<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)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
WATERS
April 1, 1998
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 12,
1998 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 (i) the election of
directors of the Company, (ii) the ratification of auditors for the Company and
(iii) the reservation of an additional two million shares of the Company's
common stock for issuance upon the exercise of stock options granted under the
Company's Long-Term Performance Incentive Plan for senior executives of 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
<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 12, 1998, 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 1998;
3. To ratify the reservation of an additional two million shares of the
Company's common stock for issuance upon the exercise of stock options
granted under the Company's Long-Term Performance Incentive Plan for senior
executives of the Company; and
4. 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 23, 1998 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
April 1, 1998
<PAGE>
WATERS CORPORATION
34 MAPLE STREET
MILFORD, MASSACHUSETTS 01757
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 12, 1998, 11:00 O'CLOCK A.M.
The Proxy is solicited by the Board of Directors of Waters Corporation (the
"Company") for use at the 1998 Annual Meeting of Stockholders to be held on
May 12, 1998 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 broker solicitation for a fee of $4,500.00
plus reasonable out-of-pocket expenses. 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 23, 1998 (the "Record Date").
On the Record Date, there were 29,790,227 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 April 1, 1998. 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.
1
<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. Eight 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, 1998:
Douglas A. Berthiaume, 49, has served as Chairman of the Board of Directors
of the Company since February 1996 and has served as President, Chief
Executive Officer and a Director 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 Chairman of the Analytical and Life Science
Systems Association.
Joshua Bekenstein, 39, 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.
Michael J. Berendt, Ph.D., 49, has served as a Director of the Company since
March 1998 pending election by the stockholders at an annual meeting. Since
November 1996, Dr. Berendt has served as Senior Vice President, Pharmaceutical
Research of Bayer Corporation, Pharmaceutical Division. From January 1996 to
November 1996, Dr. Berendt served as Vice President, Institute for Bone &
Joint Disorders and Cancer, Bayer Corporation, Pharmaceutical Division. From
October 1993 to January 1996, Dr. Berendt served as Director, Institute for
Bone & Joint Disorders and Cancer, Bayer Corporation, Pharmaceutical Division.
Prior to joining Bayer, Dr. Berendt served as Group Director of Drug Discovery
at Pfizer, Inc., and was responsible for immunology and infectious diseases
research. Dr. Berendt is a member of the Board of Directors of Onyx
Pharmaceuticals, Inc., Myriad Genetics, Inc., and Connecticut's Regional
Growth Partnership.
Philip Caldwell, 78, has served as a Director of the Company since August
1994. Mr. Caldwell spent 32 years at Ford Motor Company where he served as
Chairman of the Board of Directors and Chief Executive Officer from 1980 to
1985 and as a Director from 1973 to 1990. He served as a Director and Senior
Managing Director of Lehman Brothers Inc. and its predecessor, Shearson Lehman
Brothers Holdings, Inc. from 1985 to February 1998. Mr. Caldwell is Chairman
of Mettler-Toledo International Inc. and a Director of Zurich Holding Company
of America, Inc., American Guarantee & Liability Insurance Company, The Mexico
Fund and Russell Reynolds Associates, Inc. Mr. Caldwell has also served as a
Director of The Chase Manhattan Corporation, The Chase Manhattan Bank, N.A.,
Digital Equipment Corporation, Federated Department Stores, Inc., Kellogg
Company, CasTech Aluminum Group, Inc., Specialty Coatings International, Inc.,
and Zurich Reinsurance Centre, Inc.,
Edward Conard, 41, has served as a Director of the Company since August
1994. Mr. Conard has been a Managing Director of Bain since March 1993. Mr.
Conard was previously a Managing Director of Wasserstein Perella and Company,
an investment banking firm that specializes in mergers and acquisitions, and a
Vice President of Bain & Company heading up the firm's operations practice
area. Mr. Conard is a Director of Medical Specialties Group, Inc.
Laurie H. Glimcher, M.D., 46, has served as a Director of the Company since
January 1998 pending election by the stockholders at an annual meeting. Dr.
Glimcher has been a Professor of Immunology and Medicine at the Harvard School
of Public Health and Harvard Medical School since 1990. Dr. Glimcher is a
Director of Bristol-Myers Squibb Company.
