<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-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)(1)
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:
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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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<PAGE>
[LOGO]
April 1, 2000
Dear Stockholder:
On behalf of the Board of Directors, I cordially invite you to attend the
Annual Meeting of Stockholders of Waters Corporation ("Waters" or the "Company")
on May 4, 2000 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, and (ii) the amendment of the Company's Certificate
of Incorporation to increase the number of shares of common stock which the
Company is authorized to issue from 100,000,000 to 200,000,000 shares. 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>
[LOGO]
WATERS CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Notice is hereby given that the Annual Meeting of Stockholders of Waters
Corporation ("Waters" or the "Company") will be held at Waters Corporation, 34
Maple Street, Milford, Massachusetts 01757 on May 4, 2000 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 approve an amendment to the Company's Certificate of Incorporation to
increase the number of shares of common stock, $.01 par value per share,
which the Company is authorized to issue from 100,000,000 to 200,000,000
shares; 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 15, 2000 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, 2000
<PAGE>
WATERS CORPORATION
34 MAPLE STREET
MILFORD, MASSACHUSETTS 01757
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 4, 2000, 11:00 O'CLOCK A.M.
The Proxy is solicited by the Board of Directors of Waters Corporation
("Waters" or the "Company") for use at the 2000 Annual Meeting of Stockholders
to be held on May 4, 2000 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 $4,000 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.
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 15, 2000 (the "Record Date").
Representatives of the Company's auditors, PricewaterhouseCoopers LLP, 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.
On the Record Date, there were 63,270,131 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, 2000. 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.
2
<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, 2000:
Douglas A. Berthiaume, 51, 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 Corporation, the predecessor business of the Company which was
purchased in 1994. Mr. Berthiaume is a Director of Genzyme Corporation.
Joshua Bekenstein, 41, 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 Sealy Corporation,
Totes Inc., Shoppers Drug Mart, and Bright Horizons Family Solutions, Inc.
Michael J. Berendt, Ph.D., 51, has served as a Director of the Company since
March 1998. 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. and Myriad Genetics, Inc.
Philip Caldwell, 80, 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 also a
Director of, Mettler-Toledo International Inc., the Mexico Fund and Russell
Reynolds Associates, Inc. Mr. Caldwell is a member of the Zurich Financial
Services Group U.S. Advisory Board. Mr. Caldwell has also served as a Director
of the Chase Manhattan Bank, N.A., the Chase Manhattan Corporation, Digital
Equipment Corporation, Federated Department Stores, Inc., Kellogg Company,
CasTech Aluminum Group, Inc., Specialty Coatings International, Inc., American
Guarantee & Liability Insurance Company, Zurich Holding Company of
America, Inc. and Zurich Reinsurance Centre Holdings, Inc.
Edward Conard, 43, 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 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., Dynamic
Details, Inc., Alliance Laundry, Inc., US Synthetic, Inc., ChipPAC, Inc., and
Cambridge Industries, Inc.
Laurie H. Glimcher, M.D., 48, has served as a Director of the Company since
January 1998. 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.
3
<PAGE>
William J. Miller, 54, has served as a Director of the Company since
January 1998. Mr. Miller is an Independent Investor and Consultant. From
April 1996 to November 1999, Mr. Miller served as Chief Executive Officer and
Chairman of the Board of Avid Corporation and from September 1996 to
January 1999, he 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, 40, has served as a Director of the Company since
July 1994. Mr. Salice is President, Chief Executive Officer and a Director of
AEA Investors Inc. ("AEA") and has served with AEA since June 1989. Prior to his
association with AEA, Mr. Salice held positions in the investment banking
divisions of First Boston Corp. and Lehman Brothers. Mr. Salice served on the
Board of Directors of CasTech Aluminum Group, Manchester Tank & Equipment and is
currently a director of Mettler-Toledo International, Inc. and Sovereign
Specialty Chemicals, Inc.
REQUIRED VOTE; RECOMMENDATION OF THE BOARD OF DIRECTORS
With respect to the election of directors of the Company, the affirmative
vote of a plurality of shares present in person or represented by Proxy, and
entitled to vote on the matter, is necessary for the election of each of the
nominees for director listed above. Withholding authority to vote or an
instruction to abstain from voting for the election of a nominee 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 election of
such nominee. A broker "non-vote" occurs when a broker, dealer, voting trustee,
bank, association or other entity that exercises fiduciary powers holding shares
for a beneficial owner 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 the election of
directors of the Company and will have no effect on the outcome of the vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH NOMINEE FOR DIRECTOR SET
FORTH ABOVE.
