<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14a INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
Lumen Technologies, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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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):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
LUMEN TECHNOLOGIES, INC.
Suite B-302
555 Theodore Fremd Avenue
Rye, New York 10580
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held on July 31, 1998
To the Stockholders of Lumen Technologies, Inc.:
You are cordially invited to attend the Annual Meeting of
Stockholders of LUMEN TECHNOLOGIES, INC. (the "Company"), to be held on JULY
31, 1998 AT 9:00 A.M., local time, in Suite A, 555 Theodore Fremd Avenue, Rye,
New York, or any adjournment or postponement thereof (the "Meeting") for the
following purposes:
1. To elect seven directors.
2. To ratify the selection of PricewaterhouseCoopers LLP
as the Company's independent accountants for the year ending December 31, 1998.
3. To transact such other business as may properly come
before the Meeting.
Only holders of record of Common Stock at the close of
business on July 8, 1998 will be entitled to notice of and to vote at the
Meeting. Please sign, date and mail the enclosed proxy card so that your
shares may be represented at the Meeting if you are unable to attend and vote
in person.
By Order of the Board of Directors,
Peter H. Trembath
Secretary
July 9, 1998
<PAGE> 3
LUMEN TECHNOLOGIES, INC.
Suite B-302
555 Theodore Fremd Avenue
Rye, New York 10580
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 31, 1998
INTRODUCTION
This Proxy Statement is furnished to the holders of Common Stock, par
value $.01 (the "Common Stock"), of Lumen Technologies, Inc., a Delaware
corporation (hereinafter referred to as the "Company" or "Lumen"), in
connection with the solicitation of proxies by the Board of Directors of the
Company for use at the Annual Meeting of Stockholders to be held on July 31,
1998, at 9:00 A.M. local time, at 555 Theodore Fremd Avenue, Rye, New York
10580, and at any adjournment or postponement thereof (the "Meeting").
At the Meeting, holders of Common Stock ("Stockholders") will be asked:
1. To elect seven directors.
2. To ratify the selection of PricewaterhouseCoopers LLP as
the Company's independent accountants for the year ending December 31, 1998.
3. To transact such other business as may properly come
before the Meeting.
The Board of Directors has fixed the close of business on July 8, 1998
as the record date (the "Record Date") for the determination of Stockholders
entitled to notice of and to vote at the Meeting. Each such Stockholder will be
entitled to one vote for each share of Common Stock held on all matters to come
before the Meeting (or at any adjournment or postponement thereof) and may vote
in person or by proxy authorized in writing.
STOCKHOLDERS ARE REQUESTED TO COMPLETE, DATE, SIGN AND
PROMPTLY RETURN THE ACCOMPANYING FORM OF PROXY IN THE ENCLOSED ENVELOPE. Common
Stock represented by properly executed proxies received by the Company and not
revoked will be voted at the Meeting in accordance with instructions contained
therein. ANY PROXY RETURNED WITHOUT INSTRUCTION WILL BE VOTED FOR EACH NOMINEE
FOR DIRECTOR NAMED HEREIN (PROPOSAL NO. 1). ANY PROXY NOT SPECIFYING THE
CONTRARY WILL BE VOTED FOR PROPOSAL NO. 2. A Stockholder who so desires may
revoke his or her proxy at any time before it is voted at the Meeting by giving
notice to the Company in writing (attention: Secretary), by duly executing a
proxy bearing a later date or by attending the Meeting and voting in person.
Attendance at the Meeting will not in and of itself constitute a revocation of
an executed proxy.
This Proxy Statement and the accompanying form of proxy are
first being sent to Stockholders on or about July 9, 1998.
<PAGE> 4
THE MEETING
The Meeting will be held on July 31, 1998, at 9:00 A.M., local time,
at 555 Theodore Fremd Avenue, Rye, New York, 10580.
MATTERS TO BE CONSIDERED
At the Meeting, Stockholders will be asked to vote to elect seven
directors (Proposal No. 1) and to ratify the selection of
PricewaterhouseCoopers LLP as the Company's independent accountants for 1998
(Proposal No. 2). The Board of Directors knows of no matters that are to be
brought before the Meeting other than as set forth in the Notice of Meeting. If
any other matters properly come before the Meeting, the persons named in the
enclosed form of proxy or their substitutes will vote in accordance with their
best judgment on such matters.
RECORD DATE; SHARES OUTSTANDING AND ENTITLED TO VOTE
Only Stockholders as of the Record Date (i.e., the close of business
on July 8, 1998) are entitled to notice of and to vote at the Meeting. As of
the Record Date, there were 20,710,586 shares of Common Stock outstanding and
entitled to vote, with each share entitled to one vote.
REQUIRED VOTES
A majority of the votes cast by the stockholders present in person or
represented by proxy at the Meeting is required for the election of directors.
Only shares of Common Stock that are voted in favor of a nominee will be
counted toward that nominee's achievement of a majority. Shares of Common Stock
held by Stockholders present in person at the Meeting that are not voted for a
nominee or shares held by Stockholders represented at the Meeting by proxy from
which authority to vote for a nominee has been properly withheld (including
broker non-votes) will not be counted toward that Nominee's achievement of a
plurality.
The affirmative vote of the holders of a majority of the shares of
Common Stock present in person or represented by proxy at the Meeting is
required for ratification of the selection of PricewaterhouseCoopers LLP as the
Company's independent accountants for the year ending December 31, 1998
(Proposal No. 2). With respect to an abstention of this matter, the shares will
be considered present at the Meeting for the particular matter and (since such
votes are not an affirmative vote for the matter) they will have the same
effect as votes against the matter. With respect to a broker non-vote on this
matter, for such matter such shares will not be considered present at the
Meeting and (since they will not be counted in respect of the matter) the
broker non-votes will have the practical effect of reducing the number of
affirmative votes required to achieve a majority vote for the matter by
reducing the total number of shares from which the majority is calculated.
The ratification of the selection of PricewaterhouseCoopers LLP as
independent accountants for 1998 (Proposal No. 2) is being submitted to
Stockholders as a matter of sound corporate practice. If the Stockholders do
not ratify the selection, the selection of independent accountants will be
reconsidered by the Board of Directors. If the Stockholders ratify the
selection, the Board of Directors, at its discretion, may still direct the
appointment of new independent accountants at any time if the Board of
Directors believes that it would be in the best interests of the Company.
All of the directors and executive officers of the Company have
indicated that they will vote all shares of Common Stock beneficially owned by
them in favor of the election as a director of each nominee named herein and
for Proposal No. 2. Such directors and officers own approximately 10.6% of the
currently issued and outstanding Common Stock.
2
<PAGE> 5
PROXY SOLICITATION
The Company will bear the costs (if any) of solicitation of proxies
for the Meeting. In addition to solicitations by mail, directors, officers and
regular employees of the Company may solicit proxies from Stockholders by
telephone, telegram, personal interview or otherwise. Such directors, officers
and employees will not receive additional compensation, but may be reimbursed
for out-of-pocket expenses in connection with such solicitation. Brokers,
nominees, fiduciaries and other custodians have been requested to forward
soliciting material to the beneficial owners of Common Stock held of record by
them, and such custodians will be reimbursed for their reasonable expenses.
