<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 (S)240.14a-11(c) or (S)240.14a-12
THERMO SENTRON INC.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
THERMO SENTRON INC.
------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
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:
________________________________________________________________________
(4) Date Filed:
________________________________________________________________________
<PAGE>
THERMO SENTRON INC.
501 90th Avenue N.W.
Minneapolis, Minnesota 55433
April 23, 1998
Dear Stockholder:
The enclosed Notice calls the 1998 Annual Meeting of the Stockholders of
Thermo Sentron Inc. I respectfully request that all Stockholders attend this
meeting, if possible.
Our Annual Report for the year ended January 3, 1998, is enclosed. I hope
you will read it carefully. Feel free to forward any questions you may have if
you are unable to be present at the meeting.
Enclosed with this letter is a proxy authorizing three officers of the
Corporation to vote your shares for you if you do not attend the meeting.
Whether or not you are able to attend the meeting, I urge you to complete your
proxy and return it to our transfer agent, American Stock Transfer & Trust
Company, in the enclosed addressed, postage-paid envelope, as a quorum of the
Stockholders must be present at the meeting, either in person or by proxy.
I would appreciate your immediate attention to the mailing of this proxy.
Yours very truly,
LEWIS J. RIBICH
President and Chief Executive Officer
<PAGE>
THERMO SENTRON INC.
501 90th Avenue N.W.
Minneapolis, MN 55433
April 23, 1998
To the Holders of the Common Stock of
THERMO SENTRON INC.
NOTICE OF ANNUAL MEETING
The 1998 Annual Meeting of the Stockholders of Thermo Sentron Inc. (the
"Corporation") will be held on Monday, June 1, 1998, at 1:30 p.m. at The Hyatt
Regency Scottsdale Resort at Gainey Ranch, 7500 East Doubletree Ranch Road,
Scottsdale, Arizona, 85258. The purpose of the meeting is to consider and take
action upon the following matters:
1. Election of five directors.
2. Such other business as may properly be brought before the meeting and any
adjournment thereof.
The transfer books of the Corporation will not be closed prior to the
meeting, but, pursuant to appropriate action by the board of directors, the
record date for the determination of the Stockholders entitled to receive notice
of and to vote at the meeting is April 3, 1998.
The By-laws require that the holders of a majority of the stock issued and
outstanding and entitled to vote be present or represented by proxy at the
meeting in order to constitute a quorum for the transaction of business. It is
important that your shares be represented at the meeting regardless of the
number of shares you may hold. Whether or not you are able to be present in
person, please sign and return promptly the enclosed proxy in the accompanying
envelope, which requires no postage if mailed in the United States.
This Notice, the proxy and proxy statement enclosed herewith are sent to
you by order of the board of directors.
SANDRA L. LAMBERT
Secretary
<PAGE>
PROXY STATEMENT
The enclosed proxy is solicited by the board of directors of Thermo Sentron
Inc. (the "Corporation") for use at the 1998 Annual Meeting of the Stockholders
(the "Meeting") to be held on Monday, June 1, 1998, at 1:30 p.m. at The Hyatt
Regency Scottsdale Resort at Gainey Ranch, Scottsdale, Arizona, and any
adjournment thereof. The mailing address of the executive office of the
Corporation is 501 90th Avenue, N.W., Minneapolis, Minnesota 55433. This proxy
statement and the enclosed proxy were first furnished to Stockholders of the
Corporation on or about April 29, 1998.
VOTING PROCEDURES
The board of directors intends to present to the Meeting the election of
five directors, constituting the entire board of directors.
The representation in person or by proxy of a majority of the outstanding
shares of common stock of the Corporation, $.01 par value, ("Common Stock")
entitled to 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 returning a properly
signed 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 for the management nominees for 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.
In order to be elected a director, a nominee must receive the affirmative
vote of a majority of the shares of Common Stock present and entitled to vote on
the election. Withholding authority to vote for a nominee for director 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
nominee. With respect to the election of directors, 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. 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.
A Stockholder who returns a proxy may revoke it at any time before the
Stockholder's shares are voted at the Meeting by written notice to the Secretary
of the Corporation received prior to the Meeting, by executing and returning a
later dated proxy or by voting by ballot at the Meeting.
The outstanding stock of the Corporation entitled to vote (excluding shares
held in treasury by the (Corporation) as of April 3, 1998, consisted of
9,875,000 shares of Common Stock. Only Stockholders of record at the close of
business on April 3, 1998, are entitled to vote at the Meeting. Each share is
entitled to one vote.
<PAGE>
- PROPOSAL 1 -
ELECTION OF DIRECTORS
Five directors are to be elected at the Meeting, each to hold office until
his successor is chosen and qualified or until his earlier resignation, death or
removal.
NOMINEES FOR DIRECTORS
Set forth below are the names of the persons nominated as directors, their
ages, their offices in the Corporation, if any, their principal occupation or
employment for the past five years, the length of their tenure as directors and
the names of other public companies in which such persons hold directorships.
Information regarding their beneficial ownership of the Corporation's Common
Stock and of the common stock of its parent company, Thermedics Inc.
("Thermedics"), a manufacturer of product quality-assurance systems, security
devices and biomedical products, and Thermedics' parent company, Thermo Electron
Corporation ("Thermo Electron"), a provider of diversified products and services
for biomedical, instrument and environmental markets, is reported under the
caption "Stock Ownership." All of the nominees are currently directors of the
Corporation.
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
MARSHALL J. ARMSTRONG Mr. Armstrong, 62, has been a director of the Corporation since September
1996. Mr. Armstrong has been senior vice president, government affairs of
Thermo Electron since March 1997 and was a vice president of Thermo
Electron from 1986 until his promotion. He also served as chairman of the
board of Thermo Power Corporation, a majority-owned subsidiary of Thermo
Electron that manufactures packaged cogeneration, commercial cooling and
specialized refrigeration systems, from 1990 to 1996, as its chief
executive officer from 1991 to 1996, and as its president from 1992 to
1995. He is also a director of SatCon Technology Corporation and Thermo
Power Corporation.
- ------------------------------------------------------------------------------------------------------------------------------------
DONALD E. NOBLE Mr. Noble, 83, has been a director of the Corporation since January 1996.
For more than 20 years, from 1959 to 1980, Mr. Noble served as the chief
executive officer of Rubbermaid Incorporated, first with the title of
president and then as chairman of the board. Mr. Noble is also a director
of Thermo Electron, Thermo Fibertek Inc., Thermo Power Corporation and
Thermo TerraTech Inc.
- ----------------------------------------------------------------------------------------------------------------
LEWIS J. RIBICH Mr. Ribich, 54, has been the chief executive officer, president and a
director of the Corporation since its inception in 1995. He has also been
president of Ramsey Technology Inc., the predecessor of the Corporation,
since 1990.
- ----------------------------------------------------------------------------------------------------------------
PETER RICHMAN Mr. Richman, 70, has been a director of the Corporation since January 1996.
