<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
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.
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(Name of Registrant as Specified In Its Charter)
THERMO SENTRON, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
THERMO
SENTRON
INC.
501 90th Avenue N.W.
Minneapolis, Minnesota 55433
April 12, 1999
Dear Stockholder:
The enclosed Notice calls the 1999 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 2, 1999, 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,
/s/ Lewis J. Ribich
LEWIS J. RIBICH
President and Chief Executive Officer
<PAGE>
THERMO
SENTRON
INC.
501 90th Avenue N.W.
Minneapolis, MN 55433
April 12, 1999
To the Holders of the Common Stock of
THERMO SENTRON INC.
NOTICE OF ANNUAL MEETING
The 1999 Annual Meeting of the Stockholders of Thermo Sentron Inc. (the
"Corporation") will be held on Thursday, May 27, 1999 at 11:00 a.m. at The
Westin Hotel, 70 Third Avenue, Waltham, Massachusetts. 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 March 30, 1999.
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 1999 Annual Meeting of the Stockholders
to be held on Thursday, May 27, 1999 at 11:00 a.m. at The Westin Hotel, 70 Third
Avenue, Waltham, Massachusetts, 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 15, 1999.
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 per share (the "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.
Votes of stockholders of record who are present at the meeting in person or by
proxy, abstentions, and broker non-votes (as defined below) are counted as
present or represented at the meeting for purposes of determining whether a
quorum exists.
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.
Nominees for election as directors at the meeting will be elected by a
plurality of the votes of the shares present in person or represented by proxy
at the meeting. If you hold your shares of Common Stock through a broker, bank
or other nominee, generally the nominee may only vote the Common Stock that it
holds for you in accordance with your instructions. However, if it has not
timely received your instructions, the nominee may vote on certain matters for
which it has discretionary voting authority. If a nominee cannot vote on a
particular matter because it does not have discretionary voting authority, this
is a "broker non-vote" on that matter. With regard to the election of
directors, broker non-votes and withholdings of authority to vote will have no
effect on the outcome of the vote.
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 March 30, 1999, consisted of 9,427,901
shares of Common Stock. Only Stockholders of record at the close of business on
March 30, 1999, are entitled to vote at the meeting. Each share is entitled to
one vote.
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- PROPOSAL 1 -
ELECTION OF DIRECTORS
Five 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.
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 biomedical products, product quality-assurance
systems, and security devices, and Thermedics' parent company, Thermo Electron
Corporation ("Thermo Electron"), a provider of products and services in
measurement instrumentation, biomedical devices, energy, resource recovery, and
emerging technologies, is reported under the caption "Stock Ownership." All of
the nominees are currently directors of the Corporation.
<TABLE>
<C> <S>
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Marshall J. Armstrong Mr. Armstrong, 63, 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 develops and commercializes
intelligent traffic-control systems and related
products, industrial refrigeration equipment, and
commercial cooling and cogeneration 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.
- --------------------------------------------------------------------------------
John T. Keiser Mr. Keiser, 63, has been a director of the
Corporation since September 1998 and chairman of the
board since December 1998. He has been the chief
operating officer, biomedical and emerging
technologies, of Thermo Electron since September
1998, and was a vice president from April 1997 until
his promotion. Mr. Keiser has been the president and
chief executive officer of Thermedics since March
1998 and December 1998, respectively, and was a
senior vice president of Thermedics from 1994 until
his promotion to president. He has also been the
president of Thermo Electron's wholly owned
biomedical group, a manufacturer of medical equipment
and instruments, since 1994. Mr. Keiser was president
of Eberline Instrument, a division of Thermo
Instrument Systems Inc., a majority-owned subsidiary
of Thermo Electron, from 1985 to July 1994. The
Eberline Instrument division manufactures radiation
detection and counting instrumentation and radiation
monitoring systems. Mr. Keiser is a director of
Metrika Systems Corporation, Thermedics Detection
Inc., Thermedics, Thermo Cardiosystems Inc.,
ThermoLase Corporation, ThermoTrex Corporation and
Trex Medical Corporation.
- --------------------------------------------------------------------------------
Donald E. Noble Mr. Noble, 84, 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, 55, 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.
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</TABLE>
2
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<TABLE>
<C> <S>
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Peter Richman Mr. Richman, 71, 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 subsidiary of
Thermedics.
</TABLE>
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 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".) 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 six
times, the audit committee met twice and the human resources committee met four
times during fiscal 1998. Each director attended at least 75% of all meetings of
the board of directors and committees on which he served that were held during
fiscal 1998.
Compensation of Directors
Cash Compensation
Outside directors receive an annual retainer of $2,000 and a fee of $1,000
per meeting for attending regular meetings of the board of directors and $500
per meeting 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, Keiser and Ribich 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 Corporation's 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 in 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
has been reserved for issuance under the Deferred Compensation Plan. As of
January 2, 1999, deferred units equal to approximately 2,470 shares of Common
Stock were accumulated under the Deferred Compensation Plan.
3
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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 has 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 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 publicly traded, at the last price per
share paid by third parties in an arms-length transaction prior to the option
grant. As of January 31, 1999, 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
The human resources committee of the board of directors (the "Committee")
has 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 within a three-year
period. The chief executive officer of the Corporation is required to comply
with a separate stock holding policy established by the Committee, which is
described in "Committee Report on Executive Compensation - Stock Ownership and
Retention Policies."