2. APPROVAL OF THE AMENDMENT TO THE CERTIFICATE OF INCORPORATION
GENERAL
The Company's Second Amended and Restated Certificate of Incorporation, as
amended and currently in effect (the "Certificate"), provides that the Company's
authorized capital stock shall consist of 100,000,000 shares of Common Stock,
$.01 par value per share (the "Common Stock"), and 5,000,000 shares of Preferred
Stock. On February 29, 2000, the Company's Board of Directors approved an
amendment to the Certificate (the "Amendment") in order to increase the number
of shares of Common Stock authorized for issuance under the Certificate by
100,000,000 shares to a total of 200,000,000 shares. The text of the Amendment
is set forth as Exhibit A to this Proxy Statement. If the Amendment is adopted,
it will become effective upon the filing of the Amendment with the Delaware
Secretary of State.
PURPOSE OF THE PROPOSED AMENDMENT
The Board of Directors believes that given the current market price for the
Company's Common Stock, it may be advisable at some point in the future to
declare a stock dividend (which would have the same effect as a stock split) in
order to lower the per share market price of the Company's Common Stock, to
increase its trading activity and to broaden its marketability. The proposed
Amendment would provide the Company with a sufficient number of authorized but
unissued shares of Common Stock to effect such a stock dividend and to
accomplish other proper corporate purposes that may be authorized in the future.
Such future activities may include, without limitation, raising equity capital,
reserving additional shares of
4
<PAGE>
Common Stock for issuance under the Company's 1994 Amended and Restated Stock
Option Plan, 1996 Long-Term Performance Incentive Plan, 1996 Employee Stock
Purchase Plan, 1996 Non-Employee Director Deferred Compensation Plan and 1996
Non-Employee Director Stock Option Plan (collectively, the "Employee Stock
Plans"), adopting additional employee stock plans and making acquisitions
through the issuance of Common Stock. The Board of Directors has no immediate
plans, understanding, agreements, or commitments to issue additional shares of
Common Stock for any purpose.
The Board of Directors believes that the proposed increase in the authorized
Common Stock will make a sufficient number of shares available should the
Company decide to use its shares for one or more of such previously mentioned
purposes or otherwise. The Company reserves the right to seek a further increase
in authorized shares from time to time in the future as considered appropriate
by the Board of Directors.
CURRENT USE OF SHARES
As of the Record Date, the Company had approximately 63,270,131 shares of
Common Stock outstanding and approximately 11,940,524 shares of Common Stock
reserved for issuance under the Company's Employee Stock Plans, of which,
approximately 8,859,535 shares are covered by outstanding options and
approximately 3,080,989 shares are available for grant or purchase. Therefore,
the Company's total share requirement prior to the Amendment is 75,210,655
shares (the "Share Requirement"). In the event stockholder approval of the
proposed Amendment is obtained, the Share Requirement would not change, unless,
for example, the Board were to approve a stock dividend, as described below.
Accordingly, in the absence of such a stock dividend, the Company would have a
total of 200,000,000 authorized and 124,789,345 unissued, unreserved shares of
Common Stock remaining available pursuant to its Certificate, as amended by the
Amendment.
If the Company were to effect, for example, a two-for-one stock split in the
form of a stock dividend, each holder of the Company's Common Stock would
receive one additional share for each share held. In addition, the number of
shares of Common Stock reserved for issuance or subject to outstanding options
under the Company's Employee Stock Plans would increase by 100% (and the
exercise prices of outstanding options would correspondingly decrease by 50%).
If the authorized number of shares of Common Stock were not increased, the
Company would not have enough authorized but unissued shares of Common Stock to
effect such a stock dividend as described. Were such a stock split to be
effected, the Share Requirement would increase to 150,421,310. Accordingly,
following such a stock dividend, the Company would have 200,000,000 authorized
and 49,578,690 unissued, unreserved shares of Common Stock available pursuant to
the amended Certificate.