Mr. Richman was a consultant to Thermedics and its subsidiaries on
corporate development and acquisition strategies from March 1993 to March
1995. For more than five years prior to 1993, Mr. Richman was the founder,
president and chief executive officer of Keytek Instrument Corp., a
manufacturer of electromagnetic compatibility testing equipment, which was
sold in 1993 to Thermo Voltek Corp., a majority-owned subsidiary of
Thermedics. Mr. Richman is also a director of Thermo Voltek Corp.
- ----------------------------------------------------------------------------------------------------------------
JOHN W. WOOD JR. Mr. Wood, 54, has been a director of the Corporation and its chairman of
the board since its inception in 1995. Mr. Wood has been a senior vice
president of Thermo Electron since November 1995, and was a vice president
of Thermo Electron from September 1994 to November 1995. Mr. Wood has also
been the chairman of the board of Thermedics since March 1998, and served
as its president and chief executive officer from 1984 to March 1998. Mr.
Wood is also a director of Thermedics, Thermedics Detection Inc., Thermo
Cardiosystems Inc. and Thermo Voltek Corp.
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETINGS
The board of directors has established an audit committee and a human
resources committee, each consisting solely of outside directors. The present
members of the audit committee are Mr. Noble and Mr. Richman (Chairman). The
audit committee reviews the scope of the audit with the Corporation's
independent public accountants and meets with them for the purpose of reviewing
the results of the audit subsequent to its completion. The present members of
the human resources committee are Mr. Noble (Chairman) and Mr. Richman. The
human resources committee reviews the performance of senior members of
management, approves executive compensation and administers the Corporation's
stock option and other stock-based compensation plans. The Corporation does not
have a nominating committee of the board of directors. The board of directors
met three times, the audit committee met twice and the human resources committee
met four times during fiscal 1997. Each director attended at least 75% of all
meetings of the board of directors and committees on which he served held during
fiscal 1997.
COMPENSATION OF DIRECTORS
CASH COMPENSATION
Directors who are not employees of the Corporation, of Thermo Electron or
of any other companies affiliated with Thermo Electron (also referred to as
"outside directors") receive an annual retainer of $2,000 and a fee of $1,000
per day for attending regular meetings of the board of directors and $500 per
day for participating in meetings of the board of directors held by means of
conference telephone and for participating in certain meetings of committees of
the board of directors. Payment of directors' fees is made quarterly. Messrs.
Armstrong, Ribich and Wood are all employees of Thermo Electron or its
subsidiaries and do not receive any cash compensation from the Corporation for
their services as directors. Directors are also reimbursed for out-of-pocket
expenses incurred in attending such meetings.
DEFERRED COMPENSATION PLAN
Under the deferred compensation plan for directors (the "Deferred
Compensation Plan"), a director has the right to defer receipt of his cash fees
until he ceases to serve as a director, dies or retires from his principal
occupation. In the event of a change in control or proposed change in control of
the Corporation that is not approved by the board of directors, deferred amounts
become payable immediately. Either of the following is deemed to be a change of
control: (a) the acquisition, without the prior approval of the board of
directors, directly or indirectly, by any person of 50% or more of the
outstanding Common Stock or the outstanding common stock of Thermedics or 25% or
more of the outstanding common stock of Thermo Electron; or (b) the failure of
the persons serving on the board of directors immediately prior to any contested
election of directors or any exchange offer or tender offer for the Common Stock
or the common stock of Thermedics or 25% or more of the outstanding common stock
of Thermo Electron to constitute a majority of the board of directors at any
time within two years following any such event. Amounts deferred pursuant to the
Deferred Compensation Plan are valued at the end of each quarter as units of the
Corporation's Common Stock. When payable, amounts deferred may be disbursed
solely in shares of Common Stock accumulated under the Deferred Compensation
Plan. A total of 25,000 shares of Common Stock have been reserved for issuance
under the Deferred Compensation Plan. As of March 1, 1998, deferred units equal
to 1,634.25 shares of Common Stock were accumulated under the Deferred
Compensation Plan.
DIRECTORS STOCK OPTION PLAN
The Corporation's directors stock option plan (the "Directors Plan")
provides for the grant of stock options to purchase shares of Common Stock of
the Corporation to outside directors as additional compensation for their
service as directors. The Directors Plan provides for the grant of stock
options upon a director's initial appointment and, beginning in 2000, awards
options to purchase 1,000 shares annually to outside directors. A total of
100,000 shares of Common Stock have been reserved for issuance under the
Directors Plan.
Under the Directors Plan, each outside director who joined the board of
directors prior to or during 1996 was granted an option to purchase 15,000
shares of Common Stock upon the effective date of the Corporation's initial
public offering. The size of awards to new directors appointed to the board of
directors after 1996 is reduced by 3,750 shares in each subsequent year.
Outside directors who join the board of directors after 1999 would not receive
an option grant upon their appointment or election to the board of directors,
but would be eligible to
<PAGE>
participate in the annual option awards described below. Options evidencing
initial grants to directors are exercisable six months after the date of grant.
The shares acquired upon exercise are subject to restrictions on transfer and
the right of the Corporation to repurchase such shares at the exercise price in
the event the director ceases to serve as a director of the Corporation or any
other Thermo Electron company. The restrictions and repurchase rights lapse or
are deemed to have lapsed in equal annual installments of 3,750 shares per year,
starting with the first anniversary of the grant date, provided the director has
continuously served as a director of the Corporation or any other Thermo
Electron company since the grant date. These options expire on the fifth
anniversary of the grant date, unless the director dies or otherwise ceases to
serve as a director of the Corporation or any other Thermo Electron company
prior to that date.
Outside directors will also receive an annual grant of options to purchase
1,000 shares of Common Stock, commencing with the Annual Meeting of the
Stockholders to be held in 2000. The annual grant will be made at the close of
business on the date of each Annual Meeting of the Stockholders of the
Corporation to each outside director then holding office. Options evidencing
annual grants will be exercisable at any time from and after the six-month
anniversary of the grant date of the option and prior to the expiration of the
option on the third anniversary of the grant date. Shares acquired upon
exercise of the options would be subject to repurchase by the Corporation at the
exercise price if the recipient ceased to serve as a director of the Corporation
or any other Thermo Electron company prior to the first anniversary of the grant
date.
The exercise price for options granted under the Directors Plan is the
average of the closing prices of the Common Stock as reported on the American
Stock Exchange (or other principal market on which the Common Stock is then
traded) for the five trading days immediately preceding and including the date
of grant, or, if the shares are not then traded, at the last price per share
paid by third parties in an arms-length transaction prior to the option grant.
As of March 1, 1998, options to purchase 30,000 shares of Common Stock were
outstanding under the Directors Plan, no options had lapsed or been exercised,
and options to purchase 70,000 shares of Common Stock were reserved and
available for future grant.
STOCK OWNERSHIP POLICIES FOR DIRECTORS
During 1996, the human resources committee of the board of directors (the
"Committee") established a stock holding policy for directors. The stock
holding policy requires each director to hold a minimum of 1,000 shares of
Common Stock. Directors are requested to achieve this ownership level by the
1998 Annual Meeting of Stockholders. The chief executive officer of the
Corporation is required to comply with a separate stock holding policy
established by the Committee in 1996, which is described in "Committee Report on
Executive Compensation - Stock Ownership Policies."