In addition, the Committee has 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
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applicable to executive officers and is described in "Committee Report on
Executive Compensation - Stock Ownership and Retention 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 January 31, 1999, with
respect to (i) each director, (ii) each executive officer named in the summary
compensation table under the heading "Executive Compensation" (the "named
executive officers") and (iii) all directors and current executive officers as a
group. In addition, the following table sets forth the beneficial ownership of
Common Stock as of January 31, 1999, with respect to each person who was known
by the Corporation to own beneficially more than 5% of the outstanding shares of
Common Stock.
While certain directors and executive officers of the Corporation are also
directors and executive officers of Thermo Electron or its subsidiaries other
than the Corporation, all such persons disclaim beneficial ownership of the
shares of Common Stock owned by Thermo Electron.
<TABLE>
<CAPTION>
Thermo Sentron Thermedics Thermo Electron
Name (1) Inc. (2) Inc. (3) Corporation (4)
-------- -------- -------- ---------------
<S> <C> <C> <C>
Thermo Electron Corporation (5)...... 8,139,724 N/A N/A
Dimensional Fund Advisors, Inc. (6).. 610,600 N/A N/A
Marshall J. Armstrong................ 2,000 1,448 138,706
John T. Keiser....................... 51,000 193,993 296,608
M. Preston Luman..................... 47,800 10,320 5,200
Donald E. Noble...................... 18,284 14,173 59,751
Lewis J. Ribich...................... 206,700 52,001 27,095
Peter Richman........................ 16,485 3,000 0
All directors and current executive
officers as a group (8 persons)...... 349,269 336,558 1,059,110
</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. Keiser, Mr. Noble, Mr. Ribich, Mr. Richman and all directors and
executive officers as a group include 2,000, 19,500, 41,600, 15,000,
201,500, 15,000 and 301,600 shares, respectively, that such person or group
has the right to acquire within 60 days of January 31, 1999, through the
exercise of stock options. Shares of the Common Stock beneficially owned
by Mr. Noble, Mr. Richman and all directors and current executive officers
as a group include 1,984, 485, and 2,469 shares, respectively, allocated to
their respective accounts through January 2, 1999, maintained under the
Deferred Compensation Plan. No director or named executive officer
beneficially owned more than 1% of the Common Stock outstanding as of
January 31, 1999, except for Mr. Ribich, who owned 2.15% of such Common
Stock; all directors and current executive officers as a group beneficially
owned 3.65% of the Common Stock outstanding as of such date.
(3) Shares of the common stock of Thermedics beneficially owned by Mr. Keiser,
Mr. Luman, Mr. Noble, Mr. Ribich, Mr. Richman and all directors and
executive officers as a group include 187,200, 10,000, 4,500, 51,200, 3,000
and 314,900 shares, respectively, that such person or group has the right
to acquire within 60 days of January 31, 1999, 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 3,861 shares, respectively, allocated through January 31,
1999, to their accounts maintained pursuant to Thermo Electron's employee
stock ownership plan (the "ESOP"), of which the trustees, who have
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investment power over its assets, are executive officers of Thermo
Electron. No director or named executive officer beneficially owned more
than 1% of the Thermedics common stock outstanding as of January 31, 1999;
all the directors and current executive officers as a group did not
beneficially own more than 1% of the common stock of Thermedics outstanding
as of January 31, 1999.
(4) Shares of the common stock of Thermo Electron beneficially owned by
Mr. Armstrong, Mr. Keiser, Mr. Luman, Mr. Noble, Mr. Ribich and all
directors and current executive officers as a group include 76,650,
251,622, 4,200, 9,125, 25,925 and 830,294 shares, respectively, that such
person or group has the right to acquire within 60 days of January 31,
1999, through the exercise of stock options. Shares of the common stock of
Thermo Electron beneficially owned by Mr. Armstrong and all directors and
current executive officers as a group include 2,598 and 5,095 shares,
respectively, allocated through January 31, 1999, to their accounts
maintained pursuant to the ESOP. Shares of the common stock of Thermo
Electron beneficially owned by Mr. Noble and all directors and executive
officers as a group include 44,961 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. No director or
named executive officer beneficially owned more than 1% of the Thermo
Electron common stock outstanding as of January 31, 1999; all the directors
and current executive officers as a group did not beneficially own more
than 1% of the common stock of Thermo Electron outstanding as of
January 31, 1999.
