<PAGE>
===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
METRIKA SYSTEMS CORP.
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(Name of Registrant as Specified In Its Charter)
METRIKA SYSTEMS CORP.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(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:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
METRIKA LOGO APPEARS HERE
5788 Pacific Center Boulevard
San Diego, California 92121
April 12, 1999
Dear Stockholder:
The enclosed Notice calls the 1999 Annual Meeting of the Stockholders of
Metrika Systems Corporation. I respectfully request that all Stockholders
attend this meeting, if possible.
Our Annual Report for the year ended January 2, 1999 is enclosed. I hope
you will read it carefully. Feel free to forward any questions you may have if
you are unable to be present at the meeting.
Enclosed with this letter is a proxy authorizing three officers of the
Corporation to vote your shares for you if you do not attend the meeting.
Whether or not you are able to attend the meeting, I urge you to complete your
proxy and return it to our transfer agent, American Stock Transfer & Trust
Company, in the enclosed addressed, postage-paid envelope, as a quorum of the
Stockholders must be present at the meeting, either in person or by proxy.
I would appreciate your immediate attention to the mailing of this proxy.
Yours very truly,
/s/ Ernesto A. Corte
ERNESTO A. CORTE
President and Chief Executive Officer
<PAGE>
METRIKA LOGO APPEARS HERE
5788 Pacific Center Boulevard
San Diego, California 92121
April 12, 1999
To the Holders of the Common Stock of
METRIKA SYSTEMS CORPORATION
NOTICE OF ANNUAL MEETING
The 1999 Annual Meeting of the Stockholders of Metrika Systems Corporation
(the "Corporation") will be held on Thursday, May 27, 1999 at 11:00 a.m. at The
Westin Hotel, 70 Third Avenue, Waltham, Massachusetts. The purpose of the
meeting is to consider and take action upon the following matters:
1. Election of 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 March 30, 1999.
The By-laws require that the holders of a majority of the stock issued and
outstanding and entitled to vote be present or represented by proxy at the
meeting in order to constitute a quorum for the transaction of business. It is
important that your shares be represented at the meeting regardless of the
number of shares you may hold. Whether or not you are able to be present in
person, please sign and return promptly the enclosed proxy in the accompanying
envelope, which requires no postage if mailed in the United States.
This Notice, the proxy and proxy statement enclosed herewith are sent to
you by order of the board of directors.
SANDRA L. LAMBERT
Secretary
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PROXY STATEMENT
The enclosed proxy is solicited by the board of directors of Metrika
Systems Corporation (the "Corporation") for use at the 1999 Annual Meeting of
the Stockholders to be held on Thursday, May 27, 1999 at 11:00 a.m. at The
Westin Hotel, 70 Third Avenue, Waltham, Massachusetts, and any adjournment
thereof. The mailing address of the executive office of the Corporation is 5788
Pacific Center Boulevard, San Diego, California, 92121. This proxy statement
and the enclosed proxy were first furnished to Stockholders of the Corporation
on or about April 15, 1999.
VOTING PROCEDURES
The board of directors intends to present to the meeting the election of
six directors, constituting the entire board of directors.
The representation in person or by proxy of a majority of the outstanding
shares of common stock, $.01 par value, of the Corporation ("Common Stock")
entitled to vote at the meeting is necessary to provide a quorum for the
transaction of business at the meeting. Shares can only be voted if the
Stockholder is present in person or is represented by returning a properly
signed proxy. Each Stockholder's vote is very important. Whether or not you plan
to attend the meeting in person, please sign and promptly return the enclosed
proxy card, which requires no postage if mailed in the United States. Votes of
Stockholders of record who are present at the meeting in person or by proxy,
abstentions and broker non-votes (as defined below) are counted as present or
represented at the meeting for purposes of determining whether a quorum exists.
Shares represented by proxy will be voted in accordance with your
instructions. You may specify your choice by marking the appropriate box on the
proxy card. If your proxy card is signed and returned without specifying
choices, your shares will be voted FOR the management nominees for directors and
as the individuals named as proxy holders on the proxy deem advisable on all
other matters as may properly come before the meeting.