POSSIBLE EFFECTS OF THE PROPOSED AMENDMENT
If the stockholders approve the proposed Amendment, the Board of Directors
may cause the issuance of additional shares of Common Stock without further vote
of the stockholders except as provided under Delaware corporate law or under the
rules of any national securities exchange on which shares of Common Stock of the
Company are then listed. Under the Company's Certificate, the Company's
stockholders do not have preemptive rights to subscribe to additional securities
which may be issued by the Company, which means that current stockholders do not
have a prior right to purchase any new issue of capital stock of the Company in
order to maintain their proportionate ownership of the Company's Common Stock.
In addition, if the Board of Directors elects to issue additional shares of
Common Stock, such issuance could have a dilutive effect on the earnings per
share, voting power and shareholdings of current stockholders.
In addition to the corporate purposes discussed above, the proposed
Amendment could, under certain circumstances, have an anti-takeover effect,
although this is not the intent of the Board of Directors. For example, it may
be possible for the Board of Directors to delay or impede a takeover or transfer
of control of the Company by causing such additional authorized shares of Common
Stock to be issued to holders who might side with the Board in opposing a
takeover bid that the Board of Directors determines is not in the best interests
of the Company and its stockholders. The Amendment therefore may have the effect
of
5
<PAGE>
discouraging unsolicited takeover attempts. By potentially discouraging
initiation of such an unsolicited takeover attempt, the proposed Amendment may
limit the opportunity for the Company's stockholders to dispose of their shares
of Common Stock at the higher price generally available in takeover attempts or
that may be available under a merger proposal. The proposed Amendment may have
the effect of permitting the Company's current management, including the current
Board of Directors, to retain its position, and place it in a better position to
resist changes that stockholders may wish to make if they are dissatisfied with
the conduct of the Company's business. However, the Board of Directors is not
aware of any attempt to take control of the Company and the Board of Directors
has not presented this proposal with the intent that it be utilized as a type of
anti-takeover device.
REQUIRED VOTE; RECOMMENDATION OF THE BOARD OF DIRECTORS
With respect to the amendment of the Company's Certificate, the affirmative
vote of a majority of shares outstanding as of the Record Date and entitled to
vote on the matter is necessary for approval. Withholding authority to vote or
an instruction to abstain from voting on the 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. Broker
"non-votes" will not be treated as shares present and entitled to vote on a
voting matter, but will have the same effect as a vote against the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE AMENDMENT TO THE
COMPANY'S SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION.
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 five meetings during the year ended
December 31, 2000. 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, Salice and
Miller, 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 1999, with one exception, 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. Dr. Glimcher was unable to
attend two of the five meetings held during the year. During fiscal year 1999,
the Compensation Committee and the Audit Committee each met two times.
COMPENSATION OF DIRECTORS
Directors who are full-time employees of the Company receive no additional
compensation for serving on the Board of Directors or its committees. In 1999,
outside Directors each received a retainer of $20,000 for the year, $1,000 for
each Board meeting attended, $750 for each committee meeting attended; and, on
January 3, 2000 outside directors received, with respect to services performed
in 1999, an annual grant of 2,000 options under the Company's 1996 Non-Employee
Director Stock Option Plan. For services performed in the year 2000, outside
Directors each will receive a retainer of $20,000 for the year (other than the
Chairman who, if an outside Director, will receive an annual fee of $30,000),
$1,000 for each Board meeting attended, $750 for each committee meeting attended
and an annual grant of 2,000 stock options under the 1996 Non-Employee Director
Stock Option Plan. All directors are reimbursed for expenses incurred in
connection with their attendance at meetings.