In addition, the Committee adopted a policy requiring directors to hold
shares of the Corporation's Common Stock equal to one-half of their net option
exercises over a period of five years. The net option exercise is determined by
calculating the number of shares acquired upon exercise of a stock option, after
deducting the number of shares that could have been traded to exercise the
option and the number of shares that could have been surrendered to satisfy tax
withholding obligations attributable to the exercise of the option. This policy
is also applicable to executive officers and is described in "Committee Report
on Executive Compensation - Stock Ownership Policies."
STOCK OWNERSHIP
The following table sets forth the beneficial ownership of Common Stock, as
well as the common stock of Thermedics, the Corporation's parent company, and of
Thermo Electron, Thermedics' parent company, as of March 1, 1998, with respect
to (i) each director, (ii) each executive officer named in the summary
compensation table under the heading "Executive Compensation" and (iii) all
directors and executive officers as a group. In addition, the following table
sets forth the beneficial ownership of Common Stock as of March 1, 1998, with
respect to each person who was known by the Corporation to own beneficially more
than 5% of the outstanding shares of Common Stock.
<PAGE>
While certain directors and executive officers of the Corporation are also
directors and executive officers of Thermedics or its subsidiaries other than
the Corporation, all such persons disclaim beneficial ownership of the shares of
Common Stock owned by Thermedics.
<TABLE>
<CAPTION>
THERMO SENTRON THERMEDICS THERMO
NAME (1) INC. (2) INC.(3) ELECTRON(4)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Thermo Electron Corporation (5) 7,688,000 -- --
Dimensional Fund Advisers Inc. (6) 611,600 -- --
Marshall J. Armstrong 2,000 14,173 147,754
M. Preston Luman 46,900 11,097 4,668
Donald E. Noble 17,448 14,173 56,651
Lewis J. Ribich 105,900 52,401 22,595
Peter Richman 16,485 4,500 0
John W. Wood Jr. 33,400 188,406 272,157
All directors and executive
officers as a group (8 persons) 269,033 357,015 1,316,652
</TABLE>
(1) Except as reflected in the footnotes to this table, shares beneficially
owned consist of shares owned by the indicated person or by that person for
the benefit of minor children and all share ownership includes sole voting
and investment power.
(2) Shares of the Common Stock beneficially owned by Mr. Armstrong, Mr. Luman,
Mr. Noble, Mr. Ribich, Mr. Richman, Mr. Wood and all directors and
executive officers as a group include 2,000, 40,700, 15,000, 100,700,
15,000, 30,400 and 223,800 shares, respectively, that such person or group
has the right to acquire within 60 days of March 1, 1998, through the
exercise of stock options. Shares of the Common Stock beneficially owned
by Mr. Noble, Mr. Richman and all directors and executive officers as a
group include 1,148, 485 and 1,633 full shares, respectively, allocated to
their respective accounts through March 1, 1998, maintained under the
Corporation's Deferred Compensation Plan for directors. No director or
executive officer beneficially owned more than 1% of the Common Stock
outstanding as of March 1, 1998, except for Mr. Ribich, who owned 1.1%; all
directors and executive officers as a group beneficially owned 2.7% of the
Common Stock outstanding as of such date.
(3) Shares of the common stock of Thermedics beneficially owned by Mr. Luman,
Mr. Noble, Mr. Ribich, Mr. Richman, Mr. Wood and all directors and
executive officers as a group include 10,000, 4,500, 51,600, 4,500, 130,700
and 270,300 shares, respectively, that such person or group has the right
to acquire within 60 days after March 1, 1998, through the exercise of
stock options. Shares of the common stock of Thermedics beneficially owned
by Mr. Armstrong and all directors and executive officers as a group
include 1,448 and 4,479 full shares, respectively, allocated through March
1, 1998, to their accounts maintained pursuant to Thermo Electron's
employee stock ownership plan (the "ESOP"), of which the trustees, who have
investment power over its assets, are executive officers of Thermo
Electron. Shares of the common stock of Thermedics beneficially owned by
Mr. Wood include 2,600 shares held in trust for the benefit of two minor
children. The directors and executive officers of the Corporation did not
individually or as a group beneficially own more than 1% of the common
stock of Thermedics outstanding as of March 1, 1998.
(4) Shares of the common stock of Thermo Electron beneficially owned by Mr.
Armstrong, Mr. Luman, Mr. Noble, Mr. Ribich, Mr. Wood and all directors and
executive officers as a group include 88,824, 4,100, 10,375, 21,425,
230,458 and 1,060,654 shares, respectively, that such person or group has
the right to acquire within 60 days of March 1, 1998, through the exercise
of stock options. Shares of the common stock of Thermo Electron
beneficially owned by Mr. Armstrong and all directors and executive
officers as a group include 2,598 and 6,060 full shares, respectively,
allocated through March 1, 1998, to their accounts maintained pursuant to
Thermo Electron's employee stock ownership plan (the "ESOP"), of
<PAGE>
which the trustees, who have investment power over its assets, are
executive officers of Thermo Electron. Shares of the common stock of Thermo
Electron beneficially owned by Mr. Noble and all directors and executive
officers as a group include 42,861 full shares allocated to Mr. Noble's
account maintained under the Thermo Electron deferred compensation plan for
directors. Shares of the common stock of Thermo Electron beneficially owned
by Mr. Armstrong include 249 shares owned by his spouse. The directors and
executive officers of the Corporation did not individually or as a group
beneficially own more than 1% of the common stock of Thermo Electron
outstanding as of March 1, 1998.
(5) As of March 1, 1998, Thermo Electron, primarily through its majority-owned
subsidiary Thermedics, beneficially owned approximately 78% of the
outstanding Common Stock. Thermo Electron's address is 81 Wyman Street,
Waltham, Massachusetts 02254-9046. As of March 1, 1998, Thermo Electron
had the power to elect all of the members of the Corporation's board of
directors.
(6) Information regarding the number of shares of the Common Stock beneficially
owned by Dimensional Fund Advisers Inc. is based on the most recent
Schedule 13G of Dimensional Fund Advisers Inc. received by the Corporation,
which reported such ownership as of December 31, 1997. The address of
Dimensional Fund Advisers Inc. is 1299 Ocean Avenue, 11th Floor, Santa
Monica, California 90401. As of December 31, 1997, Dimensional Fund
Advisers Inc. beneficially owned approximately 6.19% of the outstanding
Common Stock. Dimensional Fund Advisors Inc. is a registered investment
advisor. All shares that it is deemed to beneficially own are held in
portfolios of DFA Investment Dimensions Group Inc., a registered open-end
investment company, or in series of the DFA Investment Trust Company, a
Delaware business trust, or the DFA Group Trust and DFA Participation Group
Trust, investment vehicles for qualified employee benefit plans, all of
which Dimensional Fund Advisors Inc. serves as investment manager.
