<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
THERMO VOLTEK CORP.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
THERMO VOLTEK CORP.
------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
________________________________________________________________________
(5) Total fee paid:
________________________________________________________________________
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
________________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
________________________________________________________________________
(3) Filing Party:
________________________________________________________________________
(4) Date Filed:
________________________________________________________________________
<PAGE>
THERMO VOLTEK CORP.
470 Wildwood Street
Woburn, Massachusetts 01888
April 23, 1998
Dear Stockholder:
The enclosed Notice calls the 1998 Annual Meeting of the Stockholders of
Thermo Voltek Corp. I respectfully request that all Stockholders attend this
meeting, if possible.
Our Annual Report for the year ended January 3, 1998, is enclosed. I hope
you will read it carefully. Feel free to forward any questions you may have if
you are unable to be present at the meeting.
Enclosed with this letter is a proxy authorizing three officers of the
Corporation to vote your shares for you if you do not attend the meeting.
Whether or not you are able to attend the meeting, I urge you to complete your
proxy and return it to our transfer agent, American Stock Transfer & Trust
Company, in the enclosed addressed, postage-paid envelope, as a quorum of the
Stockholders must be present at the meeting, either in person or by proxy.
I would appreciate your immediate attention to the mailing of this proxy.
Yours very truly,
JOHN W. WOOD JR.
Chairman and Chief Executive Officer
<PAGE>
THERMO VOLTEK CORP.
470 Wildwood Street
Woburn, Massachusetts 01888
April 23, 1998
To the Holders of the Common Stock of
THERMO VOLTEK CORP.
NOTICE OF ANNUAL MEETING
The 1998 Annual Meeting of the Stockholders of Thermo Voltek Corp. (the
"Corporation") will be held on Monday, June 1, 1998, at 1:30 p.m. at The Hyatt
Regency Scottsdale Resort at Gainey Ranch, 7500 East Doubletree Ranch Road,
Scottsdale, Arizona, 85258. The purpose of the meeting is to consider and take
action upon the following matters:
1. Election of six directors.
2. Such other business as may properly be brought before the meeting and
any adjournment thereof.
The transfer books of the Corporation will not be closed prior to the
meeting, but, pursuant to appropriate action by the board of directors, the
record date for the determination of the Stockholders entitled to receive notice
of and to vote at the meeting is April 3, 1998.
The By-laws require that the holders of a majority of the stock issued and
outstanding and entitled to vote be present or represented by proxy at the
meeting in order to constitute a quorum for the transaction of business. It is
important that your shares be represented at the meeting regardless of the
number of shares you may hold. Whether or not you are able to be present in
person, please sign and return promptly the enclosed proxy in the accompanying
envelope, which requires no postage if mailed in the United States.
This Notice, the proxy and proxy statement enclosed herewith are sent to
you by order of the board of directors.
SANDRA L. LAMBERT
Secretary
<PAGE>
PROXY STATEMENT
The enclosed proxy is solicited by the board of directors of Thermo Voltek
Corp. (the "Corporation") for use at the 1998 Annual Meeting of the Stockholders
(the "Meeting") to be held on Monday, June 1, 1998, at 1:30 p.m. at The Hyatt
Regency Scottsdale Resort at Gainey Ranch, Scottsdale, Arizona, and any
adjournment thereof. The mailing address of the executive office of the
Corporation is 470 Wildwood Street, Woburn, Massachusetts 01888. This proxy
statement and the enclosed proxy were first furnished to Stockholders of the
Corporation on or about April 29, 1998.
VOTING PROCEDURES
The board of directors intends to present to the Meeting the election of
six directors, constituting the entire board of directors.
The representation in person or by proxy of a majority of the outstanding
shares of the common stock of the Corporation, $.05 par value, ("Common Stock")
entitled to vote at the Meeting is necessary to provide a quorum for the
transaction of business at the Meeting. Shares can only be voted if the
Stockholder is present in person or is represented by returning a properly
signed proxy. Each Stockholder's vote is very important. Whether or not you plan
to attend the Meeting in person, please sign and promptly return the enclosed
proxy card, which requires no postage if mailed in the United States. All
signed and returned proxies will be counted toward establishing a quorum for the
Meeting, regardless of how the shares are voted.
Shares represented by proxy will be voted in accordance with your
instructions. You may specify your choice by marking the appropriate box on the
proxy card. If your proxy card is signed and returned without specifying
choices, your shares will be voted for the management nominees for directors and
as the individuals named as proxy holders on the proxy deem advisable on all
other matters as may properly come before the Meeting.
In order to be elected a director, a nominee must receive the affirmative
vote of a majority of the shares of Common Stock present and entitled to vote on
the election. Withholding authority to vote for a nominee for director will be
treated as shares present and entitled to vote and, for purposes of determining
the outcome of the vote, will have the same effect as a vote against the
nominee. With respect to the election of directors, broker "non-votes" will not
be treated as shares present and entitled to vote on a voting matter and will
have no effect on the outcome of the vote. A broker "non-vote" occurs when a
nominee holding shares for a beneficial holder does not have discretionary
voting power and does not receive voting instructions from the beneficial owner.
A Stockholder who returns a proxy may revoke it at any time before the
Stockholder's shares are voted at the Meeting by written notice to the Secretary
of the Corporation received prior to the Meeting, by executing and returning a
later-dated proxy or by voting by ballot at the Meeting.
The outstanding stock of the Corporation entitled to vote (excluding shares
held in treasury by the Corporation) as of April 3, 1998, consisted of 8,858,899
shares of Common Stock. Only Stockholders of record at the close of business on
April 3, 1998, are entitled to vote at the Meeting. Each share is entitled to
one vote.
--PROPOSAL 1--
ELECTION OF DIRECTORS
Six directors are to be elected at the Meeting, each to hold office until
his or her successor is chosen and qualified or until his or her 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 corporations in which such persons hold directorships.
Information regarding
1
<PAGE>
their beneficial ownership of the Corporation's Common Stock, and of the common
stock of its parent company, Thermedics Inc. ("Thermedics"), a manufacturer of
product quality-assurance systems, security devices and biomedical products, and
Thermedics' parent company, Thermo Electron Corporation ("Thermo Electron"), a
provider of diversified products and services for biomedical, instrument and
environmental markets, is reported under the caption "Stock Ownership." All of
the nominees are currently directors of the Corporation.
<TABLE>
<S> <C>
- ----------------------------------------------------------------------------------------------------------------
ELIAS P. GYFTOPOULOS Dr. Gyftopoulos, 70, has been a director of the Corporation since 1994. He is
Professor Emeritus at The Massachusetts Institute of Technology, where he was
the Ford Professor of Mechanical Engineering and of Nuclear Engineering for
more than 20 years until his retirement in 1996. Dr. Gyftopoulos is also a
director of Thermo Electron, Thermo BioAnalysis Corporation, Thermo
Cardiosystems Inc., ThermoLase Corporation, Thermo Remediation Inc.,
ThermoSpectra Corporation, Thermo Vision Corporation and Trex Medical
Corporation.