(5) As of January 31, 1999, Thermo Electron, primarily through its majority-
owned subsidiary Thermedics, beneficially owned approximately 86.34% of the
outstanding Common Stock. Thermo Electron's address is 81 Wyman Street,
Waltham, Massachusetts 02454-9046. As of January 31, 1999, 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 Advisors Inc. is based on the most recent
Schedule 13G of Dimensional Fund Advisors Inc. received by the Corporation,
which reported such ownership as of December 31, 1998. The address of
Dimensional Fund Advisors Inc. is 1299 Ocean Avenue, 11th Floor, Santa
Monica, California 90401. As of December 31, 1998, Dimensional Fund
Advisors Inc. beneficially owned approximately 6.48% of the outstanding
Common Stock. Dimensional Fund Advisors Inc. is an investment advisor
registered under the Investment Advisors Act of 1940. All shares reported
as beneficially owned by Dimensional Fund Advisors Inc. are owned by
advisory clients of Dimensional Fund Advisors Inc., no one of which to the
knowledge of Dimensional Fund Advisors Inc. owns more than 5% of the
outstanding Common Stock. Dimensional Fund Advisors Inc. disclaims
beneficial ownership of all such shares. Section 16(a) Beneficial Ownership
Reporting Compliance
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") 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 1998, except in the
following instances. Mr. John N. Hatsopoulos, formerly an officer of the
Corporation, reported one transaction late, consisting of a gift of Common
Stock. Thermo Electron reported six Form 4s late, reporting a total of 35
transactions, including 28 open market purchases of shares of Common Stock and 7
transactions associated with the grant and lapse of options to purchase Common
Stock granted to employees under its stock option program.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table summarizes compensation for services to the Corporation
received during the last three years by the Corporation's chief executive
officer and its other most highly compensated executive officer. These
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executive officers are collectively referred to herein as the "named executive
officers." 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. See "Relationship with Affiliates."
Accordingly, the compensation for these individuals is not reported in the
following table.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Compensation
------------
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 1998 $172,000 $70,000 100,800 (TSR) $10,178 (3)
President and 4,500 (TMO)
Chief Executive Officer 2,000 (MKA)
2,000 (ONX)
4,000 (RGI)
200 (TMD)
2,000 (TDX)
1,000 (TISI)
2,000 (TRIL)
1,500 (VIZ)
2,000 (TRCC)
1997 $165,000 $95,000 40,700 (TSR) $10,410 (3)
10,100 (TMO)
900 (TMD)
1996 $159,000 $89,000 60,000 (TSR) $ 8,059 (3)
75 (TMO)
600 (TMD)
2,000 (TFG)
- -------------------------------------------------------------------------------------------------------
M. Preston Luman 1998 $109,000 $36,000 900 (TSR) $ 8,778 (4)
Vice President, Operations 100 (TMO)
1997 $104,000 $44,390 20,700 (TSR) $ 8,675 (4)
4,100 (TMO)
1996 $100,000 $48,000 20,000 (TSR) $ 6,240 (4)
- -------------------------------------------------------------------------------------------------------
</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), Metrika Systems Corporation (designated in the table as
MKA), ONIX Systems Inc. (designated in the table as ONX), The Randers
Killam Group Inc. (designated in the table as RGI), Thermedics Inc.
(designated in the table as TMD), Thermedics Detection Inc. (designated in
the table as TDX), Thermo Fibergen Inc. (designated in the table as TFG),
Thermo Information Solutions Inc. (designated in the table as TISI), Thermo
Trilogy Corporation (designated in the table as TRIL), Thermo Vision
Corporation (designated in the table as VIZ), and Trex Communications
Corporation (designated in the table as TRCC).
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(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 $2,978, $3,660 and $1,309, which represent the amounts of
compensation attributable in 1998, 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 $3,153, $3,331 and $896, respectively, which represent the
amounts of compensation attributable in 1998, 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 1998
The following table sets forth information concerning individual grants of
stock options made during fiscal 1998 to the named executive officers. It has
not been the Corporation's policy in the past to grant stock appreciation
rights, and no such rights were granted during fiscal 1998.
Option Grants in Fiscal 1998
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Percent of Annual Rates of Stock
Number of Securities Total Options Price Appreciation for
Underlying Options Granted to Exercise Option Term (2)
Granted and Employees in Price Per Expiration ----------------------
Name Company(1) Fiscal Year Share Date 5% 10%
- ----------------- -------------------- -------------- --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Lewis J. Ribich 800 (TSR) 0.3% $11.38 03/09/01 $ 1,432 $ 3,016
100,000 (TSR) 33.8% $ 9.53 12/01/03 $263,000 $582,000
200 (TMO) 0.01% (3) $34.50 06/02/03 $ 1,906 $ 4,212
4,300 (TMO) 0.1% (3) $16.20 09/23/03 $ 19,264 $ 42,527
2,000 (MKA) 0.7% (3) $14.23 01/21/05 $ 11,580 $ 27,000
2,000 (ONX) 0.2% (3) $14.25 01/21/08 $ 17,920 $ 45,420
4,000 (RGI) 0.8% (3) $ 4.00 01/21/05 $ 6,520 $ 15,160
200 (TMD) 0.04% (3) $16.05 03/05/01 $ 506 $ 1,062
2,000 (TDX) 0.2% (3) $ 9.56 01/21/05 $ 7,780 $ 18,140
1,000 (TISI) 1.7% (3) $10.00 01/21/08 $ 6,290 $ 15,940
2,000 (TRIL) 1.1% (3) $ 8.25 01/21/08 $ 10,380 $ 26,300
1,500 (VIZ) 0.4% (3) $ 7.25 01/21/05 $ 4,425 $ 10,320
2,000 (TRCC) 0.2% (3) $ 4.00 01/21/08 $ 5,040 $ 12,740
- ------------------------------------------------------------------------------------------------------------
M. Preston Luman 900 (TSR) 0.3% $11.38 03/09/01 $ 1,611 $ 3,393
100 (TMO) 0.03% (3) $34.50 06/02/03 $ 953 $ 2,106
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(1) All of the options granted during the fiscal year are immediately
exercisable as of the end of the fiscal year, except options to purchase
the common stock of Thermo Information Solutions Inc., Thermo Trilogy
Corporation and Trex Communications Corporation, which are not exercisable
until the earlier of (i) 90 days after the effective date of the
registration of that company's common stock under Section 12 of the
Exchange Act or (ii) nine years after the grant date. In all cases, the
shares acquired upon exercise are subject to repurchase by the granting
company at the exercise price if the optionee ceases to be employed by, or
serve as a director of, such company or any other Thermo Electron company.