INDEPENDENT ACCOUNTANTS
The Company has been advised that representatives of
PricewaterhouseCoopers LLP, the Company's independent accountants for 1997,
will be available at the Meeting, will have an opportunity to make a statement
if they desire to do so and will be available to respond to appropriate
questions.
3
<PAGE> 6
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, to the knowledge of the Company and as
of July 6, 1998, (unless otherwise indicated), (i) the number of shares of
Common stock owned of record or beneficially, or both, by each person who owned
of record, or is known by the Company to have beneficially owned, individually,
or with his associates, more than 5% of such shares then outstanding; (ii) the
number of shares owned beneficially by each director of the Company; and (iii)
the number of shares owned beneficially by all directors and executive officers
as a group. Unless otherwise noted, each person holds sole voting and
investment power with respect to the shares shown opposite his name. All
figures are adjusted (as appropriate) to reflect the effect of the one-for-two
reverse split of the Common Stock that was effected on March 11, 1998 and the
merger of ILC Technology, Inc. ("ILC") with and into a subsidiary of the
Company (the "ILC Merger"), which was effective March 12, 1998.
<TABLE>
<S> <C>
AMOUNT AND NATURE OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) CLASS
- ------------------------------------ ----------------------- ----------
Martin E. Franklin................................... 1,033,432(2) 4.9%
555 Theodore Fremd Avenue, Suite B302
Rye, New York
Richard D. Capra..................................... 312,338(3) 1.5%
Ian G.H. Ashken...................................... 228,125(4) 1.1%
Harrison H. Augur.................................... 136,660(5) *
George B. Clairmont.................................. 392,127(6) 1.9%
David L. Moore....................................... 10,487(7) *
William T. Sullivan.................................. 189,048(8) *
All Executive Officers and Directors................. 2,302,217(9) 10.6%
as a group (7 persons)
Westport Asset Management, Inc....................... 1,544,152(10) 7.5%
253 Riverside Avenue
Westport CT. 06880
Millbrook Partners, L.P.............................. 1,327,600(11) 6.4%(7)
2102 Sawgrass Village Dr., Ponte Vedra Beach
Florida 32082
Marvin Schwartz...................................... 1,324,615(12) 6.4%(8)
c/o Neuberger & Berman, LLC,
605 Third Avenue, New York, NY 10158-3698
Royce & Associates, Inc.............................. 1,146,007(13) 5.5%
1414 Avenue of the Americas
New York N.Y 10019
</TABLE>
4
<PAGE> 7
- --------------------------------------------------------------------------------
* Less than 1%.
(1) Shares not outstanding but deemed beneficially owned by virtue of the
right of an individual to acquire them within 60 days upon the
exercise of an option are treated as outstanding for purposes of
determining beneficial ownership and the percent beneficially owned by
such individual and for the executive officers and directors as a
group.
(2) Includes 385,625 shares that Mr. Franklin has a right to acquire
within 60 days upon the exercise of options. Excludes 7,691 shares
held in trust for Mr. Franklin's minor children, as to which shares
Mr. Franklin disclaims beneficial ownership.
(3) Includes 308,588 shares that Mr. Capra has right to acquire within 60
days upon exercise of options.
(4) Includes 128,125 shares that Mr. Ashken has a right to acquire within
60 days upon the exercise of options. Excludes 2,500 shares held in
trust for Mr. Ashken's minor children, as to which shares Mr.
Ashken disclaims beneficial ownership.
(5) Includes 110,210 shares that Mr. Augur has right to acquire within 60
days upon exercise of options.
(6) Includes 812 shares that the Director has a right to acquire within 60
days upon the exercise of options.
(7) Includes 147,500 shares that Mr. Sullivan has a right to acquire
within 60 days upon the exercise of options and 848 shares with
respect to which Mr. Sullivan shares voting and investment power with
his spouse.
(8) Includes 1,082,860 shares that members of the group have a right to
acquire within 60 days upon the exercise of options. Excludes 10,191
shares held in trust for directors' children, as to which they
disclaim beneficial ownership.
(9) Shareholdings indicated are adjusted to reflect the effect of the ILC
Merger and the Company's one-for-two reverse stock split, occurring on
March 12, 1998 and March 11, 1998, respectively, based on a Schedule
13G dated February 13, 1997. Westport Asset Management, Inc.
("Westport") reported beneficial ownership of 700,500 shares of ILC
common stock, of which it reported 691,500 shares were held in
discretionary managed accounts and 8,900 shares were beneficially
owned by officers and stockholders of Westport.
(10) Shareholdings indicated are adjusted to reflect the effect of the ILC
Merger and the Company's one-for-two reverse stock split, occurring on
March 12 and March 11, 1998, respectively, based on a Schedule 13D
filed March 31, 1997. Millbrook Partners, L.P. ("Millbrook") and Mark
M. Mathes, its general partner, reported that, as of December 31, 1996
they held an aggregate 2,655,200 shares of the Company's common stock
then outstanding. Millbrook and Mr. Mathes reported that they share
voting and dispositive power with respect to 2,577,200 of such shares
then outstanding, while Mr. Mathes holds sole voting and dispositive
power with respect to 78,000 of such shares.
(11) Based on a Schedule 13D dated March 30, 1998, Marvin Schwartz, acting
in his personal capacity and not as a principal of Neuberger & Berman,
LLC ("N&B"), reported that he is the beneficial owner of 1,324,615
shares of the Company's common stock outstanding as of that date. Mr.
Schwartz reported that 500,307 of such shares are held in his personal
account. Mr. Schwartz reported that 824,308 of such shares are held in
street name in accounts for the benefit of Mr. Schwartz's family. Mr.
Schwartz reported that he holds discretionary and shared dispositive
power over such accounts. Mr. Schwartz reported that N&B has no voting
or dispositive power over any of such shares.
5
<PAGE> 8
(12) Shareholdings indicated are adjusted to reflect the effect of the ILC
Merger and the Company's one-for-two reverse stock split, occurring on
March 11 and March 12, 1998, respectively, based on a Schedule 13G/A
dated June 6, 1997. A group including Mr. Charles Royce, Royce &
Associates ("Royce") and Royce Management Company ("RMC") reported
beneficial ownership of 519,920 shares of ILC common stock, of which
461,620 shares were reported to be owned by Royce and 58,300 were
reported to be owned by RMC. Mr. Royce disclaimed beneficial ownership
of any such shares.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's By-Laws provide that the Company shall have at least two
(2) and no more than twelve (12) directors, as determined by the Board of
Directors from time to time. The Board of Directors has determined that there
will be seven (7) directors for the ensuing year. At the Meeting, seven (7)
directors are to be elected to serve until the next annual meeting or until
their successors are elected and qualified. The persons identified below as the
Company's current directors and executive officers have been nominated for
election at the Meeting, other than Ms. Bailey and Mr. Baumgartner, both of
whom have informed the Company of their intent to retire from the Board of
Directors effective on the date of the Meeting. See "Information Concerning
Directors and Executive Officers." The persons named in the enclosed form of
proxy have advised that, unless contrary instructions are received, they intend
to vote FOR the election of the nominees. The Board of Directors does not
expect that any of the nominees will be unavailable for election as a director.