Nominees for election as directors at the meeting will be elected by a
plurality of the votes of the shares present in person or represented by proxy
at the meeting. If you hold your shares of Common Stock through a broker, bank
or other nominee, generally the nominee may only vote the Common Stock that it
holds for you in accordance with your instructions. However, if it has not
timely received your instructions, the nominee may vote on certain matters for
which it has discretionary voting authority. If a nominee cannot vote on a
particular matter because it does not have discretionary voting authority, this
is a "broker non-vote" on that matter. With respect to the election of
directors, broker non-votes and withholdings of authority to vote will have no
effect on the outcome of the vote.
A Stockholder who returns a proxy may revoke it at any time before the
Stockholder's shares are voted at the meeting by written notice to the Secretary
of the Corporation received prior to the meeting, by executing and returning a
later-dated proxy or by voting by ballot at the meeting.
The outstanding stock of the Corporation entitled to vote (excluding shares
held in treasury by the Corporation) as of March 30, 1999 consisted of 7,418,129
shares of Common Stock. Only Stockholders of record at the close of business on
March 30, 1999, are entitled to vote at the meeting. Each share is entitled to
one vote.
PROPOSAL 1
ELECTION OF DIRECTORS
Six directors are to be elected at the meeting, each to hold office until
his successor is elected and qualified or until his earlier resignation, death
or removal.
Nominees For Directors
Set forth below are the names of the persons nominated as directors, their
ages, their offices in the Corporation, if any, their principal occupation or
employment for the past five years, the length of their tenure as
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directors and the names of other public companies in which such persons hold
directorships. Information regarding their beneficial ownership of the
Corporation's Common Stock and of the common stock of its parent company, Thermo
Instrument Systems Inc. ("Thermo Instrument"), a manufacturer of measurement and
detection instruments, and Thermo Instrument's parent company, Thermo Electron
Corporation ("Thermo Electron"), a provider of products and services in
measurement instrumentation, biomedical devices, energy, resource recovery, and
emerging technologies, is reported under the caption "Stock Ownership." All of
the nominees are currently directors of the Corporation.
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Joseph A. Baute Mr. Baute, 71, has been a director of the Corporation
since June 1997. Since 1993, Mr. Baute has been a
consultant to Markem Corporation, a manufacturer of
marking and printing machinery, specialty inks and
printing elements. Mr. Baute was the chairman and chief
executive officer of Markem Corporation from 1977 and
1979, respectively, until his retirement in 1993. He is
also a director of Houghton-Mifflin Company, INSO
Corporation and ThermoSpectra Corporation.
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Willard R. Becraft Mr. Becraft, 72, has been a director of the Corporation
since May 1997. Mr. Becraft has been a consultant in
advanced instrumentation and control technology
development since 1996. He was an executive vice
president of Northwest Instrument Systems, Inc., a
business he co-founded to develop specific
instrumentation services with applications in the
environmental field, for more than five years prior to
his retirement in July 1996. Mr. Becraft spent more than
30 years of his business career with the General
Electric Company in various management capacities, and
was responsible for managing research and development
and product development activities in instrumentation
and control, fusion energy, solar energy, jet engines
and spacecraft systems.
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Ernesto A. Corte Mr. Corte, 60, has been a director of the Corporation
since February 1998. Mr. Corte was promoted to the
position of chief executive officer of the Corporation
in February 1998, and also serves as president of the
Corporation, a position he has held since the
Corporation's inception in November 1996. Prior to his
promotion, Mr. Corte served as chief operating officer
from November 1996 to February 1998. Mr. Corte also
serves as president of the Corporation's Gamma-Metrics
subsidiary, a manufacturer and marketer of on-line raw
materials analyzers, since its acquisition by Thermo
Instrument in 1993. Mr. Corte founded Gamma-Metrics in
1980 and was chairman of the board, chief executive
officer and president of Gamma-Metrics prior to its
acquisition by Thermo Instrument in 1993.
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Denis A. Helm Mr. Helm, 60, has been chairman of the board and a
director of the Corporation since its inception in
November 1996, and served as chief executive officer of
the Corporation from November 1996 until February 1998.
Mr. Helm has been an executive vice president of Thermo
Instrument since January 1999, and was a senior vice
president of Thermo Instrument from 1994 to 1998, and a
vice president from 1986 until 1994. Mr. Helm also
served as president of Thermo Instrument's Thermo
Environmental Instruments Inc. subsidiary, from 1981 to
1998. Thermo Environmental designs, manufactures and
distributes instruments and systems for detecting and
monitoring environmental pollutants.