The granting company may exercise its repurchase rights within six months
after the termination of the optionee's employment or the cessation of
directorship, as the case may be. For publicly-traded companies, the
repurchase rights
8
<PAGE>
generally lapse ratably over a one- to five-year period, depending on the
option term, which may vary from five to ten years, provided that the
optionee continues to be employed by or serve as a director of the granting
company or another Thermo Electron company. For companies that are not
publicly-traded, the repurchase rights lapse in their entirety on the ninth
anniversary of the grant date. Certain options have three-year terms and
the repurchase rights lapse in their entirety on the second anniversary of
the grant date. The granting company 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. Please see footnote (1) on page 7 for the company abbreviations
used in this table.
(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 company, the optionee's continued employment or service as a
director 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 1998 and Fiscal Year-End Option Values
The following table reports certain information regarding stock option
exercises during fiscal 1998 and outstanding stock options held at the end of
fiscal 1998 by the named executive officers. No stock appreciation rights were
exercised or were outstanding during fiscal 1998.
Aggregated Option Exercises In Fiscal 1998 And Fiscal 1998
Year-End Option Values
<TABLE>
<CAPTION>
Number of Value of
Securities Underlying Unexercised
Unexercised In-the-Money
Options at Fiscal Options
Shares Year-End at Fiscal Year-End
Acquired on Value (Exercisable/ (Exercisable/
Name Company Exercise Realized (1) Unexercisable) (2) Unexercisable)
---- ------- -------- ------------ ------------------ --------------
<S> <C> <C> <C> <C> <C>
Lewis J. Ribich (TSR) -- -- 201,500/0 $22,000/--
(TMO) -- -- 25,925/0 $ 2,098/--
(MKA) -- -- 2,000/0 $ 0/--
(ONX) -- -- 2,000/0 $ 0/--
(RGI) -- -- 4,000/0 $ 0/--
(TMD) -- -- 51,200/0 $ 0/--
(TDX) -- -- 2,000/0 $ 0/--
(TFG) -- -- 2,000/0 $ 0/--
(TISI) -- -- 0/1,000 --/$0 (3)
(THS) -- -- 800/0 $ 1,100/--
(TRIL) -- -- 0/2,000 --/$0 (3)
(VIZ) -- -- 1,500/0 $ 0/--
(TRCC) -- -- 0/2,000 --/$0 (3)
- --------------------------------------------------------------------------------------------------------------
M. Preston Luman (TSR) -- -- 41,600/0 $ 0/--
(TMO) -- -- 4,200/0 $ 0/--
(TMD) -- -- 10,000/0 $ 0/--
- --------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
(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 as of the end of the fiscal year, except options to
purchase the common stock of Thermo Information Solutions Inc., Thermo
Trilogy Corporation and Trex Communications Corporation, which are not
exercisable until the earlier of (i) 90 days after the effective date of
the registration of that company's common stock under Section 12 of the
Exchange Act or (ii) nine years after the grant date. In all cases, the
shares acquired upon exercise of the options reported in the table are
subject to repurchase by the granting company at the exercise price if the
optionee ceases to be employed by, or serve as a director of, such company
or any other Thermo Electron company. The granting company may exercise its
repurchase rights within six months after the termination of the optionee's
employment or the cessation of directorship, as the case may be. For
publicly-traded companies, the repurchase rights generally lapse ratably
over a one- to ten-year period, depending on the option term, which may
vary from five to twelve years, provided that the optionee continues to be
employed by or serve as a director of the granting company or another
Thermo Electron company. For companies that are not publicly-traded, the
repurchase rights lapse in their entirety on the ninth anniversary of the
grant date. Certain options have three-year terms and the repurchase
rights lapse in their entirety on the second anniversary of the grant date.
The granting company 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.
(3) No public market existed for the shares underlying these options as of
January 2, 1999. Accordingly, no value in excess of the exercise price has
been attributed to these options.