If by reason of an unexpected occurrence, one or more of the nominees is not
available for election, however, the persons named in the form of proxy have
advised that they will vote for such substitute nominees as the Board of
Directors of the Company may propose.
INFORMATION CONCERNING OFFICERS AND DIRECTORS
The executive officers and directors as of the date hereof are as
follows:
<TABLE>
<S> <C> <C>
NAME AGE OFFICE
- ---- --- ------
Martin E. Franklin(1)(2) 33 Chairman of the Board of Directors and
Director
Richard D. Capra(1) 65 Chief Executive Officer and Director
Ian G.H. Ashken(1) 38 Executive Vice President of Finance and
Administration, Chief Financial Officer,
Assistant Secretary and Director
Harrison H. Augur(2)(3) 55 Director
Nora A. Bailey* 56 Director
Henry C. Baumgartner* 65 Director
George B. Clairmont(3)(4) 48 Director
David L. Moore(2)(4) 40 Director
William T. Sullivan(3)(4) 53 Director
</TABLE>
- -------------------------------------------------------------------------------
(1) Member of Executive Committee
(2) Member of Nominating Committee
(3) Member of Audit Committee
(4) Member of Compensation/Stock Option Committee
* Not a nominee for election at the Meeting.
6
<PAGE> 9
Pursuant to the terms of the ILC Merger agreement, for a period of two
years following the date of the ILC Merger, the Board of Directors was to be
composed of five (5) members designated by the Company (or the successors of
such designees) and four (4) members designated by ILC (or the successors of
such designees). Directors of the Company are elected annually at the Annual
Meeting of Stockholders. Their respective terms of office would continue until
the next Annual Meeting of Stockholders and until their successors have been
elected and qualified in accordance with the Company's Restated By-laws. As a
result of Ms. Bailey's and Mr. Baumgartner's intent to retire from the Board,
the Board has agreed to a composition of four (4) members designated by the
Company and three (3) members designated by ILC. There are no family
relationships among any of the directors or executive officers of the Company.
Martin E. Franklin is currently Chairman of the Company, Chairman of
Bolle Inc., a NASDAQ listed company, and non-executive Chairman of Eyecare
Products plc, a London Stock Exchange listed company. Mr. Franklin has been
Chairman of the Company since December 1995 and also served as the Chief
Executive Officer from December 1995 to March 1998. Mr. Franklin was Chairman
and Chief Executive Officer of Benson Eyecare Corporation ("Benson"), the
predecessor company of the Company from October 1992 through May 1996. Mr.
Franklin has been Chairman and Chief Executive Officer of Marlin Holdings,
Inc., the general partner of Marlin Capital, L.P., a private investment
partnership, since October 1996. Mr. Franklin also serves on the Boards of
Specialty Catalog Corp. and certain private companies. Mr. Franklin received a
B.A. in political science from the University of Pennsylvania.
Richard D. Capra was elected to the Company's Board of Directors on
March 12, 1998, on which date he also was named its Chief Executive Officer.
Mr. Capra served as a member of the ILC Board from 1995 through March 1998.
From July 1996 through March 1998, Mr. Capra served as President and Chief
Operating Officer of ILC. From January 1991 to July 1996, Mr. Capra served as a
management consultant and a director of several companies in the electrical and
lighting business. He was President and Chief Executive Officer of Philips
Lighting Inc., U.S., from 1983 to 1991.
Ian G.H. Ashken, A.C.A., was appointed Executive Vice President, Chief
Financial Officer, Assistant Secretary and a Director of the Company in
December 1995. Mr. Ashken was Chief Financial Officer of Benson and a director
of Benson from October 1992 to May 1996. Mr. Ashken also served as Benson's
Executive Vice President from October 1994 to May 1996; Secretary from October
1992 to December 1993; and, Assistant Secretary from December 1993 to May 1996.
Since October 1996, Mr. Ashken has been Vice Chairman of Marlin Holdings, Inc.,
the general partner of Marlin Capital, L.P. Mr. Ashken is a director of Eyecare
Products plc, a London Stock Exchange listed company, Bolle Inc., a NASDAQ
listed company, and certain private companies. Mr. Ashken received his B.A.
(Hons) in Economics and Accounting from the University of Newcastle in England.
Harrison H. Augur was elected to the Company's Board of Directors on
March 12, 1998. Mr. Augur served as a member of the Board of Directors of ILC
since 1989. He has been General Partner of Capital Asset Management since June
1987. From April 1981 to August 1991, Mr. Augur served as Executive Vice
President and Director of Worms & Co., Inc.
Nora A. Bailey, Esq. became a member of the Company's Board of
Directors in May 1996. Ms. Bailey is a federal income tax attorney with a
specialty in mergers and acquisitions and has many multinational clients. Ms.
Bailey and her firm from time to time have been engaged to provide legal advice
to the Company. Until 1993, she was a partner in Ivins, Phillips & Barker in
Washington D.C., which she joined in 1972. Ms. Bailey also serves on the Board
of Bolle Inc. Ms. Bailey received her J.D. from The University of Michigan Law
School.
Henry C. Baumgartner was elected to the Company's Board of Directors
on March 12, 1998. He was a co-founder of ILC, and he served ILC in various
management positions and as a member of the ILC Board from 1967 through March
1998. Mr. Baumgartner was appointed Chairman of the ILC Board in July 1996 and
Chief
7
<PAGE> 10
Executive Officer of ILC in April 1990. From April 1990 to July 1996, Mr.
Baumgartner served as the President of ILC; prior to 1990, he served as Chief
Executive Officer and Chairman of the Board of ILC from November 1986.
George B. Clairmont was elected to the Company's Board of Directors on
March 12, 1998. Mr. Clairmont served as a member of the Board of Directors of
ILC from July 1997 through March 1998. He has been President of Clairvest
Corporation, a New York-based registered investment adviser, since 1983. Mr.
Clairmont also serves as a director of Thomson-Leeds Corporation, a designer
and manufacturer of point of sales displays.
David L. Moore became a member of the Company Board in May 1996. For
more than the last five years Mr. Moore has been President and Chief Executive
Officer of Century 21 Home Improvements, and for more than fifteen years he has
been President and Chief Executive Officer of Garden State Brickface, Inc., a
leading New York metropolitan area residential and commercial remodeling firm.
Mr. Moore also serves on the Board of Bolle Inc. Mr. Moore received his B.A. in
Economics from Amherst College and his M.B.A. from Harvard University.
William T. Sullivan became a member of the Company Board in May 1996.
Mr. Sullivan has been President and Chief Executive Officer, and a member of
the Board of Directors of Sight Resource Corporation, an optical retailer,
since January 1998. Mr. Sullivan was President and Chief Operating Officer of
the Company from April 1996 to April 1997. Upon Benson's acquisition of Optical
Radiation Corporation ("ORC") in October 1994, Mr. Sullivan was appointed
Benson's Executive Vice President of Operations. From July 1993 to October
1994, Mr. Sullivan served as the President of the Consumer Optical Group of
ORC. From August 1987 through July 1993, Mr. Sullivan served as Group Vice
President of the Consumer Optical Group of ORC. Prior to joining ORC, Mr.
Sullivan was President of Pearle Vision Centers.