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John T. Keiser Mr. Keiser, 63, has been a director of the Corporation
since its inception in November 1996. He has been the
chief operating officer, biomedical and emerging
technologies, of Thermo Electron since September 1998,
and a vice president from April 1997 until his
promotion. Mr. Keiser has been the president and chief
executive officer of Thermedics Inc., a majority-owned
subsidiary of Thermo Electron, since March 1998 and
December 1998, respectively, and was a senior vice
president of Thermedics Inc. from 1994 until his
promotion to president. He has also been the president
of Thermo Electron's wholly owned biomedical group, a
manufacturer of medical equipment and
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John T. Keiser, cont'd instruments, since 1994. Mr. Keiser was president of
Eberline Instruments, a division of Thermo Instrument
from 1985 to July 1994. The Eberline Instruments
division manufactures radiation detection and counting
instrumentation and radiation monitoring systems. Mr.
Keiser is a director of Thermedics Inc., Thermedics
Detection Inc., Thermo Cardiosystems Inc., Thermo
Sentron Inc., ThermoTrex Corporation, ThermoLase
Corporation and Trex Medical Corporation.
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Earl R. Lewis Mr. Lewis, 55, has been a director of the Corporation
since its inception in November 1996. Mr. Lewis has been
president and chief executive officer of Thermo
Instrument since March 1997 and January 1998,
respectively, and was chief operating officer of Thermo
Instrument from January 1996 to January 1998. Prior to
that time, he was executive vice president of Thermo
Instrument from January 1996 to March 1997, senior vice
president of Thermo Instrument from January 1994 to
January 1996, and vice president of Thermo Instrument
from March 1992 to January 1994. Mr. Lewis has been
chief operating officer, measurement and detection, of
Thermo Electron since September 1998. Prior to his
appointment as chief operating officer, Mr. Lewis served
as senior vice president of Thermo Electron from June
1998 to September 1998 and vice president from September
1996 to June 1998. Mr. Lewis served as chief executive
officer of Thermo Optek Corporation, a majority-owned
subsidiary of Thermo Instrument and a manufacturer of
analytical instruments that measure energy and light for
purposes of materials analysis, characterization and
preparation, from its inception in August 1995 to
January 1998, and served as president of its
predecessor, Thermo Jarrell Ash Corporation, for more
than five years prior to 1995. Mr. Lewis is a director
of ONIX Systems Inc., SpectRx Inc., Thermo BioAnalysis
Corporation, Thermo Instrument, Thermo Optek
Corporation, ThermoQuest Corporation, ThermoSpectra
Corporation and Thermo Vision Corporation.
- --------------------------------------------------------------------------------
Committees of the Board of Directors and Meetings
The board of directors has established an audit committee and a human
resources committee, each consisting solely of directors who are not employees
of the Corporation, of Thermo Electron or of any other companies affiliated with
Thermo Electron (also referred to as "outside directors"). The present members
of the audit committee are Mr. Becraft (Chairman) and Mr. Baute. 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. Baute (Chairman) and Mr. Becraft. The human
resources committee reviews the performance of senior members of management,
approves executive compensation and administers the Corporation's stock option
and other stock-based compensation plans. The Corporation does not have a
nominating committee of the board of directors. The board of directors met six
times, the audit committee met twice and the human resources committee met four
times during fiscal 1998. Each director attended at least 75% of all meetings of
the board of directors and committees on which he served that were held during
fiscal 1998.
Compensation of Directors
Cash Compensation
Outside directors receive an annual retainer of $2,000 and a fee of $1,000
per meeting for attending regular meetings of the board of directors and $500
per meeting for participating in meetings of the board of directors held by
means of conference telephone and for participating in certain meetings of
committees of the board of directors. Payment of directors' fees is made
quarterly. Mr. Corte, Mr. Helm, Mr. Lewis and Mr. Keiser are all employees of
Thermo Electron or its subsidiaries and do not receive any cash compensation
from the Corporation for their services as directors. Directors are also
reimbursed for out-of-pocket expenses incurred in attending such meetings.