Executive Retention Agreements
Thermo Electron has entered into agreements with certain executive officers
and key employees of Thermo Electron and its subsidiaries that provide severance
benefits if there is a change in control of Thermo Electron and their employment
is terminated by Thermo Electron "without cause" or by the individual for "good
reason", as those terms are defined therein, within 18 months thereafter. For
purposes of these agreements, a change in control exists upon (i) the
acquisition by any person of 40% or more of the outstanding common stock or
voting securities of Thermo Electron; (ii) the failure of the Thermo Electron
board of directors to include a majority of directors who are "continuing
directors", which term is defined to include directors who were members of
Thermo Electron's board on the date of the agreement or who subsequent to the
date of the agreement were nominated or elected by a majority of directors who
were "continuing directors" at the time of such nomination or election; (iii)
the consummation of a merger, consolidation, reorganization, recapitalization or
statutory share exchange involving Thermo Electron or the sale or other
disposition of all or substantially all of the assets of Thermo Electron unless
immediately after such transaction (a) all holders of Thermo Electron common
stock immediately prior to such transaction own more than 60% of the outstanding
voting securities of the resulting or acquiring corporation in substantially the
same proportions as their ownership immediately prior to such transaction and
(b) no person after the transaction owns 40% or more of the outstanding voting
securities of the resulting or acquiring corporation; or (iv) approval by
stockholders of a complete liquidation or dissolution of Thermo Electron.
In 1998, Thermo Electron authorized an executive retention agreement with
Mr. Ribich. This agreement provides that in the event Mr. Ribich's employment
is terminated under the circumstances described above, he would be entitled to a
lump sum payment equal to the sum of (a) one times his highest annual base
salary in any 12 month period during the prior five- year period, plus (b) one
times his highest annual bonus in any 12 month period during the prior five-
year period. In addition, Mr. Ribich would be provided benefits for a period of
one year after such termination substantially equivalent to the benefits package
he would have been otherwise entitled to receive if he was not terminated.
Further, all repurchase rights of Thermo Electron and its subsidiaries shall
lapse in their entirety with respect to all options that Mr. Ribich holds in
Thermo Electron and its subsidiaries, including the
10
<PAGE>
Corporation, as of the date of the change in control. Finally, Mr. Ribich would
be entitled to a cash payment equal to $15,000, to be used toward outplacement
services.
Assuming that the severance benefits would have been payable as of
January 1, 1999, the lump sum salary and bonus payment under such agreement to
Mr. Ribich would have been approximately $275,000. In the event that payments
under this agreement are deemed to be so called "excess parachute payments"
under the applicable provisions of the Internal Revenue Code of 1986, as amended
(the "Internal Revenue Code"), Mr. Ribich would be entitled to receive a gross-
up payment equal to the amount of any excise tax payable by him with respect to
such payment plus the amount of all other additional taxes imposed on him
attributable to the receipt of such gross-up payment.
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Compensation Philosophy
Decisions on compensation for the Corporation's executive officers are made
by the human resources committee of the board of directors (the "Committee").
The Committee follows guidelines established by the human resources committee of
the board of directors of its ultimate parent company, Thermo Electron. The
compensation policies followed by the Committee are designed to reward and
motivate executives in achieving long-term value for Stockholders and other
business objectives, to attract and retain dedicated, talented individuals to
accomplish the Corporation's objectives, to recognize individual contributions
as well as the performance of the Corporation and its subsidiaries, and to
encourage stock ownership by executives through stock-based compensation and
stock retention programs in order to link executive and Stockholder interests.
The Committee evaluates the competitiveness of its compensation practices
through the use of market surveys and competitive analyses prepared by its
outside compensation consultants and by participating in annual 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. Internal fairness of compensation within
the organization is also an important element of the Committee's compensation
philosophy. Compensation of executives is evaluated by comparing it to the
compensation of other executives within the Thermo Electron organization who
have responsibility to manage businesses of comparable size and complexity.
The compensation program of the Corporation consists of annual cash
compensation and long-term incentive compensation. Annual cash compensation is
composed of base salary and performance-based incentive compensation, which is
reviewed and determined annually. Long-term incentive compensation is in the
form of stock-based compensation such as stock options and restricted stock
awards. The process for determining the components of executive compensation
for the executive officers is described below.
Components of Executive Compensation
Annual Cash Compensation
Annual cash compensation consists of base salary and performance-based
incentive compensation. The cash incentive compensation paid to an executive
varies from year to year based on the performance of the Corporation and the
executive.
The Committee assesses the competitiveness of annual cash compensation by
establishing for each executive position at the beginning of each fiscal year a
salary and reference incentive compensation for the position that together are
intended to approximate the mid-point of competitive total annual cash
compensation for organizations that are of comparable size and complexity as the
Corporation.
11
<PAGE>
Base Salary. Generally, executive salaries are adjusted gradually over
time to reflect competitive salary levels or other considerations, such as
geographic or regional market data, industry trends or internal fairness within
the Corporation. The Committee may also adjust individual salaries to reflect
the assumption of increased responsibilities. The salary increases in fiscal
1998 for the named executive officers generally reflect this practice of gradual
adjustment and moderation.
Performance-based Incentive Compensation. The amount of incentive
compensation actually earned by an executive from year to year varies with the
performance of the Corporation and the executive. The Committee evaluates
performance (1) by formula using financial measures of profitability and
contribution to Stockholder value and (2) by subjectively evaluating the
executive's contribution to the achievement of the Corporation's long-term
objectives. In fiscal 1998, the formula used by the Committee measured return
on net assets, return on sales, earnings improvement over a three-year period
for the Corporation and, to a lesser extent, the Corporation's parent companies,
and three-year growth in earnings per share for the same companies. The
financial measures are not financial targets that are met, not met or exceeded,
but assess the financial performance relative to the financial performance of
comparable companies and are designed to penalize below-average performance and
reward above-average performance. The relative weighting of the financial
measures and subjective evaluation varies depending on the executive's role and
responsibilities within the organization.