2
<PAGE>
William J. Miller, 51, has served as a Director of the Company since January
1998 pending election by the stockholders at an annual meeting. Since April
1996, Mr. Miller has served as Chief Executive Officer and Chairman of the
Board of Avid Corporation and since September 1996, he has served as
President. From March 1992 to September 1995, Mr. Miller served as Chief
Executive Officer of Quantum Corporation. From May 1992, Mr. Miller served as
a member of the Board of Directors of Quantum Corporation and from September
1993 to August 1995, he served as Chairman of the Board of Directors. From
1981 to March 1992, he served in various positions at Control Data
Corporation, most recently as Executive Vice President and President,
Information Services. Mr. Miller is a Director of NVidia Corporation and
Innovex, Inc.
Thomas P. Salice, 38, has served as a Director of the Company since July
1994. Mr. Salice is a Managing Director of AEA Investors Inc. ("AEA") and has
served with AEA since May 1989. Mr. Salice is a Director of Mettler-Toledo
International, Inc. and Manchester Tank & Equipment Company.
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, 1998. 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.
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. RESERVATION OF SHARES
The Board of Directors recommends that the stockholders vote FOR the
ratification of the reservation (the "Reservation") of an additional two
million shares of the Common Stock for issuance upon the exercise of stock
options granted under the Company's Long-Term Performance Incentive Plan (the
"Plan") for senior executives of the Company.
The Plan provides for the granting to employees and other key individuals
who perform services for the Company and its subsidiaries ("Participants") the
following types of incentive awards: stock options, stock appreciation rights,
restricted stock, performance units, performance grants and other types of
awards that the Compensation Committee of the Board of Directors deems to be
consistent with the purposes of the Plan. In 1996, the Plan was approved, and
an aggregate of 1,000,000 shares of Common Stock was reserved for issuance
under the Plan. If the Reservation is ratified, an additional 2,000,000 shares
of Common Stock will be reserved for issuance under the Plan. The Participants
are chosen at the discretion of the Compensation Committee and currently
number approximately 150.
4. 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.
3
<PAGE>
DIRECTORS MEETINGS AND COMPENSATION
DIRECTORS MEETINGS
The Board of Directors held five meetings during the year ended December 31,
1997. The Audit Committee, which currently consists of Messrs. Bekenstein,
Caldwell and Salice, oversees the activities of the Company's independent
auditors and recommends the engagement of auditors. 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 1997, all of the Company's directors
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 1997, the Compensation
Committee and the Audit Committee each met two times.
Marc Wolpow resigned on December 19, 1997 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 eight and
elected Michael J. Berendt, Ph.D, Laurie H. Glimcher, M.D. and William J.
Miller to fill the vacant director positions until such time as they or their
successors are elected by the stockholders at an annual meeting.
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 $17,500 per year (other than the Chairman who, if
an Outside Director, will receive an annual fee of $30,000), $1,000 for each
Board meeting, $750 for each committee meeting that they attend and an annual
grant of 1,000 options under the Company's 1996 Non-Employee Director Stock
Option Plan. All directors are reimbursed for expenses incurred in connection
with their attendance at meetings.
4
<PAGE>
MANAGEMENT COMPENSATION
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table discloses, for the fiscal years
indicated, individual compensation information on Mr. Berthiaume and the four
other most highly compensated executive officers (collectively, the "named
executives") who were serving as executive officers at the end of fiscal year
1997.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
---------------------------
SECURITIES
UNDERLYING
OPTIONS ALL OTHER
NAME AND PRINCIPAL SALARY BONUS (#) OF COMPENSATION
POSITION FISCAL YEAR ($) ($) SHARES ($)
- ------------------ ----------- ------- ------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Douglas A. Berthiaume... 1997 400,000 490,000(1) 45,000 29,484(2)(3)(4)
Chairman, President and 1996 299,990 352,200(5) 38,500 22,696
Chief Executive Officer 1995 275,002 548,414(6)(7) -- 26,914
Arthur G. Caputo........ 1997 184,990 200,836(1) 27,000 12,967(2)(3)(4)
Senior Vice President, 1996 160,004 164,480(5) 22,000 11,446
Sales and Marketing 1995 149,994 345,714(6)(7) -- 15,685
Thomas W. Feller........ 1997 184,990 200,836(1) 27,000 15,310(2)(3)(4)
Senior Vice President,
Operations 1996 160,004 164,480(5) 22,000 13,655
1995 155,012 352,714(6)(7) -- 16,236
John R. Nelson.......... 1997 190,008 206,264(1) 27,000 12,712(2)(3)(4)
Senior Vice President, 1996 164,996 169,620(5) 22,000 11,053
Research and Develop-
ment 1995 160,004 359,714(6)(7) -- 18,086
Philip S. Taymor........ 1997 184,990 200,836(1) 27,000 12,289(2)(3)(4)
Senior Vice President,
Finance and 1996 160,004 164,480(5) 22,000 10,582
Administration and
Chief Financial 1995 149,994 395,714(6)(7) -- 16,799
Officer
</TABLE>
- --------
(1) Reflects bonus earned under the Company's Pay for Performance Plan in 1997
which was paid in 1998.