Deferred Compensation Plan
Under the Corporation's deferred compensation plan for directors (the
"Deferred Compensation Plan"), a director has the right to defer receipt of his
cash fees until he ceases to serve as a director, dies or retires from his
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principal occupation. In the event of a change of control or proposed change of
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 Thermo
Instrument 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 Thermo Instrument 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 12,500 shares of Common Stock has been reserved for issuance
under the Deferred Compensation Plan. As of January 2, 1999, deferred units
equal to approximately 1,472 shares of Common Stock were accumulated under the
Deferred Compensation Plan.
Stock-based Compensation
Directors of the Corporation are also eligible for the grant of stock
options under the Corporation's stock-based compensation plans. These plans are
administered by the human resources committee of the board of directors, which
determines the form and terms of stock-based awards to be granted. To date,
only nonqualified stock options have been granted to directors under these
plans. At the time of the Corporation's initial public offering, directors
received a grant of options to purchase 10,000 shares of Common Stock, at an
exercise price of $15.00. These options may be exercised at any time prior to
the expiration of the option on the seventh anniversary of the grant date.
These options may be exercised at any time prior to the expiration of the option
on the seventh anniversary of the grant date. Shares acquired upon exercise of
the options are subject to restrictions on transfer and the right of the
Corporation to repurchase such shares at the exercise price if the director
ceases to serve as a director of the Corporation or any other Thermo Electron
company. The restrictions and repurchase rights lapse or are deemed to have
lapsed 20% per year, starting with the first anniversary of the grant date,
provided the director has continuously served as a director of the Corporation
or any other Thermo Electron company since the grant date.
Stock Ownership Policies for Directors
The human resources committee of the board of directors (the "Committee")
has established a stock holding policy for directors. The stock holding policy
requires each director to hold a minimum of 1,000 shares of Common Stock.
Directors are requested to achieve this ownership within a three-year period.
The chief executive officer of the Corporation is required to comply with a
separate stock holding policy established by the Committee, which is described
in "Committee Report on Executive Compensation - Stock Ownership Policies."
In addition, the Committee has a policy requiring directors to hold shares
of 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 Thermo Instrument, the Corporation's parent company,
and of Thermo Electron, Thermo Instrument's parent company, as of January 31,
1999, with respect to (i) each director, (ii) each executive officer named in
the summary compensation table set forth below under the heading "Executive
Compensation" (the "named executive officers") and (iii) all directors and
current executive officers as a group. In addition, the following table sets
forth the beneficial ownership of Common Stock, as of January 31, 1999, with
respect to each person who was known by the Corporation to own beneficially more
than 5% of the outstanding shares of Common Stock.
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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>
Metrika Systems Thermo Instrument Thermo Electron
Name (1) Corporation (2) Systems Inc. (3) Corporation (4)
- ----------------------------------------- -------------------- ---------------------- -------------------
<S> <C> <C> <C>
Thermo Electron Corporation(5)........... 5,846,700 N/A N/A
Joseph A. Baute.......................... 11,736 0 0
Willard R. Becraft....................... 11,736 0 0
Ernesto A. Corte......................... 51,800 70,701 25,220
Denis A. Helm............................ 26,000 212,644 174,948
John T. Keiser........................... 12,000 154,212 296,608
Werner G. Kramer......................... 37,000 5,934 0
Earl R. Lewis ........................... 20,000 338,250 204,878
All directors and current executive
officers as a group (9 persons)......... 172,772 843,452 1,233,404
</TABLE>
(1) Except as reflected in the footnotes to this table, shares beneficially
owned consist of shares owned by the indicated person or by that person for
the benefit of minor children, and all share ownership includes sole voting
and investment power.
(2) Shares of Common Stock beneficially owned by Mr. Baute, Mr. Becraft, Mr.
Corte, Mr. Helm, Mr. Keiser, Mr. Kramer, Mr. Lewis and all directors and
current executive officers as a group include 10,000, 10,000, 45,000,
25,000, 12,000, 36,000, 20,000 and 160,500 shares, respectively, that such
person or group had the right to acquire within 60 days of January 31,
1999, through the exercise of stock options. Shares of Common Stock
beneficially owned by Mr. Baute, Mr. Becraft and all directors and current
executive officers as a group include 736, 736 and 1,472 shares allocated
through January 2, 1999 to their respective accounts under the Deferred
Compensation Plan. No director or named executive officer beneficially
owned more than 1% of Common Stock outstanding as of January 31, 1999; all
directors and current executive officers as a group beneficially owned
2.23% of Common Stock outstanding as of such date.