6
<PAGE>
MANAGEMENT COMPENSATION
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table discloses, for the fiscal years
indicated, individual compensation information on Mr. Berthiaume and the four
other most highly compensated executive officers (collectively, the "named
executives") who were serving as executive officers at the end of fiscal year
1999.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------------------- SECURITIES
UNDERLYING ALL OTHER
SALARY BONUS OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION FISCAL YEAR ($) ($) (#) ($)
- --------------------------- ----------- -------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Douglas A. Berthiaume.......... 1999 500,006 635,250(1) 70,000 38,105(2)(3)(4)
Chairman, President and Chief 1998 450,008 645,750(5) 50,000 36,179(7)
Executive Officer 1997 400,000 490,000(6) 45,000 29,484(7)
Arthur G. Caputo............... 1999 240,006 244,560(1) 40,000 16,159(2)(3)(4)
Senior Vice President, 1998 210,002 272,160(5) 30,000 15,902(7)
Sales and Marketing 1997 184,990 200,836(6) 27,000 12,967(7)
Thomas W. Feller............... 1999 214,994 219,085(1) 0 13,023(2)(3)
Senior Vice President, 1998 199,992 259,200(5) 30,000 17,511(7)
Operations 1997 184,990 200,836(6) 27,000 15,310(7)
John R. Nelson................. 1999 249,990 254,750(1) 40,000 17,125(2)(3)(4)
Senior Vice President, 1998 220,012 285,120(5) 30,000 16,441(7)
Research and Development 1997 190,008 206,264(6) 27,000 12,712(7)
Philip S. Taymor............... 1999 240,006 244,560(1) 40,000 15,628(2)(3)(4)
Senior Vice President, Finance 1998 210,002 272,160(5) 30,000 15,307(7)
and 1997 184,990 200,836(6) 27,000 12,289(7)
Administration and Chief
Financial
Officer
</TABLE>
- ------------------------
(1) Reflects bonus earned under the Company's Management Incentive Plan in 1999
which was paid in 2000.
(2) Includes amounts contributed for the benefit of the named executive under
the Waters 401(k) Restoration Plan in 1999 as follows: Mr. Berthiaume
$29,096, Mr. Caputo $9,552, Mr. Feller $7,992, Mr. Nelson $10,158 and
Mr. Taymor $9,552.
(3) Includes amounts contributed for the benefit of the named executive under
the Waters Employee Investment Plan in 1999 as follows: Mr. Berthiaume
$4,962, Mr. Caputo $4,985, Mr. Feller $5,031, Mr. Nelson $4,985 and
Mr. Taymor $4,985.
(4) Includes amounts contributed for the benefit of the named executive under
group term life insurance coverage in 1999 as follows: Mr. Berthiaume
$4,047, Mr. Caputo $1,622, Mr. Nelson $1,982 and Mr. Taymor $1,091.
(5) Reflects bonus earned under the Company's Management Incentive Plan in 1998
which was paid in 1999.
(6) Reflects bonus earned under the Company's Management Incentive Plan in 1997
which was paid in 1998.
(7) Reflects amounts contributed for the benefit of the named executive in 1998
and 1997, respectively, under the Waters 401(k) Restoration Plan, the Waters
Employee Investment Plan and for group term life insurance coverage.
7
<PAGE>
OPTION GRANTS IN FISCAL YEAR 1999
The following table shows information regarding stock option grants to the
named executives in fiscal year 1999:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR
INDIVIDUAL GRANTS 10-YEAR OPTION TERM
------------------------------------------ -----------------------------------------
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED EXERCISE
OPTIONS TO EMPLOYEES PRICE EXPIRATION
NAME GRANTED (#)(1) IN FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- ---- -------------- -------------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Douglas A. Berthiaume..... 70,000 7.51% $46.125 12/09/09 $2,029,973 $5,144,888
Arthur G. Caputo.......... 40,000 4.29% $46.125 12/09/09 $1,159,985 $2,939,936
Thomas W. Feller.......... 0
John R. Nelson............ 40,000 4.29% $46.125 12/09/09 $1,159,985 $2,939,936
Philip S. Taymor.......... 40,000 4.29% $46.125 12/09/09 $1,159,985 $2,939,936
</TABLE>
- ------------------------
(1) Each option becomes exercisable with respect to 20% of the shares subject to
the option on each of December 09, 2000, December 09, 2001, December 09,
2002, December 09, 2003 and December 09, 2004.
AGGREGATED OPTION EXERCISES, HOLDINGS AND YEAR END VALUES FOR FISCAL YEAR 1999
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
1999 and the value realized thereby and (ii) the number and value of any
unexercised stock options held by such executives as of December 31, 1999:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE MONEY OPTIONS AT
ACQUIRED ON VALUE OPTIONS AT FY-END (#) FY-END CLOSING PRICE OF $53.00
NAME EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ------------ ------------ ------------------------- ------------------------------
<S> <C> <C> <C> <C>
Douglas A. Berthiaume... 200,000 $12,196,713 2,452,680/234,800 $112,046,234/$4,384,566
Arthur G. Caputo........ 144,228 $ 8,398,272 645,912/138,000 $ 28,232,011/$2,585,402
Thomas W. Feller........ 300,000 $13,818,000 350,286/98,000 $ 15,120,084/$2,310,402
John R. Nelson.......... 55,000 $ 2,294,395 707,820/138,000 $ 31,357,901/$2,585,402
Philip S. Taymor........ 275,000 $12,675,093 490,420/138,000 $ 21,372,881/$2,585,402
</TABLE>
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 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
$160,000 for 1999), 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
8
<PAGE>
constant maturity Treasury bill rate on the last day of the preceding plan year
plus 0.5%, subject to a 5% minimum and a 10% maximum rate.