(2) Includes amounts contributed for the benefit of the named executive under
the Waters 401(k) Restoration Plan in 1997 as follows: Mr. Berthiaume
$22,131, Mr. Caputo $6,890, Mr. Feller $6,844, Mr. Nelson $7,227 and Mr.
Taymor $6,890.
(3) Includes amounts contributed for the benefit of the named executive under
the Waters Employee Investment Plan in 1997 as follows: Mr. Berthiaume
$4,569, Mr. Caputo $4,685, Mr. Feller $4,731, Mr. Nelson $4,662 and Mr.
Taymor $4,685.
(4) Includes amounts contributed for the benefit of the named executive under
Group Term Life Insurance in 1997 as follows: Mr. Berthiaume $2,784, Mr.
Caputo $1,392, Mr. Feller $3,735, Mr. Nelson $824 and Mr. Taymor $714.
(5) Reflects bonus earned under the Company's Pay for Performance Plan in 1996
which was paid in 1997.
(6) 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.
(7) 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 $185,714.
5
<PAGE>
OPTION GRANTS IN FISCAL YEAR 1997
The following table shows information regarding stock option grants to the
named executives in fiscal year 1997:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR
INDIVIDUAL GRANTS 10-YEAR OPTION TERM
----------------------------------- --------------------------------
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED EXERCISE
OPTIONS TO EMPLOYEES PRICE EXPIRATION
NAME GRANTED (#) IN FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
---- ----------- -------------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Douglas A. Berthiaume... 45,000 9.01% $42.75 12/02/07 $1,209,829 $3,065,957
Arthur G. Caputo........ 27,000 5.41% $42.75 12/02/07 $ 725,897 $1,839,574
Thomas W. Feller........ 27,000 5.41% $42.75 12/02/07 $ 725,897 $1,839,574
John R. Nelson.......... 27,000 5.41% $42.75 12/02/07 $ 725,897 $1,839,574
Philip S. Taymor........ 27,000 5.41% $42.75 12/02/07 $ 725,897 $1,839,574
</TABLE>
AGGREGATED OPTION EXERCISES, HOLDINGS AND YEAR END VALUES FOR FISCAL YEAR 1997
The following table shows information regarding (i) the number of shares of
Common Stock acquired upon exercise by the named executives of stock options
in 1997 and the value realized thereby and (ii) the number and value of any
unexercised stock options held by such executives as of December 31, 1997:
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
SHARES NUMBER OF SECURITIES IN-THE MONEY OPTIONS AT
ACQUIRED ON VALUE UNDERLYING UNEXERCISED FY-END ($)
EXERCISE REALIZED OPTIONS AT FY-END (#) EXERCISABLE/UNEXERCISABLE
NAME (#) ($) EXERCISABLE/UNEXERCISABLE (1)
---- ----------- ---------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Douglas A. Berthiaume... 0 0 915,868/492,872 $23,859,471/$10,613,793
Arthur G. Caputo........ 0 0 343,472/196,938 $ 8,985,626/$ 3,937,588
Thomas W. Feller........ 25,700 $1,100,217 317,772/196,938 $ 8,110,284/$ 3,937,588
John R. Nelson.......... 28,950 $1,229,999 314,522/196,938 $ 7,999,589/$ 3,937,588
Philip S. Taymor........ 38,700 $1,654,581 304,772/196,938 $ 7,667,504/$ 3,937,588
</TABLE>
- --------
(1) Value is based on the closing price of the Common Stock on December 31,
1997 of $38.125.