- ----------------------------------------------------------------------------------------------------------------
WILLIAM W. HOOVER Mr. Hoover, 66, has been a director of the Corporation since 1986. Mr. Hoover
is a retired U.S. Air Force Major General and former assistant secretary of the
U. S. Department of Energy. Since 1993, Mr. Hoover has been president of
Hoover Associates, a consulting firm. Prior to 1993, Mr. Hoover was executive
vice president of Air Transport Association of America, a position he held for
more than five years.
- ----------------------------------------------------------------------------------------------------------------
SANDRA L. LAMBERT Ms. Lambert, 43, has been a director of the Corporation since 1990. Ms.
Lambert has been secretary of the Corporation since January 1991 and secretary
and senior counsel of Thermo Electron since July 1990. For more than five
years prior to that time, she was associate general counsel of Thermo Electron.
Ms. Lambert also serves as clerk of Thermedics.
- ----------------------------------------------------------------------------------------------------------------
THEO MELAS-KYRIAZI Mr. Melas-Kyriazi, 38, has been a director of the Corporation since 1990. Mr.
Melas-Kyriazi was treasurer of the Corporation from January 1991 to September
1994 and was treasurer of Thermo Electron from May 1988 to August 1994. From
August 1994 through March 1998, he served as president and chief executive
officer of ThermoSpectra Corporation, a manufacturer of precision imaging,
inspection, temperature control and test and measurement instuments. Since
March 1998, he has served as vice president, corporate strategy, of Thermo
Electron. Mr. Melas-Kyriazi is also a director of Thermo Remediation Inc. and
ThermoSpectra Corporation.
- ----------------------------------------------------------------------------------------------------------------
PETER RICHMAN Mr. Richman, 70, has been a director of the Corporation since 1993. Mr.
Richman was a consultant to Thermedics and its subsidiaries, including the
Corporation, on corporate development and acquisition strategies from March
1993 to March 1995. For more than five years prior to that time, he was
president and chief executive officer of KeyTek Instrument Corp., a
manufacturer of electromagnetic compatibility testing equipment which was
purchased in 1993 by the Corporation. Mr. Richman is also a director of
Thermo Sentron Inc.
- ----------------------------------------------------------------------------------------------------------------
JOHN W. WOOD JR. Mr. Wood, 54, has been a director of the Corporation and chairman of the board
since 1990. Mr. Wood has been the chief executive officer of the Corporation
since 1992, and was also the president of the Corporation from 1992 to January
1997. Mr. Wood has been a senior vice president of Thermo Electron since
December 1995, and, prior to that promotion, was a vice president of Thermo
Electron from September 1994. Mr. Wood was president and chief executive
officer of Thermedics from 1984 through March 1998, and since March 1998 has
been the chairman of the board of Thermedics. Mr. Wood is also a director of
Thermedics, Thermedics Detection Inc., Thermo Cardiosystems Inc. and Thermo
Sentron Inc.
- ----------------------------------------------------------------------------------------------------------------
</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 outside directors. The present
members of the audit committee are Mr. Richman (Chairman) and
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<PAGE>
Mr. Hoover. 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. Hoover (Chairman) and Dr.
Gyftopoulos. 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 eight times, the audit committee met twice and the human
resources committee met three times during fiscal 1997. Each director attended
at least 75% of all meetings of the board of directors and committees on which
he or she served held during fiscal 1997, except for Mr. Melas-Kyriazi, who
attended 62.5%, and Mr. Richman, who attended 67%, of such meetings.
COMPENSATION OF DIRECTORS
CASH COMPENSATION
Directors who are not employees of the Corporation, of Thermo Electron or
of any other companies affiliated with Thermo Electron (also referred to as
"outside directors") receive an annual retainer of $2,000 and a fee of $1,000
per day for attending regular meetings of the board of directors and $500 per
day for participating in meetings of the board of directors held by means of
conference telephone and for participating in certain meetings of committees of
the board of directors. Payment of directors' fees is made quarterly. Ms.
Lambert, Mr. Melas-Kyriazi and Mr. Wood are employees of Thermo Electron or its
subsidiaries and do not receive any cash compensation from the Corporation for
their services as directors. Directors are also reimbursed for out-of-pocket
expenses incurred in attending such meetings.
DEFERRED COMPENSATION PLAN
Under the deferred compensation plan for directors (the "Deferred
Compensation Plan"), a director has the right to defer receipt of his cash fees
until he ceases to serve as a director, dies or retires from his principal
occupation. In the event of a change in control or proposed change in control of
the Corporation that is not approved by the board of directors, deferred amounts
become payable immediately. Either of the following is deemed to be a change of
control: (a) the acquisition, without the prior approval of the board of
directors, directly or indirectly, by any person of 50% or more of the
outstanding Common Stock or the outstanding common stock of Thermedics or 25% or
more of the outstanding common stock of Thermo Electron; or (b) the failure of
the persons serving on the board of directors immediately prior to any contested
election of directors or any exchange offer or tender offer for the Common Stock
or the common stock of Thermedics or 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 56,250 shares of Common Stock
have been reserved for issuance under the Deferred Compensation Plan. As of
March 1, 1998, deferred units equal to 3,576.39 shares of Common Stock were
accumulated under the Deferred Compensation Plan.
DIRECTORS STOCK OPTION PLAN
The Corporation's directors stock option plan (the "Directors Plan")
provides for the grant of stock options to purchase shares of Common Stock of
the Corporation to outside directors as additional compensation for their
service as directors. Under the Directors Plan, outside directors are
automatically granted options to purchase 1,000 shares of the Common Stock
annually at the close of business on the date of each Annual Meeting of the
Stockholders of the Corporation. Options evidencing annual grants may be
exercised 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 are subject to
repurchase by the Corporation at the exercise price if the recipient ceases 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
3
<PAGE>
are not then traded, at the last price per share paid by third parties in an
arms-length transaction prior to the option grant. As of March 1, 1998, options
to purchase 20,550 shares of Common Stock had been granted and were outstanding
under the Directors Plan, no options had lapsed or been exercised, and options
to purchase 35,700 shares of Common Stock were available for future grant.
STOCK OWNERSHIP POLICIES FOR DIRECTORS
During 1996, the human resources committee of the board of directors (the
"Committee") established a stock holding policy for directors. The stock
holding policy requires each director to hold a minimum of 1,000 shares of
Common Stock. Directors are requested to achieve this ownership level by the
1998 Annual Meeting of Stockholders. The chief executive officer of the
Corporation is required to comply with a separate stock holding policy
established by the Committee in 1996, which is described in "Committee Report on
Executive Compensation - Stock Ownership Policies."
In addition, the Committee adopted a policy requiring directors to hold
shares of the Corporation's Common Stock equal to one-half of their net option
exercises over a period of five years. The net option exercise is determined by
calculating the number of shares acquired upon exercise of a stock option, after
deducting the number of shares that could have been traded to exercise the
option and the number of shares that could have been surrendered to satisfy tax
withholding obligations attributable to the exercise of the option. This policy
is also applicable to executive officers and is described in "Committee Report
on Executive Compensation - Stock Ownership Policies."