The Company also maintains a non-qualified, supplemental plan which provides
benefits that would be paid by the Retirement Plan except for 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 combined to Messrs. Berthiaume, Caputo, Feller, Nelson and
Taymor upon normal retirement is $167,000, $102,000, $37,000, $65,000 and
$131,000, respectively. As of December 31, 1999, Messrs. Berthiaume, Caputo,
Feller, Nelson and Taymor had approximately 19, 22, 23, 23 and 19 years of
credited service, respectively, under the Retirement Plan.
The aggregate estimated annual normal retirement benefits are based on
actual 1999 eligible compensation, including bonus paid in 1999. Future eligible
compensation is assumed to equal January, 2000 rate of pay and future interest
credits are assumed to be 5.0%.
COMPENSATION COMMITTEE INTERLOCKS
The Compensation Committee currently consists of Mr. Edward Conard,
Mr. Thomas Salice and Mr. William Miller. 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 three 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, senior management
incentive bonus (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 1999 were determined by the Committee after subjective consideration
of the Company's financial performance in fiscal year 1998, individual position
and responsibilities, and general and industry market surveys for comparable
positions.
9
<PAGE>
ANNUAL INCENTIVE
The Management Incentive Plan is the variable pay program for officers and
other senior executives of the Company. The purpose of the Management Incentive
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 Management Incentive
Plan. The Company achieved a level of performance required to pay bonuses for
fiscal year 1999 based upon overall Company performance.
1996 LONG-TERM PERFORMANCE INCENTIVE PLAN
Stock options are an important component of senior executive compensation
and the 1996 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 1996 Long-Term Performance Incentive Plan and
the 1994 Amended and Restated Stock Option Plan, stock options were 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, the employee stock
purchase plan and the supplemental employee retirement plan.
CHIEF EXECUTIVE COMPENSATION
Mr. Berthiaume's 1999 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. After considering these factors, the Committee elected to increase
Mr. Berthiaume's annual base salary for fiscal year 1999 to $500,000. Under the
Management Incentive Plan, the Compensation Committee awarded Mr. Berthiaume a
bonus of $635,250 for fiscal year 1999 based upon the Company's performance as
compared to pre-established criteria and targets. Mr. Berthiaume received a
stock option grant of 70,000 shares based on the subjective consideration
described under the 1996 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) generally 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 compensation. Other than
$173,361 paid to Mr. Berthiaume under the Company's Management Incentive Plan
which the Committee does not consider material, the annual cash compensation
paid to individual executives during fiscal year 1999 did not reach the
$1 million threshold. It is believed that payments under the Management
Incentive Plan and the stock incentive plans of the Company qualify as
performance-based compensation. 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 Mr. William Miller
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<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, 1999 (the last day of public trading of the Common Stock in fiscal
year 1999) 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 3826--LABORATORY ANALYTICAL INSTRUMENTS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
WATERS LABORATORY ANALYTICAL NYSE MARKET
<S> <C> <C> <C>
CORPORATION INSTRUMENTS INDEX
11/17/95 100.00 100.00 100.00
12/29/95 120.66 108.68 102.31
12/31/96 200.83 130.06 123.24
12/31/97 252.07 154.29 162.13
12/31/98 576.86 193.75 192.92
12/31/99 700.83 313.47 211.25
</TABLE>
11
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The table below sets forth certain information regarding beneficial
ownership of Common Stock as of March 15, 2000, 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
FMR Corp................................................ 7,541,100 11.92%
82 Devonshire Street
Boston, Massachusetts 02109
Putnam Investments, Inc................................. 5,673,465 8.97%
One Post Office Square
Boston, Massachusetts 02109
Directors and Executive Officers
Douglas A. Berthiaume (2)(3)............................ 3,760,335 5.72%
Arthur G. Caputo (2)(12)................................ 813,512 1.27%
Thomas W. Feller (2)(4)................................. 453,812 *
John R. Nelson (2)...................................... 700,336 1.10%
Philip S. Taymor (2)(5)(6).............................. 650,960 1.02%
Joshua Bekenstein (2)(7)(8)............................. 7,135 *
Michael J. Berendt, Ph.D. (2)........................... 400 *
Philip Caldwell (2)(7)(8)(9)............................ 59,930 *
Edward Conard (2)(7)(10)................................ 6,054 *
Dr. Laurie H. Glimcher (2).............................. 2,250 *
William J. Miller (2)(7)(10)............................ 3,444 *
Thomas P. Salice (2)(7)(8)(10)(11)...................... 10,200 *
All Directors and Executive Officers as a group (14
persons).............................................. 7,917,905 11.55%
</TABLE>
* represents less than 1% of the total.