Ms. Bailey and Mr. Baumgartner have each notified the Company of their
intent to retire from the Board effective as of the date of the Meeting. The
Company wishes to express its gratitude to them for the valuable services they
have provided during their respective tenures as members of the Board of
Directors.
INFORMATION CONCERNING MEETINGS OF THE BOARD OF
DIRECTORS AND BOARD COMMITTEES AND DIRECTOR COMPENSATION
During 1997 the Board of Directors held nine meetings.
The Board of Directors has standing Audit, Nominating and Compensation
Committees. From time to time the Board of Directors may appoint special
committees for specific purposes.
The functions of the Audit Committee are to recommend to the Board of
Directors the appointment of independent accountants for the Company, to
analyze the reports and recommendations of such accountants and to review
internal audit procedures and controls. The Audit Committee, which met once in
1997, currently comprises Messrs. Clairmont (Chairman), Augur and Sullivan;
during 1997, the Audit Committee comprised Mr. Richard Hanselman (who
subsequently resigned from the Board of Directors in connection with the ILC
Merger in order to accommodate the election to the Board of ILC's designees, as
described above), Ms. Bailey and Mr. Moore.
The Compensation Committee is responsible for setting and
administering the Company's policies governing annual compensation of key
employees, managers, officers and executive officers, including setting
individual annual base salaries or salary guidelines, annual bonus plans and
individual participation levels, and participation in the Company's 1996 Stock
Incentive Plan. The Compensation Committee met one time during 1997. The
Compensation Committee currently consists of Mr. Moore (Chairman), Mr.
Clairmont and Mr.
8
<PAGE> 11
Sullivan; during 1997, Dr. Charles Sydnor, (who like Mr. Hanselman subsequently
resigned from the Board of Directors in connection with the ILC Merger), Mr.
Richard Hanselman and Mr. Moore formed the Compensation Committee.
The functions of the Nominating Committee include recommending
nominees for election to the Board of Directors. The Nominating Committee,
which did not meet in 1997, currently comprises Messrs. Franklin (Chairman),
Augur and Moore; during 1997, the Nominating Committee comprised Messers.
Franklin and Ashken. The Nominating Committee currently consists of Messrs.
Franklin (Chairman), Augur and Moore.
In addition to their regular and special meetings, both the Board of
Directors and the committees from time to time take action by unanimous written
consent, as permitted under applicable law, the Company's Restated Certificate
of Incorporation and the Company's By-laws.
In 1997, all of the Directors attended 75% or more of the aggregate
meetings of the Board and all committees thereof on which they served.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth all compensation paid to, deferred or
accrued for the benefit of the Company's Chief Executive Officer and of all
other executive officers of the Company who earned total compensation for 1997
exceeding $100,000 (the "Executive Group"). Except as disclosed below, no
executive officer of the Company had a total annual salary and bonus for 1997
exceeding $100,000.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION(1) AWARDS
---------------------- ------
OPTIONS/ ALL OTHER
NAME AND PRINCIPAL POSITION(2) YEAR SALARY BONUS SARS(3) COMPENSATION
- ------------------------------ ---- ------ ----- ------- ------------
<S> <C> <C> <C> <C> <C>
Martin E. Franklin 1997 $257,500 $300,000 550,000 $ 34,541(4)
Chairman, Chief Executive 1996 $277,455 $602,477 550,000 $ 5,700(4)
Officer 1995 $300,000 $ 50,000 -0- -0-
Ian G.H. Ashken 1997 $206,000 $168,750 100,000 27,546(4)
Chief Financial Officer, 1996 $212,981 $ 86,813 275,000 $ 132,275(4)(5)
Executive Vice President of 1995 $190,000 -0- -0- -0-
Finance and Administration,
and Assistant Secretary
William T. Sullivan(6) 1997 $ 71,464 -0- -0- $ 350,000(6)
Chief Operating Officer 1996 $212,981 $ 84,775 372,250 $ 961,618(4)(5)
and President 1995 $195,000 -0- 40,000 $ 106,340(4)(5)
</TABLE>
- -------------------------------------------------------------------------------
(1) Included in the table are amounts received as compensation from Benson
during the periods in question and prior to the spinoff of the Company
by Benson (the "Company Spinoff") on May 3, 1996.
(2) Indicates positions held during fiscal year ended December 31, 1997.
9
<PAGE> 12
(3) All awards reflected in this column represent stock options granted
under the Company's 1996 Stock Incentive Plan (as amended). Option
numbers are not adjusted to reflect the effect of the one-for-two
split of the Company's common stock effective March 11, 1998.
(4) The Company maintains "split dollar" life insurance policies for
Messrs. Franklin and Ashken, respectively, in amounts of $5 million
and $3 million; amounts indicated as "All Other Compensation" for
Messrs. Franklin and Ashken for 1997 reflect $28,877 and $21,882,
respectively, reported as income in connection with such life
insurance. "All Other Compensation" also includes employer matching
contributions under the Company's 401(k) Savings Plan, as follows: Mr.
Franklin, $5,700 for 1996 and $5,664 for 1997; Mr. Ashken, $5,700 for
1996 and $5,664 for 1997; and, Mr. Sullivan, $5,700 for 1996. Bonus
earned by Mr. Franklin in 1996 included a one-time bonus of $400,000
in recognition of Mr. Franklin's successful efforts in connection with
the merger of Benson with and into Essilor Acquisition Corporation
(the "Essilor Merger") and the Company Spinoff.
(5) Includes cash payments received in connection with the cancellation on
May 3, 1996 of then outstanding Benson Options upon the consummation
of the Essilor Merger and the Company Spinoff.
(6) Mr. Sullivan resigned as an executive officer of the Company effective
March 29, 1997; he remains a Director of the Company. "All Other
Compensation" for Mr. Sullivan for 1997 reflects payments received
pursuant to a severance agreement relating to Mr. Sullivan's
resignation. See "Executive Compensation Employment Agreements."
(7) Represents options granted under the former Benson option plan, all of
which were cancelled in connection with the Essilor Merger and the
Company Spinoff on May 3, 1996.
OPTIONS/SAR GRANTS TABLE
Except as stated below, no stock options or stock appreciation rights
(SARs) were granted in 1997 to the named executive officers. The figures
disclosed below have not been adjusted to take into account the effect of the
Bolle Spinoff, ILC Merger and a one-for-two reverse split of the Company's
common stock occurring in March 1998.
<TABLE>
% OF TOTAL POTENTIAL REALIZED VALUE
NUMBER OF OPTIONS AT ASSUMED RATES OF
SECURITIES GRANTED TO EXERCISE STOCK APPRECIATION FOR
UNDERLYING EMPLOYEES OR OPTION TERM(2)
OPTIONS IN FISCAL BASE PRICE EXPIRATION -------------------------
NAME GRANTED(1) YEAR ($/SH) DATE 5% 10%
---- ---------- ---------- ---------- ----------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
Martin E. Franklin 550,000 (3) 31% $4.25 03/25/2007(3) $1,322,290 $1,831,261
Ian G.H. Ashken 100,000 6% $4.25 05/03/2007(3) $ 240,416 $ 332,957
William T. Sullivan -0- -0- N/A N/A N/A N/A
</TABLE>
- ---------------------------
(1) For additional information concerning stock options, see "Executive
Compensation--Compensation Under Plans."