The incentive compensation awarded to the named executive officers (other
than the chief executive officer, which is discussed, below under the caption
"1998 CEO Compensation") was substantially lower in each case than the incentive
compensation awarded the previous year and reflected the Corporation's financial
performance in fiscal 1998.
Long-term Incentive Compensation
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 stock-
based compensation in shares of Common Stock and common stock of other Thermo
Electron companies.
The Committee and management believe that awards of stock-based
compensation in both the Corporation and other companies within the Thermo
Electron group of companies accomplish many objectives. The grant of stock-based
compensation 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-based compensation also results in
management's compensation being closely linked to stock performance. In
addition, because the employee's rights in stock-based compensation vest over
periods of varying durations and are subject to forfeiture if the employee
leaves the Corporation prematurely, stock-based compensation is an incentive for
key employees to remain with the Corporation long-term. The Committee believes
stock-based compensation 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 executive officer
the annual value of stock-based compensation in 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 award. In addition, the Committee considers the
aggregate amount of outstanding awards granted to all employees to monitor the
number of outstanding awards under the Corporation's stock-based compensation
programs. In determining the appropriate number of outstanding 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
compensation practices of comparable companies.
The Committee periodically awards stock-based compensation in the form of
stock options or restricted stock based on an assessment of the total
compensation of the executive, the actual and anticipated contributions of the
executive (which includes a subjective assessment by the Committee of the
executive's future potential within
12
<PAGE>
the organization), as well as the value of previously awarded stock-based
compensation, as described above. Such stock-based compensation awards were made
to the named executive officers in 1998.
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 own and retain stock acquired through
its stock option program or otherwise 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 during the prior year.
These option awards are independent of the award of stock options as an
incentive for management performance. In 1998, 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 1998 to the named executive officers with respect to
the common stock of Thermo Electron and Thermedics, respectively, were made
under similar programs that award 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 companies' common stock.
The Committee established a stock holding policy for executive officers of
the Corporation 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 is one times his base salary and reference bonus
for the fiscal year. 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 has been
amended to apply only to the chief executive officer.
In order to assist executive officers in complying with the policy, the
Committee also adopted 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. This plan has
also been amended to apply only to the chief executive officer. The loans are
required to be repaid upon the earlier of demand or the fifth anniversary of the
grant date, unless otherwise determined by the Committee. In 1996, Mr. Ribich,
the Corporation's chief executive officer, and Mr. Luman, the Corporation's vice
president, operations, received loans in the principal amounts of $75,384 and
$58,329, respectively, under this plan, of which amounts $56,144 and $46,664,
respectively, were outstanding as of January 31, 1999. During 1997, Mr. Luman
received an additional loan in the principal amount of $11,681 under the plan,
of which amount $9,345 was outstanding as of January 31, 1999. See
"Relationship with Affiliates - Stock Holding Assistance Plan."
The Committee also has a policy requiring its executive officers 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 options.
Policy on Deductibility of Compensation
Section 162(m)of the Internal Revenue Code limits the tax deduction
available to public companies for annual compensation paid to executive officers
in excess of $1 million unless the compensation qualifies as "performance-based"
or is otherwise exempt under Section 162(m). The Committee considers the
potential effect of Section 162(m) in designing its compensation program, but
reserves the right to use its independent judgment to approve nondeductible
compensation, while taking into account the financial effects such action may
have on the Corporation. From time to time, the Committee reexamines the
Corporation's compensation practices and the potential effect of Section 162(m).
13
<PAGE>
1998 CEO Compensation
The compensation of Mr. Ribich is established using the same criteria as
described above for all executive officers. The Committee approved a salary
increase for Mr. Ribich for fiscal 1998 that reflected its practice of gradual
adjustment, taking into account the factors described above under "Components of
Executive Compensation - Annual Cash Compensation - Base Salary". In
determining Mr. Ribich's performance-based incentive compensation for fiscal
1998, the Committee considered the financial performance of the Corporation and,
to a lesser extent, its parent company, Thermedics, using the measures described
above for all executive officers under "Components of Executive Compensation -
Annual Cash Compensation - Performance based Incentive Compensation." The
Committee's subjective evaluation of Mr. Ribich's performance considered, among
other things, his effectiveness in furthering the Corporation's business and
financial objectives.
Awards to Mr. Ribich of stock-based compensation in Common Stock are
reviewed and determined periodically by the Committee using the criteria
described above under the caption "Long-term Incentive Compensation." An award
of stock options to purchase 100,000 shares of Common Stock was made by the
Committee to Mr. Ribich in fiscal 1998 based on the Committee's assessment of
Mr. Ribich's total compensation. 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 held by the executive during the
year, as an incentive to buy and hold Common Stock. The award of stock options
to purchase 800 shares of Common Stock to Mr. Ribich in 1998 was made under this
program. The award to Mr. Ribich in fiscal 1998 of options to purchase 4,300
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.
Due to Mr. Ribich's position as a chief executive officer of a majority-
owned subsidiary of Thermo Electron, from time to time he 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.