STOCK OWNERSHIP
The following table sets forth the beneficial ownership of Common Stock, as
well as the common stock of Thermedics, the Corporation's parent company, and of
Thermo Electron, Thermedics' parent company, as of March 1, 1998, with respect
to (i) each director, (ii) each executive officer named in the summary
compensation table under the heading "Executive Compensation" and (iii) all
directors and current executive officers as a group. In addition, the following
table sets forth the beneficial ownership of Common Stock, as of March 1, 1998,
with respect to each person who was known by the Corporation to own beneficially
more than 5% of the outstanding shares of Common Stock.
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 beneficially owned by Thermo Electron.
<TABLE>
<CAPTION>
THERMO THERMEDICS THERMO ELECTRON
NAME(1) VOLTEK CORP.(2) INC.(3) CORP.(4)
------- --------------- ------- --------
<S> <C> <C> <C>
Thermo Electron Corporation (5) 8,474,496 N/A N/A
Colin I.W. Baxter 129,207 20,000 15,166
Elias P. Gyftopoulos 5,750 10,048 72,067
William W. Hoover 24,392 0 0
Sandra L. Lambert 1,912 10,122 87,774
Theo Melas-Kyriazi 46,226 4,500 0
John W. Wood Jr. 96,971 188,406 272,157
All directors andcurrent executive 327,707 338,035 1,407,411
officers as a group (9 persons)
</TABLE>
4
<PAGE>
(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 beneficially owned by Mr. Baxter, Dr. Gyftopoulos, Mr. Hoover, Mr.
Richman, Mr. Wood and all directors and current executive officers as a
group include 111,900, 4,750, 15,398, 41,650, 82,350 and 256,048 shares,
respectively, that such person or group has the right to acquire within 60
days of March 1, 1998, through the exercise of stock options. Shares
beneficially owned by Mr. Richman and all directors and current executive
officers as a group include 3,576 shares allocated through March 1, 1998,
to his account maintained under the Corporation's deferred compensation
plan for directors. Except for Mr. Wood who beneficially owned 1.1% of the
Corporation's Common Stock outstanding as of March 1, 1998, no director or
executive officer beneficially owned more than 1% of the Common Stock
outstanding as of March 1, 1998; all directors and current executive
officers as a group beneficially owned 3.7% of the Common Stock outstanding
as of such date.
(3) Shares of the common stock of Thermedics beneficially owned by Mr. Baxter,
Dr. Gyftopoulos, Ms. Lambert, Mr. Melas-Kyriazi, Mr. Richman, Mr. Wood and
all directors and current executive officers as a group include 20,000,
4,500, 8,000, 20,000, 4,500, 130,700 and 256,700 shares, respectively, that
such person or member of the group has the right to acquire within 60 days
of March 1, 1998, through the exercise of stock options. Shares
beneficially owned by Ms. Lambert, Mr. Melas-Kyriazi, and all directors and
current executive officers as a group include 978, 1,119 and 3,834 full
shares, respectively, allocated through March 1, 1998, to their respective
accounts maintained pursuant to Thermo Electron's employee stock ownership
plan, of which the trustees, who have investment power over its assets are
executive officers of Thermo Electron (the "ESOP"). Shares of the common
stock of Thermedics beneficially owned by Mr. Wood include 2,600 shares
held in custodial accounts for the benefit of two minor children. The
directors and executive officers did not individually or as a group
beneficially own more than 1.0% of Thermedics common stock outstanding as
of March 1, 1998.
(4) Shares of the common stock of Thermo Electron beneficially owned by Mr.
Baxter, Dr. Gyftopoulos, Ms. Lambert, Mr. Melas-Kyriazi, Mr. Wood and all
directors and current executive officers as a group include 15,000, 10,375,
79,686, 111,935, 230,458 and 1,152,926 shares, respectively, that such
person or member of the group has the right to acquire within 60 days of
March 1, 1998, through the exercise of stock options. Shares beneficially
owned by Ms. Lambert, Mr. Melas-Kyriazi and all directors and executive
officers as a group include 951, 1,071 and 5,484 full shares, respectively,
allocated through March 1, 1998, to their respective accounts maintained
pursuant to Thermo Electron's ESOP. The directors and executive officers
did not individually or as a group beneficially own more than 1% of the
Thermo Electron common stock outstanding as of March 1, 1998.
(5) Shares beneficially owned by Thermo Electron Corporation include 2,465,088
shares that Thermo Electron, primarily through its majority-owned
subsidiary Thermedics, had the right to acquire within 60 days of March 1,
1998, through the conversion of certain convertible notes of the
Corporation held by Thermedics. Shares beneficially owned by Thermo
Electron Corporation also include 82,619 shares that Thermo Electron,
through its majority-owned subsidiary Thermedics, had the right to acquire
within 60 days of March 1, 1998, through the conversion of a convertible
note of the Corporation held by Thermedics. As of March 1, 1998, Thermo
Electron, through its majority-owned subsidiary Thermedics, beneficially
owned 76.0% of the outstanding Common Stock. Thermo Electron's address is
81 Wyman Street, Waltham, Massachusetts 02254-9046. As of March 1, 1998,
Thermo Electron had the power to elect all of the members of the
Corporation's board of directors.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors and executive officers, and beneficial owners of more
than 10% of the Common Stock, such as Thermedics and its parent company, Thermo
Electron, to file with the Securities and Exchange Commission initial reports of
ownership and periodic reports of changes in ownership of the Corporation's
securities. Based upon a review of such filings, all Section 16(a) filing
requirements applicable to such persons were complied with during 1997, except
in the
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<PAGE>
following instances. Thermo Electron filed four Forms 4 late, reporting a total
of 36 transactions, including 34 open market purchases of shares of Common Stock
and two transactions associated with the grant 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
in all capacities awarded to, earned by or paid to the Corporation's chief
executive officer and its two other most highly compensated executive officers
for the last three fiscal years. No other executive officer of the Corporation
met the definition of "highly compensated" within the meaning of the Securities
and Exchange Commission's executive compensation disclosure rules.
The Corporation is required to appoint certain executive officers and full-
time employees of Thermo Electron as executive officers of the Corporation, in
accordance with the Thermo Electron Corporate Charter. The compensation for
these executive officers is determined and paid entirely by Thermo Electron. The
time and effort devoted by these individuals to the Corporation's affairs is
provided to the Corporation under the Corporate Services Agreement between the
Corporation and Thermo Electron. Accordingly, the compensation for these
individuals is not reported in the following table.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- ------------------------------------------------------------------------------------------------------------
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>
John W. Wood Jr. (3) 1997 $22,000 $16,200 2,100 (TVL) $7,125
Chief Executive Officer 1996 $19,500 $17,200 2,100 (TVL) $6,750
1995 $18,000 $16,000 1,350 (TVL) $6,750
- ------------------------------------------------------------------------------------------------------------
Colin I.W. Baxter (4) 1997 $135,000 $55,000 5,700 (TVL) $9,028 (5)
President and 5,000 (TMO)
Chief Operating Officer 0,000 (TMD)
5,000 (TDX)
5,000 (TCA)
5,000 (TSR)
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(1) In addition to grants of options to purchase shares of Common Stock of the
Corporation (designated in the table as TVL), the named executive officers
of the Corporation have been granted options to purchase common stock of
Thermo Electron and certain of its other subsidiaries as part of Thermo
Electron's stock option program. Options have been granted during the last
three fiscal years in the following Thermo Electron companies: Thermo
Electron (designated in the table as TMO), Thermedics (designated in the
table as TMD), Thermedics Detection Inc. (designated in the table as TDX),
Thermo Cardiosystems Inc. (designated in the table as TCA) and Thermo
Sentron Inc. (designated in the table as TSR).
