 28,929,595 shares of Common Stock outstanding as of
March 24, 1997. The figures assume exercise by only the stockholder or
group named in each row of all options for the purchase of Common Stock
held by such stockholder or group which are exercisable within 60 days of
March 24, 1997.
(2) Includes share amounts which the named individuals have the right to
acquire through the ownership of options which are exercisable within 60
days of March 24, 1997 as follows: Mr. Berthiaume 699,632, Mr. Caputo
262,903, Mr. Feller 262,903, Mr. Nelson 262,903 and Mr. Taymor 262,903.
(3) Member of the Audit Committee.
(4) Includes 31,782 shares held in trust for Mr. Caldwell's wife, Betsey C.
Caldwell, and for which shares he disclaims beneficial ownership.
(5) Member of the Compensation Committee.
(6) Includes 6,335 shares in a family trust, for which shares he disclaims
beneficial ownership.
9
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
EMPLOYMENT AGREEMENTS
None of the executive officers have employment agreements with the Company
or any of its affiliates. None of them have any agreements entitling them to
termination or severance payments upon a change in control of the Company nor
a change in the named executive's responsibilities following a change of
control. However, each of the named executive officers is party to a
Management Subscription Agreement with the Company pursuant to which each
named executive officer has purchased shares of Common Stock in the Company.
Each executive officer is also the grantee of certain stock options from the
Company under one or more Stock Option Agreements. Pursuant to the terms of
such agreements the stock purchased under such agreements or available upon
exercise of the options may be subject to repurchase by the Company at the end
of such executive's employment with the Company. The Management Subscription
Agreements and the Stock Option Agreements also impose certain additional
restrictions upon the executive, including confidentiality obligations,
assignment of the benefit of inventions and patents to the Company, a
requirement that the executive devote his or her exclusive business time to
the Company, and noncompete restrictions which extend in certain cases,
depending on the basis on which his or her employment is terminated, for a
period of up to 24 months following his or her termination date.
LOANS TO EXECUTIVE OFFICERS
The Company has made loans, in an aggregate principal amount of $2,342,303
million, to certain executive officers of the Company. These loans are all in
amounts in excess of $60,000, are full recourse loans and are secured by a
pledge of certain of the shares of Common Stock owned by such executive
officers. The following executive officers' loans are as of December 1, 1995,
bear interest at 5.83% and have a maturity date of December 1, 2000: Douglas
A. Berthiaume, Chairman, President and Chief Executive Officer, $650,919;
Arthur G. Caputo, Senior Vice President, Sales and Marketing, $245,825; Thomas
W. Feller, Senior Vice President, Operations, $245,825; Brian K. Mazar, Vice
President, Human Resources and Investor Relations, $247,843; John R. Nelson,
Senior Vice President, Research and Development, $204,854; Devette Russo, Vice
President, Chromatography Chemistry Division, $211,190; and Philip S. Taymor,
Senior Vice President, Finance and Administration and Chief Financial Officer,
$245,825. The following executive officers' loans are as of January 8, 1996,
bear interest at 5.65% and have a maturity date of January 8, 2001: Mr.
Berthiaume $92,939, Mr. Caputo $34,629, Mr. Feller $34,617, Mr. Mazar $34,629,
Mr. Nelson $28,858, Ms. Russo $29,750 and Mr. Taymor $34,629.
REGISTRATION RIGHTS AGREEMENT
The Company is party to a registration rights agreement (the "Registration
Rights Agreement") among all of the Company's existing stockholders. Pursuant
to the terms of the Registration Rights Agreement, certain of the Company's
stockholders have the right to require the Company, at the sole expense of the
Company and subject to certain limitations, to register under the Securities
Act of 1933 (the "Securities Act") all or part of the shares of Common Stock
(the "Registrable Securities") held by them. All of the Company's existing
stockholders are entitled to unlimited "piggyback" registrations. In
connection with all registrations, the Company will agree to indemnify all
holders of Registrable Securities against certain liabilities, including
liabilities under the Securities Act. Registrations pursuant to the
Registration Rights Agreement will be made on the appropriate registration
form and may be underwritten registrations.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company has entered into agreements to provide indemnification for its
directors and executive officers in addition to the indemnification provided
for in the Company's Amended and Restated Certificate of Incorporation and
Amended and Restated Bylaws.
10
<PAGE>
DIRECTOR AND OFFICER AND TEN PERCENT
STOCKHOLDER SECURITIES REPORTS
The federal securities laws require the Company's directors and officers,
and persons who own more than ten percent of the Company's Common Stock, to
file with the Securities and Exchange Commission, the New York Stock Exchange
and the Secretary of the Company initial reports of ownership and reports of
changes in ownership of the Common Stock of the Company. All of the Company's
officers filed reports late during the fiscal year ended December 31, 1996.