Awards of stock options to purchase 2,000 shares of the common stock of Metrika
Systems Corporation, 2,000 shares of the common stock of ONIX Systems Inc.,
4,000 shares of the common stock of The Randers Killam Group Inc., 2,000 shares
of the common stock of Thermedics Detection Inc., 1,000 shares of the common
stock of Thermo Information Solutions Inc., 2,000 shares of the common stock of
Thermo Trilogy Corporation, 1,500 shares of the common stock of Thermo Vision
Corporation and 2,000 shares of the common stock of Trex Communications
Corporation, were made to Mr. Ribich under this program in fiscal 1998. The
awards of options to purchase 200 shares of the common stock of Thermo Electron
and 2,000 shares of the common stock of Thermedics granted to Mr. Ribich in
fiscal 1998 were made by the human resources committees of the board of
directors of the granting 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
14
<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 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 December 31, 1998
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
03/27/96 12/27/96 1/2/98 12/31/98
- -----------------------------------------------------------------
<S> <C> <C> <C> <C>
TSR 100 77 59 61
- -----------------------------------------------------------------
AMEX 100 102 124 127
- -----------------------------------------------------------------
DJ DTC 100 121 138 139
- -----------------------------------------------------------------
</TABLE>
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, from time to time, caused certain subsidiaries to sell
minority interests to investors, resulting in several majority-owned private and
publicly-held subsidiaries. Thermedics has created the Corporation as a
publicly-held, majority-owned subsidiary. 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 "Charter") to define the relationships and delineate the
nature of such cooperation among themselves. The purpose
15
<PAGE>
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
the Thermo Subsidiaries.
The Charter currently 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, certain
employee benefit administration, tax advice and preparation of tax returns,
centralized cash management, and certain financial and other services to the
Corporation. The Corporation was assessed an annual fee equal to 0.8% of the
Corporation's revenues for these services in fiscal 1998. The annual fee will
remain at 0.8% of the Corporation's total revenues in fiscal 1999. The fee is
reviewed annually and may be changed by mutual agreement of the Corporation and
Thermo Electron. During fiscal 1998, Thermo Electron assessed the Corporation
$790,000 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. In 1998, the Corporation was
billed an additional $58,239 by Thermo Electron for certain administrative
services required by the Corporation that were not covered by the Services
Agreement. 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
16
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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.
The Corporation has entered into a Tax Allocation Agreement with Thermo
Electron that outlines the terms under which the Corporation will be included in
Thermo Electron's consolidated Federal and state income tax returns. Under
current law, the Corporation will be included in such tax returns so long as
Thermo Electron owns at least 80% of the outstanding common stock of Thermedics
and Thermedics and Thermo Electron collectively own at least 80% of the
outstanding Common Stock of the Corporation. In years in which the Corporation
has taxable income, it will pay to Thermo Electron amounts comparable to the
taxes the Corporation would have paid if it had filed its own separate company
tax returns. If Thermedics' and Thermo Electron's equity ownership of the
Corporation were to drop below 80%, the Corporation would file its own tax
returns. In 1999, because Thermedics' and Thermo Electron's combined equity
ownership of the Corporation now exceeds 80%, the Corporation will be included
in Thermo Electron's consolidated tax returns and will be assessed for amounts
due to Thermo Electron in accordance with the Tax Allocation Agreement.
From time to time, the Corporation may transact business with other
companies in the Thermo Group. During 1998 these transactions included the
following:
In June 1998, the Corporation borrowed $21 million from Thermo Electron
pursuant to a promissory note due December 1998, bearing interest at the 90-day
Commercial Paper Composite Rate plus 25 basis points, set at the beginning of
each quarter. The Corporation entered into this note in order to partially
finance its acquisition of the three businesses that constituted the product-
monitoring group of Graseby Limited, a subsidiary of Smiths Industries plc
("Graseby"), for $43,976,000 in cash, net of cash acquired, and the assumption
of certain liabilities. In December 1998, the Corporation repaid $2 million of
this amount and issued Thermo Electron a new promissory note for $19 million in
exchange for the initial note. This note is due June 1999 and bears interest
under the same terms as the initial note.
The Corporation acts as a distributor in Europe for process measurement
instruments manufactured by another Thermo Subsidiary. In 1998, the Corporation
purchased such products from this Thermo Subsidiary for $528,000.
The Corporation, along with certain other Thermo Subsidiaries, participates
in a notional pool arrangement with Barclays Bank, which includes a $71,017,000
credit facility. The Corporation has access to $6,266,000 under this credit
facility. Only U.K.-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. As of January 2, 1999, the Corporation had a negative cash balance
of approximately $2,458,000, based on an exchange rate of $1.6708/GBP 1.00. For
1998, the average annual interest rate earned on GBP deposits by participants in
this credit arrangement was approximately 7.7225% and the average annual
interest rate paid on overdrafts was approximately 7.485%.
Until mid-December 1998, the Corporation, along with certain other Thermo
Subsidiaries, participated in a notional pool arrangement with ABN AMRO, which
included a $29,719,000 credit facility. The Corporation had access to
$2,654,000 under this credit facility. Only European-based Thermo Subsidiaries
participated in this arrangement. Under this arrangement the Bank notionally
combined 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 was then allocated based on balances attributable to the
respective participants. Thermo Electron guaranteed all of the obligations of
each participant in this arrangement. For 1998, the average annual interest
rate earned on NLG deposits by participants in this credit arrangement was
approximately 5.00% and the average annual interest rate paid on overdrafts was
approximately 5.00%.