(3) Shares of the common stock of Thermo Instrument beneficially owned by Mr.
Corte, Mr. Helm, Mr. Keiser, Mr. Kramer, Mr. Lewis and all directors and
executive officers as a group include 68,593, 155,625, 70,312, 4,969,
322,085 and 676,660 shares, respectively, that such person or group had the
right to acquire within 60 days after January 31, 1999, through the
exercise of stock options. Shares of the common stock of Thermo Instrument
beneficially owned by all directors and executive officers as a group
include 963 shares, respectively, allocated through January 31, 1999, 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 Thermo Instrument beneficially owned by Mr. Helm
include a total of 5,264 shares held in custodial accounts for the benefit
of four minor children. Shares of the common stock of Thermo Instrument
beneficially owned by Mr. Lewis include 2,987 shares held by his spouse.
No director or named executive officer beneficially owned more than 1% of
the common stock of Thermo Instrument outstanding as of January 31, 1999;
all directors and current executive officers as a group did not
beneficially own more than 1% of the common stock of Thermo Instrument
outstanding as of such date.
(4) Shares of the common stock of Thermo Electron beneficially owned by Mr.
Corte, Mr. Helm, Mr. Keiser, Mr. Lewis and all directors and executive
officers as a group include 23,600, 111,872, 251,622, 202,350 and 1,052,216
shares, respectively, that such person or group had the right to acquire
within 60 days of January 31, 1999, through the exercise of stock options.
Shares of the common stock of Thermo Electron beneficially owned by all
directors and current executive officers as a group include 2,497 shares,
respectively, allocated through January 31, 1999, to accounts maintained
pursuant to the ESOP. Shares of
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the common stock of Thermo Electron beneficially owned by Mr. Helm include
a total of 8,100 shares held in custodial accounts for the benefit of four
minor children. No director or named executive officer beneficially owned
more than 1% of the common stock of Thermo Electron outstanding as of
January 31, 1999; all directors and current executive officers as a group
did not beneficially own more than 1% of the common stock of Thermo
Electron outstanding as of such date.
(5) As of January 31, 1999, Thermo Electron, primarily through its majority-
owned subsidiary Thermo Instrument, beneficially owned 75.78% of the
outstanding Common Stock. Thermo Electron's address is 81 Wyman Street,
Waltham, Massachusetts 02454-9046. As of January 31, 1999, Thermo
Electron had the power to elect all of the members of the Corporation's
board of directors.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Corporation's directors and executive officers,
and beneficial owners of more than 10% of the Common Stock, such as Thermo
Electron, to file with the Securities and Exchange Commission initial reports of
ownership and periodic reports of changes in ownership of the Corporation's
securities. Based upon a review of such filings, all Section 16(a) filing
requirements applicable to such persons were complied with during 1998, except
in the following instances. Thermo Electron filed three Form 4s late, reporting
a total of 19 transactions, including 15 open market purchases of Common Stock
and four transactions associated with the grant, exercise and lapse of options
to purchase Common Stock granted to employees under its stock option program.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table summarizes compensation during the last three fiscal
years for services to the Corporation in all capacities awarded to, earned by or
paid to the Corporation's chief executive officer, its former chief executive
officer and its other most highly compensated executive officer. These officers
are collectively referred to herein as the "named executive officers." No other
executive officer of the Corporation met the definition of "highly compensated"
within the meaning of the Securities and Exchange Commission's executive
compensation disclosure rules.
The Corporation is required to appoint certain executive officers and full-
time employees of Thermo Electron as executive officers of the Corporation, in
accordance with the Thermo Electron Corporate Charter. The compensation for
these executive officers is determined and paid entirely by Thermo Electron. The
time and effort devoted by these individuals to the Corporation's affairs is
provided to the Corporation under the corporate services agreement between the
Corporation and Thermo Electron. See "Relationship with Affiliates."
Accordingly, the compensation for these individuals is not reported in the
following table.