(2) These columns illustrate the hypothetical appreciation of the stock
options under the assumption that each option appreciates at the rate
of 5% and 10%, respectively, compounded annually until the date of
expiration.
10
<PAGE> 13
(3) These options vest on the earlier of (a) the date on which the
Company's common stock has traded at an average closing bid price
equal to $7.50/share for a twenty (20) consecutive trading day period
or (b) March 25, 2005.
OPTIONS/SAR EXERCISE AND FISCAL YEAR-END OPTION/SAR VALUE TABLE
The following table provides information on options/SARs exercised during
fiscal 1997 by the Executive Group and the value of each such officer's
unexercised options/SARs as of the end of such fiscal year. The figures
disclosed below have not been adjusted to take into account the effect of the
spinoff by the Company of its equity interest in Bolle Inc. (the "Bolle
Spinoff"), the ILC Merger and a one-for-two reverse split of the Company's
common stock occurring in March 1998.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTIONS/SAR VALUES
SHARES ACQUIRED ON NUMBER OF UNEXERCISED IN- VALUE OF UNEXERCISED IN-THE-
------------------ ------------------------- ----------------------------
EXERCISE THE-MONEY OPTIONS/SARS AT FY-END (#) MONEY OPTIONS/SARS AT
-------- ------------------------------------ ---------------------
FY-END($)
---------
NAME (#) VALUE ($)
-------- REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
-------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Martin E. Franklin(1) -0- N/A 137,500 962,500 $1,131,656 $1,352,844
Ian G.H. Ashken(2) -0- N/A 93,750 281,250 $124,453 $356,484
William T. Sullivan(3) -0- N/A 295,000 2,500 $359,015 $2,968
</TABLE>
- -------------------------------------------------------------------------------
(1) Based on the closing price of BEC common stock on the New York Stock
Exchange on December 31, 1997 of $5.937 and average exercise prices of
$4.98 to $4.56 per share, respectively, for exercisable and
unexercisable options.
(2) Based on the closing price of BEC common stock on the New York Stock
Exchange on December 31, 1997 of $5.937 and average exercise prices of
$4.61 to $4.67 per share, for exercisable and unexercisable options.
(3) Based on the closing price of BEC common stock on the New York Stock
Exchange on December 31, 1997 of $5.937 and exercise prices of $4.72
to $4.75 per share, for exercisable and unexercisable options.
DIRECTORS' COMPENSATION
Except as stated below, the Company's directors received no
compensation in connection with their services as directors on the Board of
Directors in 1997. For services rendered in 1997, all non-executive directors
received fees or remuneration in the amount of $15,000; fees are paid
quarterly, in arrears. Ms. Bailey's law firm has received payment for legal
services from time to time provided to the Company, but such payments were not
made in consideration of Ms. Bailey's services as a director. See "Certain
Relationships and Related Transactions." Additionally, all non-executive
directors are entitled to receive automatic grants of stock options of the
Company's common stock in compensation for their services. See "Compensation
Under Plans-1996 Stock Incentive Plan." See, also, "Employment Agreements." In
addition, upon the retirement of Mr. Richard
11
<PAGE> 14
D. Hanselman and Dr. Charles S. Sydnor from the Company's Board of Directors,
effective March 12, 1998, the Company caused all then-outstanding options
granted to such Directors to vest fully.
EMPLOYMENT AGREEMENTS
Martin E. Franklin. Mr. Franklin has entered into an employment
agreement with the Company (the "Franklin Employment Agreement"), pursuant to
which he served as Chief Executive Officer and Chairman of the Company for an
initial period of three years and thereafter subject to annual renewal. By
agreement, Mr. Franklin presently serves as Chairman of the Board and Mr. Capra
has assumed duties as Chief Executive Officer, effective March 12, 1998.
Pursuant to the Franklin Employment Agreement, Mr. Franklin receives an annual
base salary which is subject to (i) increase each year by a minimum of the
annual rate of increase in the Consumer Price Index, and (ii) discretionary
increases determined by the Compensation Committee of the Board of Directors
from time to time; Mr. Franklin also may receive a bonus based on performance
criteria to be approved by the Board of Directors. Mr. Franklin's annual base
salary for 1998 has been set at $265,000. The agreement may be terminated by
either party upon at least 90 days' notice prior to the end of the initial term
or any subsequent renewal term. The Company may terminate the agreement with
cause in the event of the death, permanent disability or certain misconduct of
Mr. Franklin. The Company may terminate Mr. Franklin's employment without cause
upon 30 days' notice, in which event Mr. Franklin will be entitled to receive a
severance payment equal to one year's current base salary and his existing
benefits for a period of one year and any non-vested stock options then
outstanding will automatically vest. The agreement contains noncompetition and
nonsolicitation restrictions effective during the employment term and for a
period of one year thereafter.
Ian G.H. Ashken. Mr. Ashken has entered into an employment agreement
with the Company. Under the agreement, Mr. Ashken serves as Chief Financial
Officer of the Company and receives an annual base salary which is subject to
(i) an increase each year by a minimum of the annual rate of increase in the
Consumer Price Index, and (ii) discretionary increases determined by the
Compensation Committee of the Board of Directors from time to time; Mr. Ashken
also may receive a bonus based on performance criteria to be determined by the
Board of Directors. Mr. Ashken's annual base salary for 1998 has been set at
$212,000. The other terms of Mr. Ashken's employment agreement are the same as
the terms of the Franklin Employment Agreement.
Richard D. Capra. Mr. Capra has entered into an employment agreement
with the Company, effective March 12, 1998. Under the agreement, Mr. Capra will
serve as Chief Executive Officer of the Company for a period of one (1) year.
Mr. Capra will receive a base salary in the amount of $250,000. In addition,
Mr. Capra, in consideration of his agreement to terminate his previously
existing employment arrangements, will receive the sum of $980,000, payable
over a period of four (4) years. Mr. Capra is not eligible for a bonus or any
other additional compensation, except as approved by the Board of Directors.
The other terms of Mr. Capra's employment agreement are materially the same as
Mr. Franklin's and Mr. Ashken's agreements.
COMPENSATION UNDER PLANS
1996 STOCK INCENTIVE PLAN.
On April 2, 1996, the Company's Board of Directors adopted the
Company's 1996 Stock Incentive Plan (as amended) (the "Plan") and on April 2,
1996, Benson, as the then sole shareholder of the Company, approved the Plan.
Effective March 12, 1998, the Company's stockholders approved an Amended Plan
in connection with the ILC Merger and Bolle Spinoff, to increase the number of
shares reserved for issuance pursuant to awards granted under the Plan and to
effect certain technical changes to conform to current SEC regulations and
provisions of the Internal Revenue Code. Pursuant to the Plan, employees and
consultants of the Company and its subsidiaries and affiliates (other than
employees subject to a collective bargaining agreement) are eligible to be
selected by the Compensation Committee as participants to receive discretionary
awards of various forms of equity-based incentive compensation, including stock
options, stock appreciation rights ("SARs"), restricted stock awards,
performance share unit awards and phantom stock unit awards, and awards
consisting of combination of such incentives.
Approximately 250 persons are eligible to participate in the Plan.