AMENDMENT OF 1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
In 1997, the Compensation Committee adopted, and the Board of Directors
approved, an amendment of the Company's 1996 Non-Employee Director Stock
Option Plan (the "Plan"). The amendment effected the following changes to the
Plan:
(i) the annual automatic grant of options under the Plan will be made on
December 1 (rather than July 1) of each year; (ii) the exercise price of
options granted under the Plan will be the fair market value of shares of
Common Stock on the date of grant (rather than 115% of fair market value)
and (iii) certain vesting and exercise provisions affecting options granted
under the Plan will be subject to the discretion of the Board of Directors.
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.
6
<PAGE>
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.
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 1997 were determined by the Committee after
consideration of the Company's financial performance in fiscal year 1996,
individual position and responsibilities, and general and industry market
surveys for comparable positions.
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 1997.
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 Chief Executive Officer.
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, retirement plan, employee stock
purchase plan and supplemental employee retirement plan.
Chief Executive Compensation
Mr. Berthiaume's 1997 annual base salary was based on the Compensation
Committee's (the "Committee") evaluation of the Company's overall performance
and the salaries and compensation practices of peer companies of comparable
size. The Committee also considered the unusual circumstances surrounding the
Company which continued from its inception as a private concern in 1994, when
it acquired the predecessor business of its former parent, and its initial
public offering in 1995. Mr. Berthiaume elected to take a salary
7
<PAGE>
reduction in 1994 and no base salary increase in 1995. After considering these
factors, the Committee elected to increase Mr. Berthiaume's annual base salary
for fiscal year 1997 to $400,000 from $300,000. Under the Pay for Performance
Plan, the Compensation Committee awarded Mr. Berthiaume a bonus of $490,000
for fiscal year 1997 based upon the Company's performance as compared to pre-
established criteria and targets. Mr. Berthiaume received a stock option grant
of 45,000 shares based on the considerations described under the Long Term
Performance Incentive Plan.
Limit on Deductible Compensation
The Compensation Committee has considered the application of Section 162(m)
of the Internal Revenue 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 reach the $1 million threshold, and it 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
8
<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, 1997 (the last day of public trading of the Common Stock
in fiscal year 1997) in the Common Stock of the Company, the NYSE Market Index
and the SIC Code 3826 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 CUMULATIVE TOTAL RETURN SINCE
THE DATE OF THE COMPANY'S INITIAL PUBLIC OFFERING,
NOVEMBER 17, 1995, AMONG WATERS CORPORATION,
NYSE MARKET INDEX AND SIC CODE INDEX
- -------------------------------------------------------------------------------
NEW YORK STOCK LABORATORY ANALYTICAL
EXCHANGE INSTRUMENTS INDEX
DATE WATERS CORPORATION MARKET INDEX (SIC CODE 3826)
- -------------------------------------------------------------------------------
11/17/95 100.00 100.00 100.00
12/13/95 120.66 102.31 108.68
12/31/96 200.83 123.24 130.06
12/31/97 252.07 162.13 154.29
9
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The table below sets forth certain information regarding beneficial
ownership of Common Stock as of March 23, 1998, 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
NUMBER OF SHARES OUTSTANDING
NAME OF COMMON STOCK(1) COMMON STOCK(1)
---- ------------------ ---------------
<S> <C> <C>
5% STOCKHOLDERS
Pilgrim Baxter & Associates, Ltd........... 3,137,900 10.53%
825 Duportail Road
Wayne, Pennsylvania 19087
FMR Corp................................... 3,734,000 12.53%
82 Devonshire Street
Boston, Massachusetts 02109
Directors and Executive Officers
Douglas A. Berthiaume (2)(3)............... 1,569,798 5.27%
Arthur G. Caputo (2)....................... 415,433 1.39%
Thomas W. Feller (2)(4).................... 377,579 1.27%
John R. Nelson (2)......................... 342,797 1.15%
Philip S. Taymor (2)(5)(6)................. 408,691 1.37%
Joshua Bekenstein (2)(7)(8) ............... 1,350 *
Michael J. Berendt, Ph.D................... -- *
Philip Caldwell (2)(7)(8)(9)............... 33,740 *
Edward Conard (2)(7)(10)................... 1,790 *
Dr. Laurie H. Glimcher..................... -- *
William J. Miller.......................... -- *
Thomas P. Salice (2)(7)(8)(10)(11)......... 31,346 *
All Directors and Executive Officers as a
group (14 persons)........................ 3,894,905
</TABLE>
- --------
* represents less than 1% of the total.