(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) Mr. Wood is a senior vice president of Thermo Electron and was the
president and chief executive officer of Thermedics until March 5, 1998 and
its chairman of the board thereafter, and has served as the
6
<PAGE>
Corporation's president and chief executive officer for the last three
fiscal years. A portion of Mr. Wood's annual cash compensation (salary and
bonus) has been paid by each of Thermo Electron and Thermedics in each of
the last three fiscal years as compensation for the services provided to
these companies based on the time he devoted to his responsibilities as a
senior vice president of Thermo Electron or as president and chief
executive officer of Thermedics. The annual cash compensation (salary and
bonus) reported in the table for Mr. Wood represents the amount paid by the
Corporation solely for Mr. Wood's services as chief executive officer of
the Corporation. For each of 1997, 1996 and 1995, 10% of Mr. Wood's annual
cash compensation (salary and bonus) was allocated to the Corporation for
his service as the Corporation's chief executive officer. In addition, Mr.
Wood has been granted options to purchase common stock of Thermo Electron
and certain of its subsidiaries other than the Corporation from time to
time by Thermo Electron or such other subsidiaries. These options are not
reported here as they were granted as compensation for service to Thermo
Electron companies in capacities other than in his capacity as chief
executive officer of the Corporation.
(4) Mr. Baxter was named president and chief operating officer of the
Corporation on January 24, 1997. Compensation is reported for Mr. Baxter
for the entire 1997 fiscal year.
(5) In addition to the matching contribution referred to in footnote (2), such
amount includes $1,828 of compensation attributable to an interest-free
loan provided to Mr. Baxter pursuant to the Corporation's Stock Holding
Assistance Plan. See "Relationship with Affiliates Stock Holding
Assistance Plan."
STOCK OPTIONS GRANTED DURING FISCAL 1997
The following table sets forth information concerning individual grants of
stock options made during fiscal 1997 to the Corporation's chief executive
officer and the other named executive 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 1997.
<TABLE>
<CAPTION>
OPTION GRANTS IN FISCAL 1997
- --------------------------------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
PERCENT OF ANNUAL RATES OF STOCK
TOTAL OPTIONS PRICE APPRECIATION FOR
NUMBER OF SECURITIES GRANTED TO EXERCISE OPTION TERM (2)
UNDERLYING OPTIONS EMPLOYEES IN PRICE PER EXPIRATION ---------------
NAME GRANTED (1) FISCAL YEAR SHARE DATE 5% 10%
---- -------------------- ------------- -------- ---------- -- ---
<S> <C> <C> <C> <C> <C> <C>
John W. Wood Jr. (3) 2,100 (TVL) 1.10% $10.28 3/13/00 $3,402 $7,140
- --------------------------------------------------------------------------------------------------------------------
Colin I. W. Baxter 75,000 (TVL) 39.80% $10.28 3/13/0 $313,500 $731,250
700 (TVL) 0.40% $10.28 3/13/00 $1,134 $2,380
15,000 (TMO) 1.(4) $39.39 9/24/0 $470,250 $1,263,450
20,000 (TMD) 6.(4) $19.03 3/20/0 $155,000 $361,000
5,000 (TDX) 0.(4) $11.04 9/24/04 $22,450 $52,350
5,000 (TCA) 0.(4) $25.76 9/24/04 $52,540 $122,200
5,000 (TSR) 2.(4) $13.26 9/24/04 $27,000 $62,900
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) All of the options granted during the fiscal year are immediately
exercisable as of the end of the fiscal year. In all cases, the shares
acquired upon exercise are subject to repurchase by the granting companies
at the exercise price if the optionee ceases to be employed by such
corporation or any other Thermo Electron company. The granting corporation
may exercise its repurchase rights within six months after the termination
of the optionee's employment. The repurchase rights generally lapse
ratably over a five- to ten-year period, depending on the option term,
which may vary from seven to twelve years, provided that the optionee
continues to be employed by the granting corporation or another Thermo
Electron company.
7
<PAGE>
The granting corporations may permit the holders of options to exercise
options and to satisfy tax withholding obligations by surrendering shares
equal in fair market value to the exercise price or withholding obligation.
(2) The amounts shown on this table represent hypothetical gains that could be
achieved for the respective options if exercised at the end of the option
term. These gains are based on assumed rates of stock appreciation of 5%
and 10% compounded annually from the date the respective options were
granted to their expiration date. The gains shown are net of the option
exercise price, but do not include deductions for taxes or other expenses
associated with the exercise. Actual gains, if any, on stock option
exercises will depend on the future performance of the common stock of the
granting corporation, the optionee's continued employment through the
option period and the date on which the options are exercised.
(3) Mr. Wood has also served as an officer of Thermo Electron since 1994 and
has been granted options to purchase common stock of Thermo Electron and
certain of its subsidiaries other than the Corporation. These options are
not reported in this table as they were granted as compensation for service
to other Thermo Electron companies in capacities other than in his capacity
as the chief executive officer of the Corporation.
(4) These options were granted under stock option plans maintained by Thermo
Electron or a subsidiary other than the Corporation and accordingly are
reported as a percentage of total options granted to employees of Thermo
Electron and its subsidiaries.
STOCK OPTIONS EXERCISED DURING FISCAL 1997
The following table reports certain information regarding stock option
exercises during fiscal 1997 and outstanding stock options held at the end of
fiscal 1997 by the Corporation's chief executive officer and the executive
officers named in the Summary Compensation Table. No stock appreciation rights
were exercised or were outstanding during fiscal 1997.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN FISCAL 1997 AND FISCAL 1997 YEAR-END OPTION VALUES
- --------------------------------------------------------------------------------------------------------------------
NUMBER OF
UNEXERCISED
OPTIONS AT FISCAL VALUE OF
SHARES YEAR-END UNEXERCISED
ACQUIRED ON VALUE (EXERCISABLE/ IN-THE-MONEY
NAME COMPANY EXERCISE REALIZED (1) UNEXERCISABLE) (2) OPTIONS
---- ------- ----------- ------------ ------------------- -------------
<S> <C> <C> <C> <C> <C>
John W. Wood Jr. (3) Thermo Voltek -- -- 80,550 /0 $0 /--
- --------------------------------------------------------------------------------------------------------------------
Colin I. W. Baxter Thermo Voltek -- -- 110,700 /0 $0 /--
Thermo Electron -- -- 15,000 /0 $56,970 /--
Thermedics -- -- 20,000 /0 $0 /--
Thermedics Detection -- -- 5,000 /0 $0 /--
Thermo Cardiosystems -- -- 5,000 /0 $3,075 /--
Thermo Sentron -- -- 5,000 /0 $0 /--
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Amounts shown in this column do not necessarily represent actual value
realized from the sale of the shares acquired upon exercise of the option
because in many cases the shares are not sold on exercise but continue to
be held by the executive officer exercising the option. The amounts shown
represent the difference between the option exercise price and the market
price on the date of exercise, which is the amount that would have been
realized if the shares had been sold immediately upon exercise.