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Summary Compensation Table
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<TABLE>
<CAPTION>
Long Term
Compensation
------------
Securities
Underlying
Annual Compensation Options (No. of
Name and Fiscal ------------------- Shares All Other
Principal Positon Year Salary Bonus and Company)(1) Compensation(2)
----------------- ------ -------- ------- ---------------- ---------------
<S> <C> <C> <C> <C> <C>
Ernesto A. Corte(3) 1998 $170,071 $50,000 10,000 (MKA) $7,154(4)
President and Chief 3,600 (TMO)
Executive Officer 7,500 (ONX)
2,000 (RGI)
1,000 (TDX)
500 (TISI)
10,000 (THI)
1,000 (TRIL)
7,500 (VIZ)
1,000 (TRCC)
1997 $163,530 $55,000 35,000 (MKA) $7,508(4)
20,000 (TMO)
1996 $163,530 $37,000 7,500 (TOC) $6,750
5,000 (TMQ)
- ----------------------------------------------------------------------------------------------------
Werner G. Kramer(3)(5) 1998 277,546DM 52,165 DM 6,000 (MKA) --
Executive Vice President 1997 282,325DM 48,055 DM 30,000 (MKA) --
1996 282,000DM 0 DM 7,500 (TOC) --
5,000 (TMQ)
- ----------------------------------------------------------------------------------------------------
Denis A. Helm(6) 1998 $ 16,200 $ 0 -- --
former Chief Executive 1997 $ 15,500 $ 9,200 25,000 (MKA) $7,125
Officer
- ----------------------------------------------------------------------------------------------------
</TABLE>
(1) Options granted by the Corporation are designated in the table as "MKA." In
addition, the named executive officers have also been granted options to
purchase the common stock of the following Thermo Electron companies during
the last three fiscal years as part of Thermo Electron's stock option
program: Thermo Electron (designated in the table as TMO), ONIX Systems
Inc. (designated in the table as ONX), The Randers Killam Group Inc.
(designated in the table as RGI), Thermedics Detection Inc. (designated in
the table as TDX), Thermo Information Solutions Inc. (designated in the
table as TISI), Thermo Instrument (designated in the table as THI), Thermo
Optek Corporation (designated in the table as TOC), ThermoQuest Corporation
(designated in the table as TMQ), Thermo Trilogy Corporation (designated in
the table as TRIL), Thermo Vision Corporation (designated in the table as
VIZ) and Trex Communications Corporation (designated in the table as TRCC).
(2) Represents the amount of matching contributions made by the individual's
employer on behalf of the named executive officers participating in the
Thermo Electron 401(k) plan.
(3) Compensation amounts for Messrs. Corte and Kramer for 1996 include
compensation received by each from Thermo Instrument prior to the
Corporation's inception in November 1996.
(4) In addition to the matching contribution referred to in footnote (2), such
amount includes $2,922 and $383, which represents the amount of
compensation in 1998 and 1997, respectively, attributable to an interest-
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free loan provided to Mr. Corte pursuant to the Corporation's stock holding
assistance plan. See "Relationship with Affiliates - Stock Holding
Assistance Plan."
(5) Mr. Kramer is a citizen of Germany. Beginning with fiscal 1998, Mr.
Kramer's compensation is determined in U.S. dollars and then converted
into deutsche marks and paid in deutsche marks. Prior to fiscal 1998, Mr.
Kramer's compensation was determined and paid in deutsche marks. If Mr.
Kramer's salary had been paid in U.S. dollars using the average exchange
rates for the year in question, he would have received an annual salary of
$166,000, $163,325 and $187,474, respectively, for fiscal 1998, 1997 and
1996 and an annual bonus of $31,200, $27,800 and $0, respectively, for the
same years.
(6) Mr. Helm was appointed chief executive officer of the Corporation at its
inception in November 1996 and served in that position until February 1998.
Mr. Helm has also served in various senior management positions at Thermo
Instrument since 1981, most recently as senior vice president from 1994 to
1999 when he was named executive vice president. A portion or all of Mr.
Helm's annual cash compensation (salary and bonus) has been paid by Thermo
Instrument in each of the last three fiscal years for the time he devoted
to his responsibilities to Thermo Instrument. The annual cash compensation
(salary and bonus) reported in the table for Mr. Helm represents the amount
paid by the Corporation for Mr. Helm's services as its chief executive
officer. For fiscal 1998, approximately 10% of Mr. Helm's salary and none
of his bonus earned in all capacities throughout the Thermo Electron
organization was paid by the Corporation for his services as chief
executive officer. For fiscal 1997, approximately 10% of Mr. Helm's salary
and bonus earned in all capacities throughout the Thermo Electron
organization was paid by the Corporation for his services as chief
executive officer. None of Mr. Helm's salary and bonus in fiscal 1996 was
paid by the Corporation. In addition, Mr. Helm has been granted options to
purchase shares of the 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 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.