1. Figures are based upon 63,270,131 shares of Common Stock outstanding as of
March 15, 2000. 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 15,
2000.
2. Includes share amounts which the named individuals have the right to acquire
through the exercise of options which are exercisable within 60 days of
March 15, 2000 as follows: Mr. Berthiaume 2,452,680, Mr. Caputo 545,912,
Mr. Feller 280,286, Mr. Nelson 656,686, Mr. Taymor 365,420, Mr. Bekenstein
3,200, Mr. Berendt 400, Mr. Caldwell 3,200, Mr. Conard 3,200, Dr. Glimcher
2,250, Mr. Miller 2,400 and Mr. Salice 400.
3. Includes 34,500 shares held by Mr. Berthiaume's wife, 438,157 shares held in
a family trust, 13,586 shares held in Mr. Berthiaume's 401K Plan and 2,762
shares held in the GST Trust account. Mr. Berthiaume disclaims beneficial
ownership for the shares held by his wife and the shares held in the GST
Trust account. The trustees of the GST Trust are his spouse and another
reporting person of the Company.
4. Includes 39,834 shares held by Mr. Feller's wife, for which shares he
disclaims beneficial ownership.
5. Includes 38,710 shares held by Mr. Taymor's wife, for which shares he
disclaims beneficial ownership.
12
<PAGE>
6. Reporting person was named a trustee of a trust established by another
reporting person of the Company.
7. Reporting person elected to receive deferred compensation in the form of
phantom stock: Mr. Bekenstein 1,935 shares, Mr. Caldwell 3,166 shares,
Mr. Conard 2,854 shares, Mr. Miller 1,044 shares and Mr. Salice 1,712
shares.
8. Member of the Audit Committee.
9. Includes 53,564 shares held in trust for Mr. Caldwell's wife, for which
shares he disclaims beneficial ownership.
10. Member of the Compensation Committee.
11. Shares held in joint custody with his spouse.
12. Includes 26,878 shares held in Mr. Caputo's 401K Plan and 920 shares held by
his daughters, for which shares he disclaims beneficail ownership.
13
<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,
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. Douglas A. Berthiaume, Chairman, President and Chief
Executive Officer repaid loans amounting to $743,858 during 1999. John R.
Nelson, Senior Vice President, Research and Development Officer repaid loans
amounting to $233,712 during 1999. Thomas W. Feller, Senior Vice President,
Operations, repaid loans amounting to $280,442 during 1998. In February 2000,
Brian K. Mazar, Senior Vice President, Human Resources and Investor Relations
repaid loans amounting to $282,472. The payments by these executive officers
reduced the aggregate principal amount outstanding to $801,848. 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: Arthur G. Caputo, Senior Vice
President, Sales and Marketing, $245,825; Devette Russo, Senior 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. Caputo $34,629,
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 Second Amended and Restated Certificate of Incorporation and
Amended and Restated Bylaws.
SECTION 16(A) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
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.
To the Company's knowledge, based solely on review of the copies of such
reports and written representations furnished to the Company that no other
reports were required, all of the Company's
14
<PAGE>
officers, directors and greater-than-ten-percent beneficial owners made all
required filings during the fiscal year ended December 31, 1999.