Dimensional Fund Advisors Inc. disclaims beneficial ownership of all such
shares.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors and executive officers, and beneficial owners of more
than 10% of the Common Stock, such as Thermo Electron, to file with the
Securities and Exchange Commission initial reports of ownership and periodic
reports of changes in ownership of the Corporation's securities. Based upon a
review of such filings, all Section 16(a) filing requirements applicable to such
persons were complied with during 1997, except in the following instances.
Thermo Electron filed four Forms 4 late, reporting a total of 27 transactions,
including 25 open market purchases of shares of Common Stock and two
transactions associated with the grant of options to purchase Common Stock made
to employees under its stock option program.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes compensation for services to the Corporation
in all capacities awarded to, earned by or paid to the Corporation's chief
executive officer and one other most highly compensated executive officer (the
"named executive officers") for the last three fiscal years. No other executive
officer of the Corporation met the definition of "highly compensated" within the
meaning of the Securities and Exchange Commission's executive compensation
disclosure rules.
The Corporation is required to appoint certain executive officers and full-
time employees of Thermo Electron as executive officers of the Corporation, in
accordance with the Thermo Electron Corporate Charter. The compensation for
these executive officers is determined and paid entirely by Thermo Electron. The
time and effort devoted by these individuals to the Corporation's affairs is
provided to the Corporation under the Corporate Services Agreement between the
Corporation and Thermo Electron. Accordingly, the compensation for these
individuals is not reported in the following table.
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM
COMPENSATION
------------
FISCAL ANNUAL COMPENSATION SECURITIES UNDERLYING
NAME AND FISCAL ------------------- OPTIONS (NO. OF SHARES ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS AND COMPANY (1) COMPENSATION (2)
------------------ ---- ------ ----- --------------- ----------------
<S> <C> <C> <C> <C> <C>
Lewis J. Ribich 1997 $165,000 $95,000 40,700 (TSR) $10,410 (3)
President and 10,100 (TMO)
Chief Executive Officer 900 (TMD)
1996 $159,000 $89,000 60,000 (TSR) $8,059 (3)
75 (TMO)
600 (TMD)
2,000 (TFG)
1995 $155,000 $87,500 100 (TMD) $6,750
M. Preston Luman 1997 $104,000 $44,390 20,700 (TSR) $8,675 (4)
Vice President, 4,100 (TMO)
Finance and Operations 1996 $100,000 $48,000 20,000 (TSR) $6,240 (4)
1995 $95,000 $40,000 -- $6,594
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Options granted by the Corporation are designated in the table as "TSR."
In addition, the named executive officers have also been granted options to
purchase common stock of Thermo Electron and its majority-owned
subsidiaries from time to time as part of Thermo Electron's stock option
program. Options have been granted during the last three fiscal years in
the following Thermo Electron companies: Thermo Electron (designated in the
table as TMO), Thermedics Inc. (designated in the table as TMD), and Thermo
Fibergen Inc. (designated in the table as TFG).
(2) Represents the amount of matching contributions made by the individual's
employer on behalf of executive officers participating in the Thermo
Electron 401(k) plan.
(3) In addition to the matching contribution referred to in footnote (2), such
amounts include $3,660 and $1,309, which represent the amounts of
compensation attributable in 1997 and 1996, respectively, to interest-free
loans provided to Mr. Ribich pursuant to the Corporation's stock holding
assistance plan. See "Relationship with Affiliates - Stock Holding
Assistance Plan."
(4) In addition to the matching contribution referred to in footnote (2), such
amounts include $3,331 and $896, respectively, which represent the amounts
of compensation attributable in 1997 and 1996, respectively, to interest-
free loans provided to Mr. Luman pursuant to the Corporation's stock
holding assistance plan. See "Relationship with Affiliates - Stock Holding
Assistance Plan."
STOCK OPTIONS GRANTED DURING FISCAL 1997
The following table sets forth information concerning individual grants of
stock options made during fiscal 1997 to the Corporation's chief executive
officer and the other named executive officer. It has not been the
Corporation's policy in the past to grant stock appreciation rights, and no such
rights were granted during fiscal 1997.
<PAGE>
<TABLE>
<CAPTION>
OPTION GRANTS IN FISCAL 1997
- ------------------------------------------------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PERCENT OF PRICE APPRECIATION FOR
NUMBER OF SECURITIES TOTAL OPTIONS EXERCISE OPTION TERM(2)
UNDERLYING OPTIONS EMPLOYEES IN PRICE PER EXPIRATION ----------------------
NAME GRANTED (1) FISCAL YEAR SHARE DATE 5% 10%
---- ---------- ----------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Lewis J. Ribich 40,000 (TSR) 20.00% $9.80 3/19 $312,000 $838,400
700 (TSR) 0.30% $9.80 3/19/0 $1,078 $2,268
100 (TMO) 0.01%(3) $34.20 6/3/00 $539 $1,132
10,000 (TMO) 0.70%(3) $39.39 9/24 $313,500 $842,300
900 (TMD) 0.30%(3) $19.03 3/20/0 $2,700 $5,670
M. Preston Luman 700 (TSR) 0.30% $9.80 3/19/0 $1,078 $2,268
20,000 (TSR) 10.00% $13.23 9/10 $210,600 $565,800
100 (TMO) 0.01%(3) $34.20 6/3/00 $539 $1,132
4,000 (TMO) 0.01%(3) $39.39 9/24 $125,400 $336,920
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The options granted during the fiscal year are immediately exercisable as
of the end of the fiscal year. In all cases, the shares acquired upon
exercise are subject to repurchase by the granting corporation at the
exercise price if the optionee ceases to be employed by such corporation or
any other Thermo Electron company. The granting corporation may exercise
its repurchase rights within six months after the termination of the
optionee's employment. The repurchase rights generally lapse ratably over
a five- to ten-year period, depending on the option term, which may vary
from seven to twelve years, provided that the optionee continues to be
employed by the Corporation or another Thermo Electron company. Certain
options have three-year terms and the repurchase rights lapse in their
entirety on the second anniversary of the grant date. The granting
corporation may permit the holder of options to exercise options and to
satisfy tax withholding obligations by surrendering shares equal in fair
market value to the exercise price or withholding obligation.
(2) The amounts shown in this table represent hypothetical gains that could be
achieved for the respective options if exercised at the end of the option
term. These gains are based on assumed rates of stock appreciation of 5%
and 10% compounded annually from the date the respective options were
granted to their expiration date. The gains shown are net of the option
exercise price, but do not include deductions for taxes or other expenses
associated with the exercise. Actual gains, if any, on stock option
exercises will depend on the future performance of the common stock of the
granting corporation, the optionee's continued employment through the
option period and the date on which the options are exercised.
(3) These options were granted under stock option plans maintained by Thermo
Electron companies other than the Corporation and accordingly are reported
as a percentage of total options granted to employees of Thermo Electron
and its subsidiaries.
STOCK OPTIONS EXERCISED DURING FISCAL 1997 AND FISCAL YEAR-END OPTION VALUES
The following table reports certain information regarding stock option
exercises during fiscal 1997 and outstanding stock options held at the end of
fiscal 1997 by the Corporation's chief executive officer and the other named
executive officer. No stock appreciation rights were exercised or were
outstanding during fiscal 1997.