Stock Options Granted During Fiscal 1998
The following table sets forth information concerning individual grants of
stock options made during fiscal 1998 to the Corporation's named executive
officers. It has not been the Corporation's policy in the past to grant stock
appreciation rights, and no such rights were granted during fiscal 1998.
Option Grants in Fiscal 1998
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Potential Realizable
Value at Assumed
Percent of Annual Rates of Stock
Number of Securities Total Options Exercise Price Appreciation for
Underlying Options Granted to Exercise Option Term (2)
Granted and Employees in Price Per Expiration ----------------------
Name Company(1) Fiscal Year Share Date 5% 10%
---- ------------------- ------------- --------- ---------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Ernesto A. Corte 10,000 (MKA) 7.0% $ 9.13 09/25/03 $25,200 $ 55,700
3,600 (TMO) 0.1% (3) $16.20 09/23/03 $16,128 $ 35,604
7,500 (ONX) 0.8% (3) $14.25 03/10/05 $43,500 $101,400
2,000 (RGI) 0.4% (3) $ 4.00 01/21/05 $ 3,260 $ 7,580
1,000 (TDX) 0.1% (3) $ 9.56 01/21/05 $ 3,890 $ 9,070
500 (TISI) 0.8% (3) $10.00 01/21/08 $ 3,145 $ 7,970
10,000 (THI) 1.3% (3) $13.54 09/25/03 $37,400 $ 82,700
1,000 (TRIL) 0.6% (3) $ 8.25 01/21/08 $ 5,190 $ 13,150
7,500 (VIZ) 1.8% (3) $ 7.15 03/10/05 $21,825 $ 50,850
1,000 (TRCC) 0.1% (3) $ 4.00 01/21/08 $ 2,520 $ 6,370
- -----------------------------------------------------------------------------------------------------------------------------
Werner G. Kramer 6,000 (MKA) 4.2% $ 9.13 09/25/03 $15,120 $ 33,420
Denis A. Helm(4) -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
(1) All of the options granted during the fiscal year are immediately
exercisable as of the end of the fiscal year, except options to purchase
the common stock of Thermo Information Solutions Inc., Thermo Trilogy
Corporation and Trex Communications Corporation, which are not exercisable
until the earlier of (i) 90 days after the effective date of the
registration of that company's common stock under Section 12 of the
Exchange Act or (ii) nine years after the grant date. In all cases, the
shares acquired upon exercise are subject to repurchase by the granting
company at the exercise price if the optionee ceases to be employed by, or
ceases to serve as a director of, such company or another Thermo Electron
company. The granting company may exercise its repurchase rights within six
months after the termination of the optionee's employment or the cessation
of directorship, as the case may be. For publicly-traded companies, the
repurchase rights generally lapse ratably over a one- to ten-year period,
depending on the option term, which may vary from five to twelve years,
provided the optionee continues to be employed by or serve as a director of
the granting company or another Thermo Electron company. For companies
that are not publicly- traded, the repurchase rights lapse in their
entirety on the ninth anniversary of their grant date. The granting
company may permit the holder of options to exercise options and to satisfy
tax withholding obligations by surrendering shares equal in fair market
value to the exercise price or withholding obligation. Please see
footnote (1) on page 7 for the company abbreviations used in this table.
(2) The amounts shown in this table represent hypothetical gains that could be
achieved for the respective options if exercised at the end of the option
term. These gains are based on assumed rates of stock appreciation of 5%
and 10% compounded annually from the date the respective options were
granted to their expiration date. The gains shown are net of the option
exercise price, but do not include deductions for taxes or other expenses
associated with the exercise. Actual gains, if any, on stock option
exercises will depend on the future performance of the common stock of the
granting company, the optionee's continued employment or service as a
director through the option period and the date on which the options are
exercised.
(3) These options were granted under stock option plans maintained by Thermo
Electron companies other than the Corporation and, accordingly, are
reported as a percentage of total options granted to employees of Thermo
Electron and its subsidiaries.