12
<PAGE> 15
The Plan is administered by the Compensation Committee of the
Company's Board of Directors (the "Compensation Committee"). The Compensation
Committee, in its sole discretion, will determine which eligible employees and
consultants of the Company and its subsidiaries may participate in the Plan and
the type, extent and terms of the equity-based awards to be granted to them.
Members of the Compensation Committee, because of their status as non-employee
Directors, will receive automatic non-discretionary annual grants of stock
options pursuant to the Plan.
Under the Plan, at the time of the Essilor Merger and the Company
Spinoff, each non-employee Director automatically was granted an option to
purchase 10,000 shares of the Company's common stock. Additionally, effective
upon the date of the Bolle Spinoff, each non-employee Director was granted an
option to purchase 10,000 shares of the Company's common stock. Finally, in
addition to the foregoing, on the date that a person first becomes a
non-employee Director, he or she is automatically granted an option to purchase
10,000 shares of the Company's common stock. Thereafter, on the date of each
annual meeting of stockholders of the Company, each non-employee Director will
automatically be granted an option to purchase 2,500 shares of the Company's
common stock. All such automatic grants to non-employee Directors are hereafter
called "Director Options." Each Director Option has an exercise price per share
equal to the fair market value of one share of the Company's common stock on
the date of grant and vests and becomes exercisable over a four year period
beginning on the first anniversary of the date of grant at the rate of 25% of
each Director Option on each of the four years immediately following the date
of grant. These grants are the only grants made to non-employee Directors under
the Plan. The Compensation Committee has no discretion to make any grants under
the Plan to non-employee Directors. All Director Options will be NQSO's (as
defined below).
Stock options granted by the Compensation Committee under the Plan may
be "incentive stock options" ("ISOs"), within the meaning of Section 422 of the
Code, or "non qualified stock options" ("NQSO's"). The exercise price of the
options will be determined by the Compensation Committee when the options are
granted, subject to a minimum price in the case of ISOs of the fair market
value of the Company's common stock on the date of grant, unless the
Compensation Committee, in its sole discretion, determines to grant a discount
NQSO in lieu of a reasonable amount of salary or cash bonus, in which case the
exercise price may be 85% of the fair market value of the Company's common
stock on the date of grant. The option exercise price for all options granted
under the Plan may be paid in cash or in shares of the Company's common stock
having a fair market value on the date of exercise equal to the exercise price
or, in the discretion of the Compensation Committee, by delivery to the Company
of (i) other property having a fair market value on the date of exercise equal
to the option exercise price, or (ii) a copy of irrevocable instructions to a
stockbroker to deliver promptly to the Company an amount of sale or loan
proceeds sufficient to pay the exercise price.
An SAR may be granted by the Compensation Committee as a supplement to
a related stock option or may be granted independent of any option. SARs
granted in connection with an option will become exercisable and lapse
according to the same vesting schedule and lapse rules that are established for
the corresponding option. SARs granted independent of any option will vest and
lapse according to the terms and conditions set by the Compensation Committee.
An SAR will entitle its holder to be paid an amount equal to the excess of the
fair market value of the Company's common stock subject to the SAR on the date
of exercise over the exercise price of the related stock options, in the case
of an SAR granted in connection with an option, or the fair market value of the
Company's common stock on the date of grant in the case of an SAR granted
independent of an option.
Shares of the Company's common stock covered by a restricted stock
award will not be issued to the recipient at the time the award is granted but
will be deposited with an escrow agent until the end of the restricted period
set by the Compensation Committee. During the restricted period, restricted
stock will be subject to transfer restrictions and forfeiture in the event of
termination of employment with the Company or a subsidiary and other
restrictions and conditions established by the Compensation Committee at the
time the award is granted.
13
<PAGE> 16
A phantom stock unit award will provide for the future payment of cash
or the issuance of shares of the Company's common stock to the recipient if
continued employment or other conditions established by the Compensation
Committee at the time of grant are attained.
A performance share unit award will provide for the future payment of
cash or the issuance of shares of the Company's common stock to the recipient
upon the attainment of certain corporate performance goals established by the
Compensation Committee over three to five year performance award periods. At
the end of each performance award period, the Compensation Committee decides
the extent to which the corporate performance goals have been attained and the
amount of cash or the Company's common stock to be distributed to the
participant.
1996 EMPLOYEE STOCK PURCHASE PLAN.
The Company has authorized the 1996 Employee Stock Purchase Plan (the
"Stock Purchase Plan") for persons who have been employed full-time by the
Company or its subsidiaries for at least one year, pursuant to which 500,000
shares of common stock will be reserved for issuance, subject to adjustment.
Eligible employees will be able to contribute, for each semi-annual period
beginning on the first business day after January 1 and July 1 (each, an
"Enrollment Date") and ending excess of $10,000 per semi-annual period, to
purchase shares of common stock on the Exercise Date. The purchase price for
each share of common stock purchased pursuant to the 1996 Employee Stock
Purchase Plan will be the lesser of 85% of the fair market value of the common
stock on the Enrollment Date or 85% of the fair market value of the common
stock on the Exercise Date. The Stock Purchase Plan has not yet been formally
implemented, and consequently no shares of common stock have been issued
thereunder.
OTHER
The Company does not maintain a pension plan or other actuarial or
defined benefit retirement plan for its named executive officers. The Company
does not maintain any long-term incentive plans, and there was no repricing of
outstanding options or SARs held by any of the Company's executive officers
during fiscal year 1997. The Company's named executive officers are eligible to
participate in benefit plans generally available to the Company's employees,
including a 401(k) savings plan and the health and life insurance programs.
COMPENSATION COMMITTEE AND STOCK OPTION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
Effective March 12, 1998, the Compensation Committee comprises of Mr.
Moore (Chairman), Mr. Clairmont and Mr. Sullivan. During 1997 and through March
12, 1998 the Company's Compensation Committee was composed of Dr. Sydnor
(Chairman), Mr. Hanselman, and Mr. Moore. For information concerning certain
transactions between members of the Compensation Committee and the Company, see
"Executive Compensation-Directors' Compensation."
14
<PAGE> 17
REPORT OF THE COMPENSATION COMMITTEE
This report is made by the Compensation Committee of the Board of
Directors. The Compensation Committee of the Company's Board of Directors is
composed of Mr. David L. Moore (Chairman), Mr. George B. Clairmont and Mr.
William T. Sullivan. The committee is responsible for setting and administering
the Company's policies governing annual compensation of key employees,
managers, officers and executive officers, including setting individual annual
base salaries or salary guidelines, annual bonus plans and individual
participation levels, and participation in the Company's Plan. See "Information
Concerning Meetings of the Board of Directors and Board Committees" and
"Director Compensation". Compensation of executive officers, including
compensation of the Chief Executive Officer, is subject to approval of the
Board of Directors. The proposed compensation of any member of the Compensation
Committee who also is an executive officer would be subject to ratification by
the disinterested members of the Board of Directors; none of the present
members of the committee are or have been executive officers of the Company,
and it is the Company's policy to appoint only disinterested directors as
members of the Committee.