<PAGE>
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN FISCAL 1997 AND FISCAL 1997 YEAR-END OPTION VALUES
- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF
UNEXERCISED
OPTIONS AT FISCAL VALUE OF
SHARES YEAR-END UNEXERCISED
ACQUIRED ON VALUE (EXERCISABLE/ IN-THE-MONEY
NAME COMPANY EXERCISE REALIZED (1) UNEXERCISABLE) (2) OPTIONS
---- ------- -------- ----------- ------------------ -----------
<S> <C> <C> <C> <C> <C>
Lewis J. Ribich Thermo Sentron -- -- 100,700 /0 $183,528 /--
Thermo Electron -- -- 21,425 /0 $240,102 /--
Thermedics -- -- 51,600 /0 $317,534 /--
Thermo Fibergen -- -- 2,000 /0 $0 /--
ThermoSpectra -- -- 800 /0 $2,700 /--
- ------------------------------------------------------------------------------------------------------------------------------------
M. Preston Luman Thermo Sentron -- -- 40,700 /0 $23,428 /--
Thermo Electron -- -- 4,100 /0 $499 /--
Thermedics -- -- 10,000 /0 $63,330 /--
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Amounts shown in this column do not necessarily represent actual value
realized from the sale of the shares acquired upon exercise of the option
because in many cases the shares are not sold on exercise but continue to
be held by the executive officer exercising the option. The amounts shown
represent the difference between the option exercise price and the market
price on the date of exercise, which is the amount that would have been
realized if the shares had been sold immediately upon exercise.
(2) All of the options reported outstanding at the end of the fiscal year are
immediately exercisable. In all cases, the shares acquired upon exercise
of the options reported in the table are subject to repurchase by the
granting corporation at the exercise price if the optionee ceases to be
employed by such corporation or any other Thermo Electron company. The
granting corporation may exercise its repurchase rights within six months
after the termination of the optionee's employment. The repurchase rights
generally lapse ratably over a five- to ten-year period, depending on the
option term, which may vary from seven to twelve years, provided that the
optionee continues to be employed by the Corporation or another Thermo
Electron company. Certain options have three-year terms and the repurchase
rights lapse in their entirety on the second anniversary of the grant date.
The granting corporation may permit the holder of options to exercise
options and to satisfy tax withholding obligations by surrendering shares
equal in fair market value to the exercise price or withholding obligation.
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
All decisions on compensation for the Corporation's executive officers are
made by the human resources committee of the board of directors (the
"Committee"). In reviewing and establishing total cash compensation and stock-
based compensation for executives, the Committee follows guidelines established
by the human resources committees of the board of directors of its parent
companies, Thermo Electron and Thermedics. The executive compensation program
presently consists of annual base salary ("salary"), short-term incentives in
the form of annual cash bonuses, and long-term incentives in the form of stock
options (collectively referred to as "total compensation").
The Committee believes that the total compensation of executive officers
should reflect the scope of their responsibilities, the success of the
Corporation, and the contributions of each executive to that success. In
addition, the Committee believes that base salaries should approximate the mid-
point of competitive salaries derived from
<PAGE>
market surveys and that short-term and long-term incentive compensation should
reflect the performance of the Corporation and the contributions of each
executive.
ESTABLISHING COMPETITIVENESS
External competitiveness is an important element of the Committee's
compensation policy. The competitiveness of the Corporation's total compensation
for its executives is assessed by comparing it to market data provided by
compensation consultants and by participating in annual executive compensation
surveys, primarily "Project 777," an executive compensation survey prepared by
Management Compensation Services, a division of Hewitt Associates. The majority
of firms represented in the Project 777 survey are included in the Standard &
Poor's 500 Index, but do not necessarily correspond to the companies included in
the Corporation's peer group index, the Dow Jones Total Return Index for the
Diversified Technology Industry Group.
Principles of internal equity are also central to the Committee's
compensation policies. Total compensation considered for the Corporation's
officers, whether cash or stock-based incentives, is also evaluated by comparing
it to total compensation of other executives within the Thermo Electron
organization with comparable levels of responsibility for comparably sized
business units.
The process for determining each of these elements for the Corporation's
executive officers is outlined below. For its review of the compensation of the
other officers of the Corporation, the Committee follows a substantially similar
process.
BASE SALARY
Base salaries are intended to approximate the mid-point of competitive
salaries for similar organizations of comparable size and complexity to the
Corporation. Executive salaries are adjusted gradually over time and only as
necessary to meet this objective. Increases in base salary may be moderated by
other considerations, such as geographic or regional market data, industry
trends or internal fairness within the Corporation and Thermo Electron. It is
the Committee's intention that over time the base salaries for the chief
executive officer and the other named executive officers will approximate the
mid-point of competitive data. The salary increases in 1997 for the chief
executive officer and the other named executive officer generally reflect this
practice of gradual increases and moderation.
CASH BONUS
The Committee establishes a median potential bonus for each executive by
using the market data on total cash compensation from the same executive
compensation surveys as used to determine salaries. Specifically, the median
potential bonus plus the salary of an executive officer is approximately equal
to the mid-point of competitive total cash compensation for a similar position
and level of responsibility in businesses having comparable sales and complexity
to the Corporation. The actual bonus awarded to an executive officer may range
from zero to three times the median potential bonus. The value within the range
(the bonus multiplier) is determined at the end of each year by the Committee in
its discretion. The Committee exercises its discretion by evaluating each
executive's performance using a methodology developed by its parent corporation,
Thermo Electron, and applied throughout the Thermo Electron organization. The
methodology incorporates measures of operating returns which are designed to
measure profitability and contributions to shareholder value, and are measures
of corporate and divisional performance that are evaluated using graphs
developed by Thermo Electron intended to reward performance that is perceived as
above average and to penalize performance that is perceived as below average.
The measures of operating returns used in the Committee's determinations in
fiscal 1997 measured return on net assets, growth in income, and return on
sales, and the Committee's determinations also included a subjective evaluation
of the contributions of each executive that are not captured by operating
measures but are considered important to the creation of long-term value for the
Stockholders. These measures of achievements are not financial targets that are
met, not met or exceeded. The relative weighting of the operating measures and
subjective evaluation varies among the executives, depending on their roles and
responsibilities within the organization.
The bonuses for named executive officers approved by the Committee with
respect to fiscal 1997 performance in each instance exceeded the median
potential bonus.
<PAGE>
STOCK OPTION PROGRAM
The primary goal of the Corporation and its parent companies is to excel in
the creation of long-term value for the Stockholders. The principal incentive
tool used to achieve this goal is the periodic award to key employees of options
to purchase common stock of the Corporation and other Thermo Electron companies.
The Committee and management believe that awards of stock options to
purchase the shares of both the Corporation and other companies within the
Thermo Electron group of companies accomplish many objectives. The grant of
options to key employees encourages equity ownership in the Corporation, and
closely aligns management's interests to the interests of all the Stockholders.
The emphasis on stock options also results in management's compensation being
closely linked to stock performance. In addition, because they are subject to
vesting periods of varying durations and to forfeiture if the employee leaves
the Corporation prematurely, stock options are an incentive for key employees to
remain with the Corporation long-term. The Committee believes stock option
awards in its parent companies, Thermo Electron and Thermedics, and the other
majority-owned subsidiaries of Thermo Electron and Thermedics, are an important
tool in providing incentives for performance within the entire organization.