8
<PAGE>
(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. The shares
acquired upon exercise of the options reported in the table are subject to
repurchase by the granting corporation at the exercise price if the
optionee ceases to be employed by such corporation or any other Thermo
Electron company. The granting corporation may exercise its repurchase
rights within six months after the termination of the optionee's
employment. The repurchase rights generally lapse ratably over a five- to
ten-year period, depending on the option term, which may vary from seven to
twelve years, provided that the optionee continues to be employed by the
Corporation or another Thermo Electron company.
(3) Mr. Wood also holds other unexercised options to purchase common stock of
Thermo Electron and its subsidiaries other than the Corporation. These
options are not reported here as they were granted as compensation for
service to other Thermo Electron companies in capacities other than in his
capacity as chief executive officer of the Corporation.
SEVERANCE AGREEMENTS
In 1988, Thermo Electron entered into severance agreements with several of
its key employees, including key employees of the Corporation and other
majority-owned subsidiaries. These agreements provide severance benefits if
there is a change of control of Thermo Electron that is not approved by the
board of directors of Thermo Electron and the employee's employment with Thermo
Electron or the majority-owned subsidiary is terminated, for whatever reason,
within one year thereafter. For purposes of the agreement a change of control
exists upon (i) the acquisition of 50% or more of the outstanding common stock
of Thermo Electron by any person without the prior approval of the board of
directors of Thermo Electron, (ii) the failure of the board of directors of
Thermo Electron, within two years after any contested election of directors or
tender or exchange offer not approved by the board of directors, to be
constituted of a majority of directors holding office prior to such event or
(iii) any other event that the board of directors of Thermo Electron determines
constitutes an effective change of control of Thermo Electron. Each of the
recipients of these agreements would receive a lump-sum benefit at the time of a
qualifying severance equal to the highest total cash compensation paid to the
employee by Thermo Electron or the majority-owned subsidiary in any 12-month
period during the three years preceding the severance event. A qualifying
severance exists if (i) the employment of the executive officer is terminated
for any reason within one year after a change in control of Thermo Electron or
(ii) a group of directors of Thermo Electron consisting of directors of Thermo
Electron on the date of the severance agreement or, if an election contest or
tender or exchange offer for Thermo Electron's common stock has occurred, the
directors of Thermo Electron immediately prior to such election contest or
tender or exchange offer, and any future directors who are nominated or elected
by such directors, determines that any other termination of the executive
officer's employment should be treated as a qualifying severance. The benefits
to be provided are limited so that the payments would not constitute so-called
"excess parachute payments" under applicable provisions of the Internal Revenue
Code of 1986. Assuming that severance benefits would have been payable under
these agreements as of March 1, 1998, Mr. Wood would have received approximately
$382,000.
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
All decisions on compensation for the Corporation's executive officers are
made by the human resources committee of the Board Of Directors (the
"Committee"). In reviewing and establishing total cash compensation and stock-
based compensation for executives, the Committee follows guidelines established
by the human resources committee of the board of directors of its parent
company, Thermo Electron. The executive compensation program presently consists
of annual base salary ("salary"), short-term incentives in the form of annual
cash bonuses, and long-term incentives in the form of stock options
(collectively referred to as "total compensation").
The Committee believes that the total compensation of executive officers
should reflect the scope of their responsibilities, the success of the
Corporation, and the contributions of each executive to that success. In
addition, the Committee believes that base salaries should approximate the mid-
point of competitive salaries derived from market surveys and that short-term
and long-term incentive compensation should reflect the performance of the
Corporation and the contributions of each executive.
9
<PAGE>
ESTABLISHING COMPETITIVENESS
External competitiveness is an important element of the Committee's
compensation policy. The competitiveness of the Corporation's total
compensation for its executives is assessed by comparing it to market data
provided by compensation consultants and by participating in annual executive
compensation surveys, primarily "Project 777," an executive compensation survey
prepared by Management Compensation Services, a division of Hewitt Associates.
The majority of firms represented in the Project 777 survey are included in the
Standard & Poor's 500 Index, but do not necessarily correspond to the companies
included in the Corporation's peer group index, the Dow Jones Total Return Index
for the Electrical Components and Equipment Industry Group.
Principles of internal equity are also central to the Committee's
compensation policies. Total compensation considered for the Corporation's
officers, whether cash or stock-based incentives, is also evaluated by comparing
it to total compensation of other executives within the Thermo Electron
organization with comparable levels of responsibility for comparably sized
business units.
The process for determining each of these elements for the Corporation's
executive officers is outlined below. For its review of the compensation of
other officers of the Corporation, the Committee follows a substantially similar
process.
BASE SALARY
Base salaries are intended to approximate the mid-point of competitive
salaries for similar organizations of comparable size and complexity to the
Corporation. Executive salaries are adjusted gradually over time and only as
necessary to meet this objective. Increases in base salary may be moderated by
other considerations, such as geographic or regional market data, industry
trends or internal fairness within the Corporation and Thermo Electron. It is
the Committee's intention that over time the base salaries for the chief
executive officer and the other named executive officers will approximate the
mid-point of competitive data. The salary increases in 1997 for the chief
executive officer and the other named executive officers generally reflect this
practice of gradual increases and moderation.
CASH BONUS
The Committee establishes a median potential bonus for each executive by
using the market data on total cash compensation from the same executive
compensation surveys as used to determine salaries. Specifically, the median
potential bonus plus the salary of an executive officer is approximately equal
to the mid-point of competitive total cash compensation for a similar position
and level of responsibility in businesses having comparable sales and complexity
to the Corporation. The actual bonus awarded to an executive officer may range
from zero to three times the median potential bonus. The value within the range
(the bonus multiplier) is determined at the end of each year by the Committee in
its discretion. The Committee exercises its discretion by evaluating each
executive's performance using a methodology developed by its parent company,
Thermo Electron, and applied throughout the Thermo Electron organization. The
methodology incorporates measures of operating returns which are designed to
measure profitability and contributions to shareholder value, and are measures
of corporate and divisional performance that are evaluated using graphs
developed by Thermo Electron intended to reward performance that is perceived as
above average and to penalize performance that is perceived as below average.
The measures of operating returns used in the Committee's determinations in
fiscal 1997 measured return on net assets, growth in income and return on sales,
and the Committee's determinations also included a subjective evaluation of the
contributions of each executive that are not captured by operating measures but
are considered important to the creation of long-term value for the
Stockholders. These measures of achievements are not financial targets that
are met, not met or exceeded. The relative weighting of the operating measures
and subjective evaluation vary among the executives, depending on their roles
and responsibilities within the organization.
The bonuses for named executive officers approved by the Committee with
respect to fiscal 1997 performance in each instance exceeded the median
potential bonus.