1. Figures are based upon 29,790,227 shares of Common Stock outstanding as
of March 23, 1998. 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 23, 1998 as follows: Mr. Berthiaume 915,868, Mr. Caputo
293,472, Mr. Feller 277,772, Mr. Nelson 283,472, Mr. Taymor 264,772, Mr.
Bekenstein 1,000, Mr. Caldwell 1,000, Mr. Conard 1,000 and Mr. Salice
1,000.
3. Includes 17,250 shares held by Mr. Berthiaume's wife, Diana M.
Berthiaume, 6,313 shares held in a family trust, 4,593 shares held in
Mr. Berthiaume's 401K Plan and 1,059 shares held in the GST Trust
account, for which shares he disclaims beneficial ownership. The
trustees of the GST Trust are his spouse and another reporting person of
the Company. Mr. Berthiaume gifted 100 shares to each of 5 nieces and
nephews.
4. Includes 19,917 shares held by Mr. Feller's wife, for which shares he
disclaims beneficial ownership.
5. Includes 19,355 shares held by Mr. Taymor's wife, for which he disclaims
beneficial ownership.
6. Reporting person was named a trustee of a trust established by another
reporting person of the Company. The trust holds 1,059 shares of Company
stock, for which shares he disclaims beneficial ownership.
7. Reporting person elected to received deferred compensation in the form of
phantom stock: Mr. Bekenstein 350.15 shares, Mr. Caldwell 957.82 shares,
Mr. Conard 790.22 shares, Mr. Salice 202.47 shares.
8. Member of the Audit Committee.
9. Includes 31,782 shares held in trust for Mr. Caldwell's wife, for which
shares he disclaims beneficial ownership.
10. Member of the Compensation Committee.
11. Transferred shares to an account held in joint custody with his spouse.
10
<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 $2,342,332
million, to certain executive officers of the Company. These loans 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.
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.
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. Four of the Company's
directors, Messrs. Conard, Salice, Caldwell and Bekenstein, filed certain
reports late during the fiscal year ended December 31, 1997.
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, 1997 all of the Company's officers, directors and greater-
than-ten-percent beneficial owners made all required filings.
11
<PAGE>
MATERIAL INCORPORATED BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1997 as filed with the Securities and Exchange Commission is hereby
incorporated by reference.
STOCKHOLDER PROPOSALS
Proposals of stockholders to be presented at the 1999 Annual Meeting of
Stockholders must be received by the Secretary of the Company by November 4,
1998 to be considered for inclusion in the Company's Proxy Statement and form
of proxy relating to that meeting. It is anticipated that the 1999 Annual
Meeting will be scheduled on or about May 12, 1999.
12
<PAGE>
1444-PS-97
<PAGE>
WATERS
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 12, 1998 at 11:00 a.m.
Douglas A. Berthiaume
/s/ Douglas A. 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 in this example
1. To elect a Board of Directors for the ensuing year. Nominees: Joshua
Bekenstein, Michael J. Berendt, Ph.D., Douglas A. Berthiaume, Philip
Caldwell, Edward Conard, Thomas P. Salice, Laurie H. Glimcher, M.D., and
William J. Miller.
2. To ratify the selection of the firm of Coopers & Lybrand L.L.P. as auditors
for the fiscal year ended December 31, 1998.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. To ratify the reservation of an additional two million shares of the
Company's common stock for issuance upon the exercise of stock options
granted under the Company's Long-Term Performance Incentive Plan.
FOR AGAINST ABSTAIN
[_] [_] [_]
4. To transact such other business as may properly come before the meeting.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [_]
MARK HERE IF YOU PLAN TO ATTEND 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.)
<PAGE>
Directions to
Waters Corporation
Annual Meeting
Date: May 12, 1998
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 Richards'
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 Richards'
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 Richards' 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
PROXY
WATERS CORPORATION
FOR ANNUAL MEETING OF STOCKHOLDERS - MAY 12, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
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, SHARES WILL BE VOTED FOR THE ELECTION OF THE DIRECTORS AND
FOR THE PROPOSALS IN ITEMS 2 AND 3; AUTHORITY WILL BE DEEMED GRANTED UNDER
PROPOSAL 4.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE [SEE REVERSE SIDE]