In determining awards, the Committee considers for each officer the annual
value of all options to purchase shares of the Corporation and other companies
within the Thermo Electron organization that vest in the next year and compares
the individual's total compensation using this value to competitive data. The
Committee uses a modified Black-Scholes option pricing model to determine the
value of an option award. In addition, the Committee considers the aggregate
amount of net awards to purchase shares of Common Stock granted to all employees
over the last five years to monitor the number of aggregate awards to all
employees. In reviewing the aggregate number of awards, the Committee considers
such factors as the size of the company, its stage of development, and its
growth strategy, as well as the aggregate awards and option practices of
comparably situated companies.
The Committee periodically awards stock options based on its assessment of
the total compensation of each executive, the actual and anticipated
contributions of each executive (which includes a subjective assessment by the
Committee of the value of the executive's future potential within the
organization), as well as the value of previously awarded options as described
above. Such discretionary option awards were made to the named executive
officers in 1997. In addition, certain option awards made to the named
executive officers in 1997 with respect to the common stock of Thermo Electron
were made as part of Thermo Electron's overall stock option program and were
determined by the human resources committee of its board of directors using a
similar analysis.
STOCK OWNERSHIP AND RETENTION POLICIES
The Corporation's compensation program is also designed to encourage
executives to own shares of the Corporation's Common Stock. The Committee
believes that encouraging executives to retain stock acquired through its stock
option program provides additional incentive for executive officers to follow
strategies designed to maximize long-term value to Stockholders.
There are several elements to the Corporation's stock retention program.
For example, the Committee annually awards stock options based upon an
executive's ownership of the Corporation's Common Stock and unexercised, vested
rights to acquire such stock during the prior year. These option awards are
independent of the award of stock options as an incentive for management
performance.
In 1997, the Committee granted options to purchase Common Stock to the
named executive officers under this program. These options have three-year
terms and vest 100% on the second anniversary of grant. Certain options awarded
in 1997 to the named executive officers with respect to the common stock of
Thermo Electron and Thermedics, respectively, were made under similar programs
that awards options to certain eligible employees annually based on the number
of shares of the common stock of Thermo Electron or Thermedics, as the case may
be, held by the employee, as an incentive to buy and hold such company's common
stock.
The Committee established a stock holding policy for executive officers of
the Corporation in 1996 that required executive officers to own a multiple of
their compensation in shares of the Corporation's Common Stock. For the chief
executive officer, the multiple was one times his base salary and reference
bonus for the calendar year.
<PAGE>
For all other officers, the multiple was one times the officer's base salary.
The Committee deemed it appropriate to permit officers to achieve these
ownership levels over a three-year period. The policy was amended in 1998 to
apply only to the chief executive officer.
In order to assist officers in complying with the policy, the Committee
also adopted in 1996 a stock holding assistance plan under which the Corporation
was authorized to make interest-free loans to officers to enable them to
purchase shares of the Common Stock in the open market. The loans are required
to be repaid upon the earlier of demand or the fifth anniversary of the grant
date, unless otherwise authorized by the Committee. During 1996, Mr. Ribich, the
Corporation's chief executive officer, and Mr. Luman, the Corporation's vice
president, finance and operations, received loans in the principal amounts
of $75,384 and $58,320, respectively, under this plan, of which amounts
$60,307.20 and $46,663.20, respectively, were outstanding as of April 23, 1998.
This plan was also amended in 1998 to apply only to the chief executive officer.
During 1997, Mr. Luman received an additional loan in the principal amount of
$11,681.70 under the plan, of which amount $9,345.36 was outstanding as of April
23, 1998. See "Relationship with Affiliates - Stock Holding Assistance Plan."
The Committee also has adopted a policy requiring its executive officers to
hold shares of the Corporation's Common Stock acquired upon the exercise of
stock options granted by the Corporation. Under this policy, executive officers
are required to hold one-half of their net option exercises over a period of
five years. The net option exercise is determined by calculating the number of
shares acquired upon exercise of a stock option, after deducting the number of
shares that could have been traded to exercise the option and the number of
shares that could have been surrendered to satisfy tax withholding obligations
attributable to the exercise of the options.
POLICY ON DEDUCTIBILITY OF COMPENSATION
The Committee has also considered the application of Section 162(m) of the
Internal Revenue Code to the Corporation'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" or is otherwise exempt under
Section 162(m). The annual compensation paid to individual executives does not
approach the $1 million threshold, and it is believed that stock incentive plans
of the Corporation 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 Corporation's
compensation practices and the effect of Section 162(m).
1997 CEO COMPENSATION
The salary and bonus of Mr. Ribich are established using the same criteria
as described above for the salaries and bonuses of the Corporation's other
executive officers. In determining Mr. Ribich's compensation as reported, the
Committee considered as part of its subjective evaluation, among other things,
his contributions toward the introduction of new products and the identification
of strategic acquisitions for the Corporation.
The Committee awarded to Mr. Ribich options to purchase 40,000 shares of
the Common Stock in fiscal 1997. This discretionary award was determined in a
manner consistent with awards to other officers, as described above under the
caption "Stock Option Program." The award to Mr. Ribich in fiscal 1997 of
options to purchase 10,000 shares of the common stock of Thermo Electron was
made by the human resources committee of the board of directors of Thermo
Electron using a methodology similar to that described for the Corporation. In
addition, the Committee annually considers an award of stock options to
executive officers of the Corporation, generally based upon the number of shares
of Common Stock and unexercised, vested stock options held by the executive
during the year, as an incentive to buy and hold Common Stock. The award of
stock options to purchase 700 shares of Common Stock to Mr. Ribich in 1997 was
made under this program. In addition to stock option awards by the Committee,
Mr. Ribich may receive awards to purchase shares of the common stock of the
majority-owned subsidiaries of Thermo Electron from time to time as part of
Thermo Electron's stock option program due to his position as a chief executive
officer of a majority-owned subsidiary of Thermo Electron. The award of stock
options to purchase 10,000 shares of the common stock of Thermo Electron to Mr.
Ribich in 1997 was made under this program. The awards of options to purchase
100 shares of the common stock of Thermo Electron and 900 shares of
<PAGE>
the common stock of Thermedics granted to Mr. Ribich in fiscal 1997 were made by
the human resources committees of those companies under a program that awards
options to certain eligible employees annually based on the number of shares of
the common stock of Thermo Electron or Thermedics held by the employee, as an
incentive to buy and hold such company's shares.
Donald E. Noble (Chairman)
Peter Richman
<PAGE>
COMPARATIVE PERFORMANCE GRAPH
The Securities and Exchange Commission requires that the Corporation
include in this proxy statement a line-graph presentation comparing cumulative,
five-year shareholder returns for the Corporation's Common Stock with a broad-
based market index and either a nationally recognized industry standard or an
index of peer companies selected by the Corporation. The Corporation's Common
Stock has been publicly traded only since March 27, 1996 and, as a result, the
following graph commences as of such date. The Corporation has compared its
performance with the American Stock Exchange Market Value Index and the Dow
Jones Total Return Index for the Diversified Technology Industry Group as of the
last trading day of the Corporation's fiscal year.