10
<PAGE>
STOCK OPTION PROGRAM
The primary goal of the Corporation and its parent companies is to excel in
the creation of long-term value for the Stockholders. The principal incentive
tool used to achieve this goal is the periodic award to key employees of options
to purchase common stock of the Corporation and other Thermo Electron companies.
The Committee and management believe that awards of stock options to
purchase the shares of both the Corporation and other companies within the
Thermo Electron group of companies accomplish many objectives. The grant of
options to key employees encourages equity ownership in the Corporation, and
closely aligns management's interests to the interests of all the Stockholders.
The emphasis on stock options also results in management's compensation being
closely linked to stock performance. In addition, because they are subject to
vesting periods of varying durations and to forfeiture if the employee leaves
the Corporation prematurely, stock options are an incentive for key employees to
remain with the Corporation long-term. The Committee believes stock option
awards in the parent corporation, Thermo Electron, and the other majority-owned
subsidiaries of Thermo Electron, are an important tool in providing incentives
for performance within the entire organization.
In determining awards, the Committee considers for each officer the annual
value of all options to purchase shares of the Corporation and other companies
within the Thermo Electron organization that vest in the next year and compares
the individual's total compensation using this value to competitive data. The
Committee uses a modified Black-Scholes option pricing model to determine the
value of an option award. In addition, the Committee considers the aggregate
amount of net awards to purchase shares of Common Stock granted to all employees
over the last five years to monitor the number of aggregate awards to all
employees. In reviewing the aggregate number of awards, the Committee considers
such factors as the size of the company, its stage of development, and its
growth strategy, as well as the aggregate awards and option practices of
comparably situated companies.
The Committee periodically awards stock options based on its assessment of
total compensation of each executive, the actual and anticipated contributions
of each executive (which includes a subjective assessment by the Committee of
the value of the executive's future potential with the organization), as well as
the value of previously awarded options as described above. The option awards
made to the named executive officers in 1997 with respect to the common stock of
Thermo Electron, Thermedics and its majority-owned subsidiaries, were determined
by the human resources committee of the board of directors of the granting
company using a similar analysis. In 1997, the Committee also granted options
to purchase Common Stock of the Corporation the named executive officers based
on their holdings of such stock and vested rights to acquire such stock
throughout the year, which the Committee considers each year.
STOCK OWNERSHIP AND RETENTION POLICIES
The Corporation's compensation program is also designed to encourage
executives to own shares of the Corporation's Common Stock. The Committee
believes that encouraging executives to retain stock acquired through its stock
option program provides additional incentive for executive officers to follow
strategies designed to maximize long-term value to Stockholders.
There are several elements to the Corporation's stock retention program.
For example, the Committee annually awards stock options based upon an
executive's ownership of the Corporation's Common Stock and unexercised, vested
rights to acquire such stock during the prior year. These option awards are
independent of the award of stock options as an incentive for management
performance. In 1997, the Committee also granted options to purchase Common
Stock of the Corporation to the chief executive officer and the other named
executive officers under this program. These options have three-year terms and
vest 100% on the second anniversary of the date of grant. The awards to the
named executive officers in 1997 to purchase shares of the common stock of
Thermo Electron and Thermedics were made by those companies 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 held by
the employee, as an incentive to buy and hold such company's shares.
11
<PAGE>
The Committee established a stock holding policy for executive officers of
the Corporation in 1996 that required executive officers to own a multiple of
their compensation in shares of the Corporation's Common Stock. For the chief
executive officer, the multiple was one times his base salary and reference
bonus for the calendar year. For all other officers, the multiple was one times
the officer's base salary. The Committee deemed it appropriate to permit
officers to achieve these ownership levels over a three-year period. The policy
was amended in 1998 to apply only to the chief executive officer.
In order to assist officers in complying with the policy, the Committee
also adopted in 1996 a stock holding assistance plan under which the Corporation
was authorized to make interest-free loans to officers to enable them to
purchase shares of the Common Stock in the open market. The loans are required
to be repaid upon the earlier of demand or the fifth anniversary of the date of
the loan, unless otherwise authorized by the Committee. During 1997, Mr. Baxter
received a loan in the principal amount of $84,383 under this program, of which
amount $84,383 was outstanding as of April 23, 1998. During 1998, Mr. Baxter
received a loan in the principal amount of $11,005 under the plan to purchase
2,000 shares of Common Stock, of which amount $11,005 was outstanding as of the
date of April 23, 1998. This plan was also amended in 1998 to apply only to the
chief executive officer. See "Relationship with Affiliates - Stock Holding
Assistance Plan."
The Committee also has adopted a policy requiring its executive officers to
hold shares of the Corporation's Common Stock acquired upon the exercise of
stock options granted by the Corporation. Under this policy, executive officers
are required to hold one-half of their net option exercises for a period of five
years. The net option exercise is determined by calculating the number of
shares acquired upon exercise of a stock option, after deducting the number of
shares that could have been traded to exercise the option and the number of
shares that could have been surrendered to satisfy tax withholding obligations
attributable to the exercise of the options.
POLICY ON DEDUCTIBILITY OF COMPENSATION
The Committee has also considered the application of Section 162(m) of the
Internal Revenue Code to the Corporation's compensation practices. Section
162(m) limits the tax deduction available to public companies for annual
compensation paid to senior executives in excess of $1 million unless the
compensation qualifies as "performance-based" or is otherwise exempt from
Section 162(m). The annual compensation paid to individual executives does not
approach the $1 million threshold, and it is believed that stock incentive plans
of the Corporation qualify as "performance-based." Therefore, the Committee does
not believe any further action is necessary in order to comply with Section
162(m). From time to time, the Committee will reexamine the Corporation's
compensation practices and the effect of Section 162(m).
1997 CEO COMPENSATION
The salary and bonus of Mr. Wood are established using the same criteria as
for the salaries and bonuses of the Corporation's other named executive
officers. However, the cash compensation for Mr. Wood is reviewed and
established by the human resources committees of the boards of directors of
Thermo Electron and Thermedics, due to Mr. Wood's position and responsibilities
as a senior vice president and chief executive officer, respectively, of those
companies. The Corporation's Committee reviews the total annual cash
compensation of Mr. Wood determined by the Thermo Electron committee and agrees
to an allocation of such annual cash compensation to the Corporation, taking
into account Mr. Wood's relative responsibilities at the Corporation and other
Thermo Electron companies. The Committee agreed to an allocation of
approximately 10% of Mr. Wood's 1997 cash compensation to the Corporation.
In December 1997, the Committee conducted its review of Mr. Wood's proposed
salary for 1998 and bonus for 1997 performance. The Committee concurred in the
recommendation made by the Thermo Electron committee and agreed to an allocation
of 10% of Mr. Wood's total cash compensation for 1997 to the Corporation, based
on his relative responsibilities at the Corporation, Thermedics and Thermo
Electron.
12
<PAGE>
In 1997, the Committee also approved stock option awards to Mr. Wood with
respect to the Corporation's Common Stock. The Committee annually considers an
award of stock options to executive officers of the Corporation, which are
generally based upon the number of shares of Common Stock and unexercised,
vested stock options held by the executive during the year, as an incentive for
executives to buy and hold Common Stock. The award of stock options to purchase
shares of Common Stock to Mr. Wood in 1997 was made under this program.