COMPLIANCE WITH FEDERAL TAX LAW
The committee has considered the potential impact of Section 162(m)
(the "Section") of the Internal Revenue Code, as amended. The Section disallows
a tax deduction for any publicly-held corporation for individual compensation
exceeding $1 million in any tax year for any executive officer, unless
compensation is based on performance. The Company maintains executive cash
compensation significantly below the $1 million threshold, and the Company
believes that any options granted under the Plan to any of its executive
officers will qualify as performance-based compensation, to the extent that any
of the same may result in compensation in excess of the threshold.
Consequently, the committee does not believe that the Section will have any
impact on the deductibility to the Company of any compensation paid to
executive officers.
OVERVIEW
The Company's executive compensation program currently includes the
following key elements: base salary, cash bonuses and awards of stock options.
The Company's general executive officer compensation policy is intended to: (i)
support achievement of the Company's strategic goals; (ii) retain and reward
sufficiently committed and talented individuals prepared to invest their
talents for long term rather than short term gain and, (iii) tie executive
officers' interests to Stockholder interests.
The Compensation Committee determines base salaries for new executive
officers and base salary adjustments for current executive officers by
evaluating the responsibilities of the position held, the experience of the
individual and individual performance. It determines stock option awards based
on the same factors. In reviewing executive compensation matters, the committee
may consult with the Company's human resources professionals and/or independent
compensation consultants. The committee also may make use of independently
available compensation survey data and other publicly available information,
including publicly-disclosed compensation information of other companies of
comparable size engaged in similar industries, as well as information gained
through their experience as directors of other publicly and privately held
corporations. The committee's determinations also are made with reference to
the Company's available financial resources.
While the Company may make use of publicly available data and other
surveys in setting its general compensation policies, the Company is relatively
young and has experienced a period of rapid change. Consequently, it is not
possible to compare the Company or its compensation policies directly with more
established companies, and the Company's executive officer compensation is not
rigidly dominated by a lock-step approach to keeping executive compensation
competitive with compensation levels of companies of similar size or in
comparable industries. Additionally, the Company's brief history, combined with
the significant changes experienced by Benson, its predecessor for accounting
purposes, has rendered financial results difficult to
15
<PAGE> 18
compare from one period to another. Therefore, achievement of financial goals
set by the Board on an annual basis is only one of the factors considered in
setting the Company's compensation policy; successful implementation of the
Company's more broadly-based strategic goals also is considered an important
factor. Moreover, the Company's focus on rapid internal growth and expansion
through acquisitions further affects its executive compensation policy by
causing the Company carefully to husband its resources. The committee believes
that annual cash compensation of its executive officers is below that which
executives of comparable ability and talent could receive competitively
elsewhere.
It is the policy of the committee and the Company that a portion of an
executive officer's compensation be composed of long-term performance-based
compensation. In this way, the Company can conserve its financial resources
while aligning the executive group's interests more strongly with the interests
of the Company's Stockholders; at the same time, the Company thereby attracts
executives of proven skill and ability who are prepared to invest their talents
over the long term. In furtherance of this policy, the Company adopted, and the
Compensation Committee has made awards and grants pursuant to, the Company's
"Plan". In determining the number of stock options granted during 1996, the
committee considered the same criteria discussed above with respect to base
salaries.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Franklin, the Company's Chief Executive Officer, has entered into
an employment agreement, under which he received an annual base salary for 1997
in the amount of $257,500. For 1998, Mr. Franklin's base salary has been set at
$265,000. Mr. Franklin is eligible to participate in the bonus program for
executive officers. See "Executive Compensation--Employment Agreements". The
Bonus paid to Mr. Franklin for services rendered in 1997 was $300,000, awarded
in recognition of extraordinary services provided in connection with the
acquisition of Bolle France in July 1997 and of the acquisition of ILC
Technology, Inc. and the spinoff by the Company of its interest in Bolle Inc.,
both of which transactions closed in March 1998 and related transactions,
whereby Mr. Franklin personally helped to limit significantly transactional
costs that otherwise would have been paid to third parties. The committee
believes that Mr. Franklin's compensation under the employment agreement is
consistent with the general policies described above. Mr. Franklin's
compensation for 1998 has been determined also in recognition of the demands
made upon Mr. Franklin in effecting the strategic goals of the Company and his
successful efforts in positioning the Company for future growth.
COMPENSATION COMMITTEE
Mr. L. Moore (Chairman)
Mr. George B. Clairmont
Mr. William T. Sullivan.
16
<PAGE> 19
COMPARATIVE STOCK PERFORMANCE GRAPH
The graph below compares the cumulative total Stockholder return on
the Company's Common Stock, based on the market price of the Common Stock, with
the cumulative total return of (i) companies included in the Wilshire Small Cap
Index and (ii) companies included in the Russell 1000 Index, assuming a $100
investment in the Company's Common Stock and in each such index on May 3, 1996.
The Company was formed in December 1995 and the Company's Common Stock first
began to trade publicly on the New York Stock Exchange on May 3, 1996.
Consequently, the comparative information presented below corresponds only to
the period during which the Company's Common Stock has been registered under
Section 12 of the Securities Exchange Act of 1934. The Company has never paid
cash dividends.
<TABLE>
Lumen Russell Wilshire Lumen Russell Wilshire
--------------------------------------------------------
05/03/96 5.05 343.78 440.08 Number of shares
--------------------------------------------------------
Investment 19.80 0.29 0.23
--------------------------------------------------------
Value
-------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
May-96 6.13 357.35 456.08 121.39 103.95 103.64
Jun-96 4.50 357.10 435.52 89.11 103.87 98.96
Jul-96 5.25 339.44 400.73 103.96 98.74 91.06
Aug-96 5.00 347.79 424.07 99.01 101.17 96.36
Sep-96 5.13 366.77 442.44 101.58 106.69 100.54
Oct-96 4.88 374.38 439.99 96.63 108.90 99.98
Nov-96 4.75 401.05 464.11 94.06 116.66 105.46
Dec-96 5.13 393.75 472.06 101.58 114.54 107.27
Jan-97 4.63 416.77 487.72 91.68 121.23 110.83
Feb-97 4.75 417.46 485.98 94.06 121.43 110.43
Mar-97 4.63 398.19 466.52 91.68 115.83 106.01
Apr-97 4.63 419.15 473.73 91.68 121.92 107.65
May-97 4.38 445.06 517.82 86.73 129.46 117.66
Jun-97 4.56 462.95 534.41 90.30 134.66 121.43
Jul-97 4.50 499.89 579.86 89.11 145.41 131.76
Aug-97 5.06 475.33 590.32 100.20 138.27 134.14
Sep-97 5.19 500.78 625.72 102.77 145.67 142.18
Oct-97 5.75 483.86 594.60 113.86 140.75 135.11
Nov-97 5.88 504.25 589.92 116.44 146.68 134.05
Dec-97 5.94 513.79 592.08 117.62 149.45 134.54
</TABLE>
17
<PAGE> 20
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has entered into indemnification agreements with each of
its directors, officers and certain executives, pursuant to which the Company
has agreed to indemnify each indemnitee to the fullest extent authorized by law
against any and all damages, judgments, settlements and fines ("losses") in
connection with any action, suit, arbitration or proceeding or any inquiry or
investigation, whether brought by or in the right of the Company or otherwise,
whether civil, criminal, administrative, investigative or other, or any appeal
therefrom, by reason of an indemnitee's serving as a director of the Company.