Except for the foregoing, to the Company's knowledge, based solely on review
of the copies of such reports furnished to the Company and written
representations that no other reports were required, during the fiscal year
ended December 31, 1996 all of the Company's officers, directors and greater-
than-ten-percent beneficial owners made all required filings.
STOCKHOLDER PROPOSALS
Proposals of stockholders to be presented at the 1998 Annual Meeting of
Stockholders must be received by the Secretary of the Company by November 4,
1997 to be considered for inclusion in the Company's Proxy Statement and form
of proxy relating to that meeting. It is anticipated that the 1998 Annual
Meeting will be scheduled for May 5, 1998.
11
<PAGE>
1444-PS-97
<PAGE>
The Officers and Directors of Waters Corporation
cordially invite you to attend
the Annual Meeting of Stockholders
to be held at Waters Corporation, 34 Maple Street,
Milford, Massachusetts on Tuesday, May 6, 1997 at 11:00 a.m.
Douglas A. Berthiaume
/s/ Douglas Berthiaume
Chairman, President and Chief Executive Officer
Please sign, date and return your proxy in the envelope provided even if you
plan to attend the meeting.
DETACH HERE
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
1. To elect a Board of Directors for the ensuing year.
Nominees: Joshua Bekenstein, Douglas A. Berthiaume, Philip Caldwell, Edward
Conard, Thomas P. Salice, Marc Wolpow
FOR WITHHELD
[ ] [ ]
[ ]
-------------------------------------------------
For all nominees except as noted above
FOR AGAINST ABSTAIN
2. To ratify the selection of the firm of [ ] [ ] [ ]
Coopers & Lybrand L.L.P. as auditors
for the fiscal year ending December
31, 1997
3. To transact such other business as may properly come before the meeting.
MARK HERE MARK HERE
FOR ADDRESS IF YOU PLAN
CHANGE AND TO ATTEND
NOTE AT LEFT [ ] THE MEETING [ ]
(If signing as attorney, executor, trustee or guardian, please give your full
title as such. If shares are held jointly, each holder should sign.)
Signature: Date: Signature: Date:
------------------ ------ ----------------- ------
<PAGE>
DIRECTIONS TO
WATERS CORPORATION
ANNUAL MEETING
DATE: MAY 6, 1997
MEETING LOCATION: WATERS CORPORATION
34 MAPLE STREET
MILFORD, MA 01757
TEL (508) 478-2000
FROM BOSTON - Mass Turnpike West to Route 495, take Route 495 South to exit 19,
(Milford/Medway, Rt. 109), turn right at end of exit onto Route 109 West,
continue approximately 1/2 mile, turn left onto Birch St. (at Richard's
Restaurant). Take right at end of Birch St. and follow the signs to Waters.
FROM THE WEST - Mass Turnpike East to Route 495, take Route 495 South to exit
19, (Milford/Medway, Rt. 109), turn right at end of exit onto Route 109 West,
continue approximately 1/2 mile, turn left onto Birch St. (at Richard's
Restaurant). Take right at end of Birch St. and follow the signs to Waters.
FROM THE NORTH OR SOUTH - take Route 495 to exit 19, (Milford/Medway, Rt. 109),
turn at end of exit onto Route 109 West, continue approximately 1/2 mile,
turn left onto Birch St. (at Richard's Restaurant). Take right at end of Birch
St. and follow the signs to Waters.
PLEASE NOTE: THESE DIRECTIONS CAN BE REPEATED BY CALLING A RECORDING AT
(508) 482-3314.
DETACH HERE
- --------------------------------------------------------------------------------
WATERS CORPORATION
FOR ANNUAL MEETING OF STOCKHOLDERS - MAY 6, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY
The undersigned hereby appoints Douglas A. Berthiaume and Philip S. Taymor,
and each or either of them, as the true and lawful attorneys of the undersigned,
with full power of substitution and revocation, and authorizes them, and each of
them, to vote all the shares of capital stock of the Corporation which the
undersigned is entitled to vote at said meeting and any adjournment thereof upon
the matters specified below and upon such other matters as may be properly
brought before the meeting or any adjournments thereof, conferring authority
upon such true and lawful attorneys to vote in their discretion on such other
matters as may properly come before the meeting and revoking any proxy
heretofore given.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO
DIRECTION IS GIVEN, WILL BE VOTED FOR THE ELECTION OF THE DIRECTORS AND FOR
--- ---
THE PROPOSAL IN ITEM 2, AND AUTHORITY WILL BE DEEMED GRANTED UNDER PROPOSAL 3.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE [SEE REVERSE SIDE]