Mr. William W. Hoover (Chairman)
Dr. Elias P. Gyftopoulos
13
<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 has
compared its performance with the American Stock Exchange Market Value Index and
the Dow Jones Total Return Index for the Electrical Components and Equipment
Industry Group, as of the last trading day of the Corporation's fiscal year.
COMPARISON OF TOTAL RETURN AMONG THERMO VOLTEK CORPORATION,
THE AMERICAN STOCK EXCHANGE MARKET VALUE INDEX AND THE
DOW JONES TOTAL RETURN INDEX FOR THE ELECTRICAL COMPONENTS AND EQUIPMENT
INDUSTRY GROUP
FROM DECEMBER 31, 1992 TO JANUARY 3, 1998
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
12/31/92 12/31/93 12/30/94 12/29/95 12/27/96 1/2/98
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
TVL 100 208 188 352 386 197
- ----------------------------------------------------------------------------------------------
AMEX 100 120 109 137 146 177
- ----------------------------------------------------------------------------------------------
DJECEI 100 109 113 148 182 222
- ----------------------------------------------------------------------------------------------
</TABLE>
The total return for the Corporation's Common Stock (TVL), the American
Stock Exchange Market Value Index (AMEX) and the Dow Jones Total Return Index
for the Electrical Components and Equipment Industry Group (DJECEI) 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 "TVL."
RELATIONSHIP WITH AFFILIATES
Thermo Electron has adopted a strategy of selling a minority interest in
subsidiary companies to outside investors as an important tool in its future
development. As part of this strategy, Thermo Electron and certain of its
subsidiaries have created several privately and publicly held subsidiaries.
Thermedics has created Thermedics Detection Inc., Thermo Cardiosystems Inc. and
Thermo Sentron Inc. as publicly held subsidiaries, and has acquired the
majority interest in the Corporation, which until 1990 was an unaffiliated
public company. From time to time, Thermo Electron and its subsidiaries will
create other majority-owned subsidiaries as part of its spinout strategy. (The
Corporation and such other majority-owned Thermo Electron subsidiaries are
hereinafter referred to as the "Thermo Subsidiaries.")
14
<PAGE>
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 of the Charter is to
ensure that (1) all of the companies and their stockholders are treated
consistently and fairly, (2) the scope and nature of the cooperation among the
companies, and each company's responsibilities, are adequately defined, (3) each
company has access to the combined resources and financial, managerial and
technological strengths of the others, and (4) Thermo Electron and the Thermo
Subsidiaries, in the aggregate, are able to obtain the most favorable terms from
outside parties.
To achieve these ends, the Charter identifies the general principles to be
followed by the companies, addresses the role and responsibilities of the
management of each company, provides for the sharing of group resources by the
companies and provides for centralized administrative, banking and credit
services to be performed by Thermo Electron. The services provided by Thermo
Electron include collecting and managing cash generated by members, coordinating
the access of Thermo Electron and the Thermo Subsidiaries (the "Thermo Group")
to external financing sources, ensuring compliance with external financial
covenants and internal financial policies, assisting in the formulation of long-
range planning and providing other banking and credit services. Pursuant to the
Charter, Thermo Electron may also provide guarantees of debt or other
obligations of the Thermo Subsidiaries or may obtain external financing at the
parent level for the benefit of the Thermo Subsidiaries. In certain instances,
the Thermo Subsidiaries may provide credit support to, or on behalf of, the
consolidated entity or may obtain financing directly from external financing
sources. Under the Charter, Thermo Electron is responsible for determining that
the Thermo Group remains in compliance with all covenants imposed by external
financing sources, including covenants related to borrowings of Thermo Electron
or other members of the Thermo Group, and for apportioning such constraints
within the Thermo Group. In addition, Thermo Electron establishes certain
internal policies and procedures applicable to members of the Thermo Group. The
cost of the services provided by Thermo Electron to the Thermo Subsidiaries is
covered under existing corporate services agreements between Thermo Electron and
each of the Thermo Subsidiaries.
The Charter presently provides that it shall continue in effect so long as
Thermo Electron and at least one Thermo Subsidiary participate. The Charter may
be amended at any time by agreement of the participants. Any Thermo Subsidiary,
including the Corporation, can withdraw from participation in the Charter upon
30 days' prior notice. In addition, Thermo Electron may terminate a subsidiary's
participation in the Charter in the event the subsidiary ceases to be controlled
by Thermo Electron or ceases to comply with the Charter or the policies and
procedures applicable to the Thermo Group. A withdrawal from the Charter
automatically terminates the corporate services agreement and tax allocation
agreement (if any) in effect between the withdrawing company and Thermo
Electron. The withdrawal from participation does not terminate outstanding
commitments to third parties made by the withdrawing company, or by Thermo
Electron or other members of the Thermo Group, prior to the withdrawal. In
addition, a withdrawing company is required to continue to comply with all
policies and procedures applicable to the Thermo Group and to provide certain
administrative functions mandated by Thermo Electron so long as the withdrawing
company is controlled by or affiliated with Thermo Electron.
As provided in the Charter, the Corporation and Thermo Electron have
entered into a Corporate Services Agreement (the "Services Agreement") under
which Thermo Electron's corporate staff provides certain administrative
services, including certain legal advice and services, risk management, employee
benefit administration, tax advice and preparation of tax returns, centralized
cash management and financial and other services to the Corporation. The
Corporation was assessed an annual fee equal to 1.0% of the Corporation's
revenues for these services in fiscal 1996 and 1997. The annual fee has been
reduced to 0.8% of the Corporation's revenues for fiscal 1998. The fee is
reviewed annually and may be changed by mutual agreement of the Corporation and
Thermo Electron. During fiscal 1997, Thermo Electron assessed the Corporation
$446,000 in fees under the Services Agreement. Management believes that the
charges under the Services Agreement are reasonable and that the terms of the
Services Agreement are fair to the Corporation. For items such as employee
benefit plans, insurance coverage and other identifiable costs, Thermo Electron
charges the Corporation based on charges attributable to the Corporation. The
Services Agreement automatically renews for successive one-year terms, unless
canceled by the Corporation upon 30 days' prior notice. In addition, the
Services Agreement terminates automatically in the event the Corporation ceases
to be a member of the Thermo Group or ceases to be a participant in the Charter.
In the event of a termination of the Services Agreement, the Corporation will be
required to pay a
15
<PAGE>
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 under Thermo Electron's policies and
procedures. Thermo Electron will charge the Corporation a fee equal to the
market rate for comparable services if such services are provided to the
Corporation following termination.
From time to time the Corporation may transact business with other
companies in the Thermo Group
As of January 3, 1998, $13,744,000 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 and agency securities, money market funds,
certificates of deposit and other marketable securities, in the amount of at
least 103% of such obligation. The Corporation's funds subject to the repurchase
agreement are readily convertible into cash by the Corporation and have a
maturity of three months or less. The repurchase agreement earns a rate based on
the 90-day Commercial Paper Composite Rate plus 25 basis points, set at the
beginning of each quarter.