STOCKHOLDER PROPOSALS
Proposals of stockholders to be presented at the 2001 Annual Meeting of
Stockholders must be received by the Secretary of the Company by November 4,
2000 to be considered for inclusion in the Company's Proxy Statement and form of
proxy relating to that meeting. It is anticipated that the 2001 Annual Meeting
will be scheduled on or about May 4, 2001.
15
<PAGE>
EXHIBIT A
CERTIFICATE OF AMENDMENT
OF
SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
WATERS CORPORATION
WATERS CORPORATION, a corporation organized and existing under the laws of
the State of Delaware (the "Corporation"), does hereby certify, pursuant to
Section 242 of the General Corporation Law of the State of Delaware, that:
FIRST: The name of the Corporation is Waters Corporation.
SECOND: The Certificate of Incorporation of the Corporation was originally
filed with the Secretary of State of Delaware on December 6, 1991.
THIRD: The Second Amended and Restated Certificate of Incorporation, as
amended, of the Corporation is further amended to effect a change in Article
FOURTH thereof, relating to the authorized capital stock of the Corporation,
accordingly the first paragraph of Article FOURTH of the Second Amended and
Restated Certificate of Incorporation shall be amended to read in its entirety
as follows:
The total number of shares of all classes which the Corporation shall
have the authority to issue is Two Hundred Five Million (205,000,000)
shares, all with a par value of One Cent ($.01) per share, of which Five
Million (5,000,000) shares shall be designated as Preferred Stock, and
Two Hundred Million (200,000,000) shares shall be designated as Common
Stock.
FOURTH: This amendment of the Second Amended and Restated Certificate of
Incorporation has been duly adopted by the vote of the Board of Directors of the
Corporation, at a duly called Regular Meeting of the Board, and thereafter duly
adopted by the vote of the Corporation's stockholders at the Annual Meeting of
Stockholders.
FIFTH: This amendment has been duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, Waters Corporation has caused this certificate to be
signed by Douglas A. Berthiaume, its Chairman, President and Chief Executive
Officer, and attested by Victor J. Paci, its Secretary, as of this day of May,
2000.
<TABLE>
<S> <C> <C>
WATERS CORPORATION
By:
-----------------------------------------
Chairman, President and
Chief Executive Officer
</TABLE>
<TABLE>
<S> <C> <C>
ATTEST:
By:
---------------------------------------
Secretary
</TABLE>
<PAGE>
1444-PS-00
<PAGE>
WATERS CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR
ANNUAL MEETING OF STOCKHOLDERS ON MAY 4, 2000
The undersigned hereby appoints Douglas A. Berthiaume and Philip S.
Taymor and each of them proxies, each with power of substitution, to vote at the
Annual Meeting of Stockholders of WATERS CORPORATION to be held on May 4, 2000
(including any adjournments or postponements thereof), with all the powers the
undersigned would possess if personally present, as specified on the ballot
below on the matters listed below and, in accordance with their discretion, on
any other business that may come before the meeting, and revokes all proxies
previously given by the undersigned with respect to the shares covered hereby.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
DETACH HERE -------------------------------------------
Detach card below, sign, date and mail in postage paid envelope provided.
WATERS CORPORATION
34 Maple Street
Milford, MA 01757
/X/ Please mark votes as in this example.
PLEASE SIGN, DATE AND RETURN YOUR PROXY IN THE ENVELOPE PROVIDED EVEN IF YOU
PLAN TO ATTEND THE MEETING.
1. To elect a Board of Directors for the ensuing year and until their successors
are elected.
NOMINEES: (01) Joshua Bekenstein, (02) Michael J. Berendt, Ph.D., (03) Douglas
A. Berthiaume, (04) Philip Caldwell, (05) Edward Conard, (06) Laurie H.
Glimcher, M.D., (07) William J. Miller and (08) Thomas P. Salice.
FOR all Nominees / /
WITHHELD from all Nominees / /
/ / ---------------------------------------
FOR all nominees except as noted above
2. To approve an amendment to the Company's Certificate of Incorporation to
increase the number of shares of common stock, $.01 par value per share, which
the Company is authorized to issue from 100,000,000 to 200,000,000.
FOR / /
AGAINST / /
ABSTAIN / /
3. To consider and act upon any other matter which may properly come before the
meeting or any adjournment thereof.
MARK HERE FOR ADDRESS CHANGE AND / / NOTE BELOW
(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
---------------- --------- ------------- ------------