COMPARISON OF TOTAL RETURN AMONG THERMO SENTRON INC.,
THE AMERICAN STOCK EXCHANGE MARKET VALUE INDEX AND THE DOW JONES TOTAL RETURN
INDEX FOR THE DIVERSIFIED TECHNOLOGY INDUSTRY GROUP FROM MARCH 27, 1996 TO
JANUARY 2, 1998
[GRAPH APPEARS HERE]
-------------------------------------
3/27/96 12/27/96 1/2/98
-------------------------------------
TSR 100 76 59
-------------------------------------
AMEX 100 102 124
-------------------------------------
DJ DTC 100 121 138
-------------------------------------
The total return for the Corporation's Common Stock (TSR), the American
Stock Exchange Market Value Index (AMEX) and the Dow Jones Total Return Index
for the Diversified Technology Industry Group (DJ DTC) assumes the reinvestment
of dividends, although dividends have not been declared on the Corporation's
Common Stock. The American Stock Exchange Market Value Index tracks the
aggregate performance of equity securities of companies listed on the American
Stock Exchange. The Corporation's Common Stock is traded on the American Stock
Exchange under the ticker symbol "TSR."
RELATIONSHIP WITH AFFILIATES
Thermo Electron has adopted a strategy of selling a minority interest in
subsidiary companies to outside investors as an important tool in its future
development. As part of this strategy, Thermo Electron and certain of its
subsidiaries have created several privately and publicly held subsidiaries, and
Thermedics Inc. has created the Corporation as a publicly held, majority-owned
subsidiary. From time to time, Thermo Electron and its subsidiaries will create
other majority-owned subsidiaries as part of its spinout strategy. (The
Corporation and such other majority-owned Thermo Electron subsidiaries are
hereinafter referred to as the "Thermo Subsidiaries.")
Thermo Electron and each of the Thermo Subsidiaries recognize that the
benefits and support that derive from their affiliation are essential elements
of their individual performance. Accordingly, Thermo Electron and each of the
Thermo Subsidiaries, including the Corporation, have adopted the Thermo Electron
Corporate Charter (the
<PAGE>
"Charter") to define the relationships and delineate the nature of such
cooperation among themselves. The purpose of the Charter is to ensure that (1)
all of the companies and their stockholders are treated consistently and fairly,
(2) the scope and nature of the cooperation among the companies, and each
company's responsibilities, are adequately defined, (3) each company has access
to the combined resources and financial, managerial and technological strengths
of the others, and (4) Thermo Electron and the Thermo Subsidiaries, in the
aggregate, are able to obtain the most favorable terms from outside parties.
To achieve these ends, the Charter identifies the general principles to be
followed by the companies, addresses the role and responsibilities of the
management of each company, provides for the sharing of group resources by the
companies and provides for centralized administrative, banking and credit
services to be performed by Thermo Electron. The services provided by Thermo
Electron include collecting and managing cash generated by members, coordinating
the access of Thermo Electron and the Thermo Subsidiaries (the "Thermo Group")
to external financing sources, ensuring compliance with external financial
covenants and internal financial policies, assisting in the formulation of long-
range planning and providing other banking and credit services. Pursuant to the
Charter, Thermo Electron may also provide guarantees of debt or other
obligations of the Thermo Subsidiaries or may obtain external financing at the
parent level for the benefit of the Thermo Subsidiaries. In certain instances,
the Thermo Subsidiaries may provide credit support to, or on behalf of, the
consolidated entity or may obtain financing directly from external financing
sources. Under the Charter, Thermo Electron is responsible for determining that
the Thermo Group remains in compliance with all covenants imposed by external
financing sources, including covenants related to borrowings of Thermo Electron
or other members of the Thermo Group, and for apportioning such constraints
within the Thermo Group. In addition, Thermo Electron establishes certain
internal policies and procedures applicable to members of the Thermo Group. The
cost of the services provided by Thermo Electron to the Thermo Subsidiaries is
covered under existing corporate services agreements between Thermo Electron and
each of the Thermo Subsidiaries.
The Charter presently provides that it shall continue in effect so long as
Thermo Electron and at least one Thermo Subsidiary participate. The Charter may
be amended at any time by agreement of the participants. Any Thermo Subsidiary,
including the Corporation, can withdraw from participation in the Charter upon
30 days' prior notice. In addition, Thermo Electron may terminate a subsidiary's
participation in the Charter in the event the subsidiary ceases to be controlled
by Thermo Electron or ceases to comply with the Charter or the policies and
procedures applicable to the Thermo Group. A withdrawal from the Charter
automatically terminates the corporate services agreement and tax allocation
agreement (if any) in effect between the withdrawing company and Thermo
Electron. The withdrawal from participation does not terminate outstanding
commitments to third parties made by the withdrawing company, or by Thermo
Electron or other members of the Thermo Group, prior to the withdrawal. In
addition, a withdrawing company is required to continue to comply with all
policies and procedures applicable to the Thermo Group and to provide certain
administrative functions mandated by Thermo Electron so long as the withdrawing
company is controlled by or affiliated with Thermo Electron.
As provided in the Charter, the Corporation and Thermo Electron have
entered into a Corporate Services Agreement (the "Services Agreement") under
which Thermo Electron's corporate staff provides certain administrative
services, including certain legal advice and services, risk management, employee
benefit administration, tax advice and preparation of tax returns, centralized
cash management and financial and other services to the Corporation. The
Corporation was assessed an annual fee equal to 1.0% of the Corporation's
revenues for these services for fiscal 1996 and 1997. The annual fee has been
reduced to 0.8% of the Corporation's total revenues for fiscal 1998. The fee is
reviewed annually and may be changed by mutual agreement of the Corporation and
Thermo Electron. During fiscal 1997, Thermo Electron assessed the Corporation
$787,000 in fees under the Services Agreement. Management believes that the
charges under the Services Agreement are reasonable and that the terms of the
Services Agreement are fair to the Corporation. For items such as employee
benefit plans, insurance coverage and other identifiable costs, Thermo Electron
charges the Corporation based on charges attributable to the Corporation. The
Services Agreement automatically renews for successive one-year terms, unless
canceled by the Corporation upon 30 days' prior notice. In addition, the
Services Agreement terminates automatically in the event the Corporation ceases
to be a member of the Thermo Group or ceases to be a participant in the Charter.
In the event of a termination of the Services Agreement, the Corporation will be
required to pay a termination fee equal to the fee that was paid by the
Corporation for services under the Services Agreement for the nine-month period
prior to termination. Following termination, Thermo Electron may provide certain
administrative services on an as-requested basis by the Corporation or as
required in order to meet the Corporation's obligations
<PAGE>
under Thermo Electron's policies and procedures. Thermo Electron will charge the
Corporation a fee equal to the market rate for comparable services if such
services are provided to the Corporation following termination.
From time to time, the Corporation may transact business with other
companies in the Thermo Group.