Thermo Electron, through its majority owned subsidiary Thermedics, holds
two subordinated convertible notes of the Corporation. One is in the principal
amount of $6.0 million, bears interest at a rate of 6 3/4%, is due 2002 and is
convertible into Common Stock at a conversion price of $4.27 per share (the "6
3/4% Note"). The other note is in the principal amount of $4 million, bears
interest at a rate of 5%, is due 2003 and is convertible into Common Stock at a
conversion price of $3.78 per share (the "5% Note").
The Corporation, along with certain other Thermo Subsidiaries, participates
in a notional pool arrangement with Barclays Bank, which includes a $150 million
credit facility. Only European-based Thermo Subsidiaries participate in this
arrangement. Under this arrangement the Bank notionally combines the positive
and negative cash balances held by the participants to calculate the net
interest yield/expense for the group. The benefit derived from this arrangement
is then allocated based on balances attributable to the respective participants.
Thermo Electron guarantees all of the obligations of each participant in this
arrangement. In addition, funds on deposit under this arrangement provide
credit support for overdraft obligations of other participants. As of January
3, 1998, the Corporation had a negative cash balance of approximately
$2,477,000, based on an exchange rate of $1.65/(Pounds)1.00 as of January 3,
1998. For 1997, the average annual interest rate earned on GBP deposits by
participants in this credit arrangement was approximately 6.5% and the average
annual interest rate paid on GBP overdrafts was approximately 7.2%.
The Corporation, along with certain other Thermo Subsidiaries, also
participates in a notional pool arrangement with ABN AMRO, which includes a $50
million credit facility. Only European-based Thermo Subsidiaries participate in
this arrangement. Under this arrangement the Bank notionally combines the
positive and negative cash balances held by the participants to calculate the
net interest yield/expense for the group. The benefit derived from this
arrangement is then allocated based on balances attributable to the respective
participants. Thermo Electron guarantees all of the obligations of each
participant in this arrangement. In addition, funds on deposit under this
arrangement provide credit support for overdraft obligations of other
participants. As of January 3, 1998, the Corporation had a negative cash
balance of approximately $238,072, based on an exchange rate of $0.495/NLG 1.00.
For 1997 the average annual interest rate earned on NLG deposits by participants
in this credit arrangement was approximately 4.8% and the average annual
interest rate paid on NLG overdrafts was approximately 4.8%
At January 3, 1998, the Corporation owned Thermo Electron and its other
subsidiaries an aggregate of $694,000 for amounts due under the Corporate
Services Agreement and related administrative changes, for other products and
services, and for miscellaneous items, excluding loans described above. The
largest amount of net indebtedness owned by the Corporation to Thermo Electron
and its other subsidiaries since December 29, 1996 was $995,000. These amounts
do not bear interest and are expected to be paid in the normal course of
business.
On March 31, 1998, the Corporation received a proposal from its parent,
Thermedics, to acquire, through a merger, all of the outstanding shares of the
Corporation's Common Stock that Thermedics does not own at a price of $7.00 per
share. It is also intended that the Corporation's 3 3/4 % convertible
subordinated debentures due 2000 would be redeemed. The merger is contingent
upon, among other things, the negotiation and execution of a
16
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definitive merger agreement, receipt by the board of directors of an opinion by
an investment banking firm that the Thermedics' offer is fair to the
Corporation's shareholders (other than Thermedics ad Thermo Electron), from a
financial point of view, the approval of the board of directors upon
recommendation of its special committee of outside directors appointed by the
board to evaluate the proposal, and clearance by the Securities and Exchange
Commission of the proxy materials regarding the proposed transactions.
STOCK HOLDING ASSISTANCE PLAN
In 1996, the Corporation adopted a stock holding policy which requires its
executive officers to acquire and hold a minimum number of shares of Common
Stock. In order to assist the executive officers in complying with the policy,
the Corporation also adopted a stock holding assistance plan under which it may
make interest-free loans to certain key employees, including its executive
officers, to enable such employees to purchase Common Stock in the open market.
During 1997, Mr. Baxter received a loan in the principal amount of $84,383 under
the plan to purchase 13,400 shares of Common Stock, of which amount, $84,383 was
outstanding as of the date of April 23, 1998. During 1998, Mr. Baxter received a
loan in the principal amount of $11,005 under the plan to purchase 2,000 shares
of Common Stock, of which amount $11,005 was outstanding as of the date of April
23, 1998. The loan is required to be repaid upon the earlier of demand or the
fifth anniversary of the date of the loan, unless otherwise authorized by the
Committee. This policy and plan were amended in 1998 to apply only to the chief
executive officer of the Corporation in the future.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The board of directors has appointed Arthur Andersen LLP as independent
public accountants for fiscal 1998. Arthur Andersen LLP has acted as independent
public accountants for the Corporation since 1991. Representatives of that firm
are expected to be present at the Meeting, will have the opportunity to make a
statement if they desire to do so and will be available to respond to questions.
The board of directors has established an audit committee, presently consisting
of two outside directors, the purpose of which is to review the scope and
results of the audit.
OTHER ACTION
Management is not aware at this time of any other matters that will be
presented for action at the Meeting. Should any such matters be presented, the
proxies grant power to the proxy holders to vote shares represented by the
proxies in the discretion of such proxy holders.
STOCKHOLDER PROPOSALS
Proposals of Stockholders intended to be presented at the 1999 Annual
Meeting of the Stockholders of the Corporation must be received by the
Corporation for inclusion in the proxy statement and form of proxy relating to
that meeting no later than December 29, 1998.
SOLICITATION STATEMENT
The cost of this solicitation of proxies will be borne by the Corporation.
Solicitation will be made primarily by mail, but regular employees of the
Corporation may solicit proxies personally or by telephone, by 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.
Woburn, Massachusetts
April 23, 1998
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FORM OF PROXY
THERMO VOLTEK CORP.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 1, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints John N. Hatsopoulos, John W. Wood Jr. and
Melissa F. Riordan or any one of them in the absence of the others, as attorneys
and proxies of the undersigned, with full power of substitution, for and in the
name of the undersigned, to represent the undersigned at the Annual Meeting of
the Stockholders of Thermo Voltek Corp., a Delaware corporation (the "Company"),
to be held on Monday, June 1, 1998, at 1:30 p.m. at The Hyatt Regency Scottsdale
Resort at Gainey Ranch, Scottsdale, Arizona, and at any adjournment or
postponement thereof, and to vote all shares of common stock of the Company
standing in the name of the undersigned on April 3, 1998, with all of the powers
the undersigned would possess if personally present at such meeting:
(IMPORTANT - TO BE SIGNED AND DATED ON THE REVERSE SIDE.)
<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: Elias P. Gyftopoulos, William W. Hoover, Sandra L. Lambert, Theo
Melas-Kyriazi, Peter Richman and John W. Wood Jr.
2. In their discretion on such other matters as may properly come before the
Meeting.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED "FOR" THE PROPOSALS SET FORTH
ABOVE IF NO INSTRUCTION TO THE CONTRARY IS INDICATED OR IF NO INSTRUCTION IS
GIVEN.
Copies of the Notice of Meeting and of the Proxy Statement have been received
by the undersigned.
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.