As of mid-December 1998, the Corporation, along with certain other Thermo
Subsidiaries, has entered into a modification of the above-described arrangement
with ABN AMRO. Only European-based Thermo Subsidiaries participate in this
arrangement. The new arrangement with ABN AMRO consists of a zero balance
arrangement, which includes a $29,719,000 credit facility. The Corporation has
access to $2,654,000 under this credit facility.
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Funds borrowed by the Corporation under this arrangement pay interest at a rate
set by Thermo Finance B.V., a wholly-owned subsidiary of Thermo Electron, at the
beginning of each month, based on Netherlands market rates. Funds invested by
the Corporation under the arrangement earn a rate set by Thermo Finance B.V. at
the beginning of each month, based on Netherlands market rates. Such invested
funds are collateralized with investments principally consisting of corporate
notes, U.S. government-agency securities, commercial paper, money market funds,
and other marketable securities, in the amount of at least 103% of such
obligation. Thermo Electron guarantees all of the obligations of each
participant in this arrangement. As of January 2, 1999, the Corporation had a
negative cash balance of approximately $798,000, based on an exchange rate of
$0.5307/NLG 1.00. As of January 2, 1999, the average annual interest rate earned
on NLG deposits by participants in this credit arrangement was approximately
3.63% and the average annual interest rate paid on overdrafts was approximately
4.5%.
At January 2, 1999, the Corporation owed Thermo Electron and its other
subsidiaries an aggregate of $19,810,000 for borrowings relating to the Graseby
acquisition, discussed above, 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 owed by the
Corporation to Thermo Electron and its other subsidiaries since January 3, 1998
was $21,925,000. With the exception of the Graseby borrowing described above,
these amounts do not bear interest and are expected to be paid in the normal
course of business.
As of January 2, 1999, $3,741,000 of the Corporation's cash equivalents
were invested in 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. Thermo Electron maintains possession of the underlying
securities and has the right of substitution at its discretion. The
Corporation's funds subject to the repurchase agreement will be readily
convertible on demand into cash by the Corporation and have an original 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.
Thermo Electron has announced a proposed reorganization involving certain
of Thermo Electron's subsidiaries, including the Corporation. As part of this
reorganization, Thermedics' majority interest in the Corporation would be
transferred to Thermo Electron. The Corporation would then be taken private and
become a wholly owned subsidiary of Thermo Electron. It is currently
contemplated that the Corporation's shareholders would receive cash in exchange
for their shares of common stock of the Corporation. The completion of these
transactions is subject to numerous conditions, including the establishment of
prices and exchange ratios; confirmation of anticipated tax consequences;
approval by the Boards of Directors of the Corporation, Thermedics and Thermo
Electron (including the independent directors of the Corporation and
Thermedics); negotiation and execution of definitive agreements; clearance by
the Securities and Exchange Commission of any necessary documents in connection
with the proposed transactions; and the receipt of fairness opinions from
investment banking firms on certain financial aspects of the transactions.
Stock Holding Assistance Plan
The human resources committee of the Corporation's board of directors (the
"Committee") established a stock holding policy that required 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 Committee also
adopted a stock holding assistance plan under which it could 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. This policy and plan
have been amended to apply only to the chief executive officer of the
Corporation. In 1996, Mr. Lewis J. Ribich, the Corporation's chief executive
officer, and Mr. M. Preston Luman, the Corporation's vice president, operations,
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 $56,144 and $46,663, respectively, were
outstanding as of January 31, 1999. During 1997, Mr. Luman received an
additional loan in the principal amount of $11,681 under the plan to purchase
1,000 shares of Common Stock, of which amount $9,345 was outstanding as of
January 31, 1999. These loans are repayable upon the earlier of demand or the
fifth anniversary of the date of the loan, unless otherwise determined by the
Committee.
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APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The board of directors has appointed Arthur Andersen LLP as independent
public accountants for fiscal 1999. 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.
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 included in the proxy statement
and form of proxy relating to the 2000 Annual Meeting of the Stockholders of the
Corporation and to be presented at such meeting must be received by the
Corporation for inclusion in the proxy statement and form of proxy no later than
December 11, 1999. Notices of Stockholder proposals submitted outside the
processes of Rule 14a-8 of the Exchange Act relating to proposals to be
presented at the meeting but not included in the Corporation's proxy statement
and form of proxy), will be considered untimely, and thus the Corporation's
proxy may confer discretionary voting authority on the persons named in the
proxy with regard to such proposals, if received after March 1, 2000.
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 12, 1999
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FORM OF PROXY
THERMO SENTRON INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 27, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints John T. Keiser, Lewis J. Ribich and Theo
Melas-Kyriazi, 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 Thursday, May 27, 1999 at 11:00 a.m. at The Westin Hotel, 70 Third
Avenue, Waltham, Massachusetts, 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 March 30, 1999, 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.)
<PAGE>
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, John T. Keiser, Donald E. Noble, Lewis J.
Ribich and Peter Richman.
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.