An indemnitee is not entitled to indemnification for any losses that are (i)
based or attributable to the indemnitee gaining in fact any personal profit or
advantage to which the indemnitee is not entitled, (ii) for the return by the
indemnitee of any remuneration paid to the indemnitee without the previous
approval of the Stockholders of the Company which is illegal, (iii) for
violations of Section 16 of the Securities Exchange Act of 1934 or similar
provisions of state law, (iv) based upon knowingly fraudulent, dishonest or
willful misconduct and (v) not permitted to be covered by applicable law. The
agreements provide that the indemnification under the agreement is not
exclusive of any other rights the indemnitee may have under the Company's
Restated Certificate of Incorporation, Restated By-laws, applicable Delaware
corporate statutes or any agreement or vote of stockholders.
The Company's non-employee Directors receive automatically stock
option grants under the terms of the Plan. Each of Mr. Franklin, Mr. Ashken and
Mr. Sullivan (prior to his resignation as an officer) also has received stock
option grants under the terms of the Plan, and Messrs. Franklin, Ashken and
Capra have entered into continuing agreements with the Company. See "Executive
Compensation."
Mr. Baumgartner, who will retire from the Board of Directors effective
as of the date of the Meeting, has entered into an agreement with the Company,
effective March 12, 1998, pursuant to which he agreed to terminate all
previously existing employment arrangements with ILC in return for payments
totaling $1,100,000, payable over a term of five years.
In connection with Mr. Sullivan's resignation as an executive officer
and employee of the Company, to be effective March 29, 1997 Mr. Sullivan
received payment of $350,000. The Company additionally agreed to vest at March
29, 1997 all options previously granted to Mr. Sullivan then outstanding and
not yet vested; all presently unexercised options granted to Mr. Sullivan will
remain exercisable through September 30, 1998.
Ms. Nora A. Bailey, a member of the Company's Board of Directors since
May 1996, and who will retire from the Board of Directors effective as of the
date of the Meeting, is an attorney specializing in federal tax law. In her
professional capacity she has rendered legal advice and related services to
both the Company and its predecessor, Benson. Ms. Bailey has rendered such
services both prior to and subsequent to her appointment to the Company's Board
of Directors, and it is anticipated that she from time to time in the future
will be engaged to provide similar legal services to the Company. All fees paid
to Ms. Bailey in connection with such services have been agreed in arms' length
negotiations and are in accordance with Ms. Bailey's usual and customary
billing practices. Fees paid to Ms. Bailey by the Company in connection with
such services are not paid in consideration of her services as a director.
Aggregate fees billed to the Company by Ms. Bailey during 1997 were
approximately $90,000.
No other significant transactions, business relationships, or
indebtedness are known to exist between the Company and related parties
(defined as directors, executive officers, nominees for director, security
holders of more than 5% of the voting stock or any members of the immediate
family of any of the foregoing persons).
18
<PAGE> 21
PROPOSAL NO. 2
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board recommends that the Stockholders ratify the selection of
PricewaterhouseCoopers LLP, certified public accountants, as independent
accountants to audit the accounts of the Company and its subsidiaries for the
year ending December 31, 1998. The selection of PricewaterhouseCoopers LLP was
recommended to the Board by the Board of its Audit Committee.
PricewaterhouseCoopers LLP are currently independent accountants for the
Company.
The Board of Directors recommends a vote FOR this Proposal No. 2.
COMPLIANCE WITH SECTION 16(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of
a registered class of the Company's equity securities to file reports of
ownership and changes in ownership in respect of the Company's securities with
the Securities and Exchange Commission. Such persons are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on the Company's review of the copies of such forms it
has received and written representations of certain of its directors and
officers, the Company believes that during 1997 all persons subject to the
reporting requirements of Section 16(a) filed the required reports on a timely
basis.
ANNUAL REPORT
A copy of the Company's Annual Report to Stockholders for 1997 has
previously been sent to Stockholders or, in the case of Stockholders who have
not received a copy previously, accompanies this Proxy Statement. Any
Stockholder who has not received a copy of the 1997 Annual Report to
Stockholders and who wishes to do so should contact the Company, Attention:
Investor Relations, by mail at the address set forth in the Notice of Annual
Meeting or by telephone at (914) 967-9400. The 1997 Annual Report to
Stockholders is not incorporated into this Proxy Statement and shall not be
considered part of this solicitation material.
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<PAGE> 22
PROPOSALS BY STOCKHOLDERS
The persons named as proxies in the enclosed Proxy Statement have no
present intention of bringing before the Annual Meeting for action any matters
other than those specifically referred to above, nor has management any such
intention, and neither such persons nor management are aware of any such
matters which may be presented by others. If any other business should properly
come before the Annual Meeting, the persons named on the proxy intend to vote
thereon in accordance with their best judgment.
Any proposal of a Stockholder intended to be presented at the Annual
Meeting of Stockholders to be held in 1998, must be received by the Company no
later than March 16, 1999 to be considered for inclusion in the proxy statement
for the 1999 Annual Meeting of Stockholders. Proposals must comply with Rule
14a-8 promulgated by the Securities and Exchange Commission pursuant to the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934.
By Order of the Board of Directors,
Peter H. Trembath
Secretary
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<PAGE> 23
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PROXY
LUMEN TECHNOLOGIES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
FOR THE ANNUAL MEETING OF STOCKHOLDERS -- JULY 31, 1998
The undersigned stockholder hereby appoints Martin E. Franklin and Ian G.H.
Ashken and each of them, the true and lawful attorneys and proxies of the
undersigned with full power of substitution, to vote all shares of Common Stock
of Lumen Technologies, Inc. which the undersigned is entitled to vote at the
Annual Meeting of Stockholders of the Company to be held on July 31, 1998 and at
any and all adjournments and postponements thereof, for the transaction of such
business as may properly come before the Meeting, including the items set forth
on the reverse side hereof.
The shares represented by this proxy will be voted in the manner directed
herein, but if no direction is made with respect to the voting of Common Stock,
this Proxy will be voted FOR the election of all listed directors and FOR
Proposal 2, all as more fully described in the accompanying Proxy Statement.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES,
BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD
OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU
SIGN AND RETURN THIS CARD.
[X] Please mark your votes as in this example
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSALS.
<TABLE>
<CAPTION>
<S> <C>
1. Election of Directors [ ] FOR all nominees listed below
[ ] WITHHOLD AUTHORITY to vote
for all nominees below.
</TABLE>
Martin E. Franklin, Ian G.H. Ashken, Harrison H. Augur, Richard D. Capra
George B. Clairmont, David L. Moore, William T. Sullivan
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name below.)
(Continued, and to be signed on other side)
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<PAGE> 24
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(Continued from other side)
2. Ratification of the selection of PricewaterhouseCoopers LLP as the Company's
independent accountants for the year ending December 31, 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
Date
------------------------------
Signature
------------------------------
Signature
PLEASE SIGN EXACTLY AS NAME
APPEARS HEREON. JOINT OWNERS
SHOULD EACH SIGN. WHEN SIGNING
AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR
GUARDIAN, PLEASE GIVE FULL
TITLE AS SUCH.
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