The Corporation acts as a distributor for another Thermo Subsidiary. In
1997, the Corporation purchased such products from this Thermo Subsidiary for
$583,000.
In 1997, the Corporation received a ten percent (10%) commission totaling
$83,000 from another Thermo Subsidiary which the Corporation earned in
connection with assisting in the sale by this subsidiary of its products in
Australia.
The Corporation, along with certain other Thermo Subsidiaries, participates
in a notional pool arrangement with ABN AMRO, which includes a $50 million
credit facility. Only European-based Thermo Subsidiaries participate in this
arrangement. Under this arrangement the Bank notionally combines the positive
and negative cash balances held by the participants to calculate the net
interest yield/expense for the group. The benefit derived from this arrangement
is then allocated based on balances attributable to the respective participants.
Thermo Electron guarantees all of the obligations of each participant in this
arrangement. In addition, funds on deposit under this arrangement provide
credit support for overdraft obligations of other participants. As of January
3, 1998, the Corporation had a negative cash balance of approximately $773,488,
based on an exchange rate of $0.495/NLG 1.00. For 1997, the average annual
interest rate earned on NLG deposits by participants in this credit arrangement
was approximately 4.8% and the average annual interest rate paid on overdrafts
was approximately 4.8%.
At January 3, 1998, the Corporation owned Thermo Electron and its other
subsidiaries an aggregate of $955,000 for amounts due under the Corporate
Services Agreement and related administrative charges, for other products and
services, and for miscellaneous items. The largest amount of net indebtedness
owned by the Corporation to Thermo Electron and its other subsidiaries since
December 29, 1996 was $1,377,000. These amounts do not bear interest and are
expected to be paid in the normal course of business.
As of January 3, 1998, $26,229,000 of the Corporation's cash equivalents
were invested pursuant to a repurchase agreement with Thermo Electron. Under
this agreement, the Corporation in effect lends excess cash to Thermo Electron,
which Thermo Electron collateralizes with investments principally consisting of
corporate notes, U.S. government agency securities, money market funds,
commercial paper and other marketable securities, in the amount of at least 103%
of such obligation. The Corporation's funds subject to the repurchase agreement
are readily convertible into cash by the Corporation and have a maturity of
three months or less. The repurchase agreement earns a rate based on the 90-day
Commercial Paper Composite Rate plus 25 basis points, set at the beginning of
each quarter.
STOCK HOLDING ASSISTANCE PLAN
In 1996, the Corporation adopted a stock holding policy which requires its
executive officers to acquire and hold a minimum number of shares of Common
Stock. In order to assist the executive officers in complying with the policy,
the Corporation also adopted a stock holding assistance plan under which it may
make interest-free loans to certain key employees, including its executive
officers, to enable such employees to purchase the Common Stock in the open
market. During 1996, Mr. Lewis J. Ribich, the Corporation's chief executive
officer, and Mr. M. Preston Luman, the Corporation's vice president, each
received loans in the respective principal amounts of $75,384 and $58,329 under
this plan to purchase 5,200 and 4,800 shares of Common Stock, respectively, of
which amounts $60,307.20 and $46,663.20, respectively, were outstanding as of
April 23, 1998. During 1997, Mr. Luman received an additional loan in the
principal amount of $11,681.70 under the plan to purchase 1,000 shares of Common
Stock, of which amount $9,345.36 was outstanding as of April 23, 1998. These
loans are repayable upon the earlier of demand or the fifth anniversary of the
date of the loan, unless otherwise authorized by the human resources committee
of the Corporation's board of directors. This policy and plan were amended in
1998 to apply only to the chief executive officer of the Corporation in the
future.
<PAGE>
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The board of directors has appointed Arthur Andersen LLP as independent
public accountants for fiscal 1998. Arthur Andersen LLP has acted as independent
public accountants for the Corporation since its inception in 1995.
Representatives of that firm are expected to be present at the Meeting, will
have the opportunity to make a statement if they desire to do so and will be
available to respond to questions. The board of directors has established an
audit committee, presently consisting of two outside directors, the purpose of
which is to review the scope and results of the audit.
OTHER ACTION
Management is not aware at this time of any other matters that will be
presented for action at the Meeting. Should any such matters be presented, the
proxies grant power to the proxy holders to vote shares represented by the
proxies in the discretion of such proxy holders.
STOCKHOLDER PROPOSALS
Proposals of Stockholders intended to be presented at the 1999 Annual
Meeting of the Stockholders of the Corporation must be received by the
Corporation for inclusion in the proxy statement and form of proxy relating to
that meeting no later than December 29, 1998.
SOLICITATION STATEMENT
The cost of this solicitation of proxies will be borne by the Corporation.
Solicitation will be made primarily by mail, but regular employees of the
Corporation may solicit proxies personally or by telephone, facsimile
transmission or telegram. Brokers, nominees, custodians and fiduciaries are
requested to forward solicitation materials to obtain voting instructions from
beneficial owners of stock registered in their names, and the Corporation will
reimburse such parties for their reasonable charges and expenses in connection
therewith.
Minneapolis, Minnesota
April 23, 1998
<PAGE>
FORM OF PROXY
THERMO SENTRON INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 1, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints John N. Hatsopoulos, Lewis J. Ribich and
Melissa F. Riordan, or any one of them in the absence of the others, as
attorneys and proxies of the undersigned, with full power of substitution, for
and in the name of the undersigned, to represent the undersigned at the Annual
Meeting of the Stockholders of Thermo Sentron Inc., a Delaware corporation (the
"Company"), to be held on Monday, June 1, 1998, at 1:30 p.m. at The Hyatt
Regency Scottsdale Resort at Gainey Ranch, Scottsdale, Arizona, and at any
adjournment or postponement thereof, and to vote all shares of common stock of
the Company standing in the name of the undersigned on April 3, 1998, with all
of the powers the undersigned would possess if personally present at such
meeting:
(IMPORTANT - TO BE SIGNED AND DATED ON THE REVERSE SIDE.)
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Please mark your
[ X ] votes as in this
example.
1. ELECTION OF DIRECTORS OF THE COMPANY (see reverse).
FOR [ ] WITHHELD [ ]
______________________________________
FOR all nominees listed at right, except authority to vote withheld for the
following nominees (if any)
NOMINEES: Marshall J. Armstrong, Donald E. Noble, Lewis J. Ribich, Peter
Richman and John W. Wood Jr.
2. In their discretion on such other matters as may properly come before the
Meeting.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED "FOR" THE PROPOSALS SET FORTH
ABOVE IF NO INSTRUCTION TO THE CONTRARY IS INDICATED OR IF NO INSTRUCTION IS
GIVEN.
Copies of the Notice of Meeting and of the Proxy Statement have been received by
the undersigned.
PLEASE DATE, SIGN AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.
SIGNATURE(S)_______________________________________ DATE_________________
NOTE: This proxy should be dated, signed by the shareholder(s) exactly as his
or her name appears hereon, and returned promptly in the enclosed
envelope. Persons signing in a fiduciary capacity should so indicate. If
shares are held by joint tenants or as community property, both should
sign.