(4) Mr. Helm has been granted options to purchase shares of the common stock of
Thermo Electron and its subsidiaries other than the Corporation. These
options are not reported in the table 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.
Stock Options Exercised During Fiscal 1998 and Fiscal Year-End Values
The following table reports certain information regarding stock option
exercises during fiscal 1998 and outstanding stock options held at the end of
fiscal 1998 by the Corporation's named executive officers. No stock appreciation
rights were exercised or were outstanding during fiscal 1998.
9
<PAGE>
<TABLE>
<CAPTION>
Aggregated Option Exercises In Fiscal 1998 And Fiscal 1998 Year-End Option Values
- --------------------------------------------------------------------------------------------------------
Value of
Unexercised
Number of In-the-Money
Underlying Options at
Unexercised Options Fiscal Year
Shares at Fiscal Year-End End
Acquired on Values (Exercisable/ (Exercisable/
Name Company Exercise Realized(1) Unexercisable)(2) Unexercisable)
---- ------- ----------- ----------- -------------------- --------------
<S> <C> <C> <C> <C> <C>
Ernesto A. Corte (MKA) -- -- 45,000/0 $ 0/--
(TMO) -- -- 23,600/0 $ 1,757/--
(ONX) -- -- 7,500/0 $ 0/--
(RGI) -- -- 2,000/0 $ 0/--
(TDX) -- -- 1,000/0 $ 0/--
(TISI) -- -- 0/500 --/$0 (3)
(THI) -- -- 68,593/0 $220,016/--
(TMO) -- -- 7,500/0 $ 0/--
(TMQ) -- -- 5,000/0 $ 1,565/--
(THS) -- -- 500/0 $ 688/--
(TRIL) -- -- 0/1,000 --/$0 (3)
(VIZ) -- -- 7,500/0 $ 0/--
(TRCC) -- -- 0/1,000 --/$0 (3)
- -------------------------------------------------------------------------------------------------------------------
Werner G. Kramer (MKA) -- -- 36,000/0 $ 0/--
(THI) 1,294 $16,796 4,969/0 $ 8,631/--
(TOC) -- -- 7,500/0 $ 0/--
(TMQ) -- -- 5,000/0 $ 1,565/--
(THS) -- -- 700/0 $ 963/--
- -------------------------------------------------------------------------------------------------------------------
Denis A. Helm (4) (MKA) -- -- 25,000/0 $ 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.
(2) All of the options reported outstanding at the end of the fiscal year were
immediately exercisable as of the end of the fiscal year, except options to
purchase the common stock of Thermo Information Solutions Inc., Thermo
Trilogy Corporation and Trex Communications Corporation, which are not
exercisable until the earlier of (i) 90 days after the effective date of
the registration of that company's common stock under Section 12 of the
Exchange Act or (ii) nine years after the grant date. In all cases, the
shares acquired upon exercise of the options reported in the table are
subject to repurchase by the granting company at the exercise price if the
optionee ceases to be employed by, or ceases to serve as a director of,
such company or another Thermo Electron company. The granting company may
exercise its repurchase rights within six months after the termination of
the optionee's employment or the cessation of directorship, as the case may
be. The repurchase rights generally lapse ratably over a one- to ten-year
period, depending on the option term, which may vary from five to twelve
years, provided that the optionee continues to be employed by or serve as a
director of the granting company or another Thermo Electron company. For
companies that are not publicly-traded, the repurchase rights lapse in
their entirety on the ninth anniversary of their grant date. The granting
company may permit the holder of such options to exercise options and to
satisfy tax
10
<PAGE>
withholding obligations by surrendering shares equal in fair
market value to the exercise price or withholding obligation.
(3) No public market existed for the shares underlying these options as of
fiscal year-end. Accordingly, no value in excess of the exercise price has
been attributed to these options.
(4) Mr. Helm 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.
Executive Retention Agreements
Thermo Electron has entered into agreements with certain executive officers
and key employees of Thermo Electron and its subsidiaries that provide severance
benefits if there is a change in control of Thermo Electron and their employment
is terminated by Thermo Electron "without cause" or by the individual "for good
reason", as those terms are defined therein, within 18 months thereafter. For
purposes of these agreements, a change in control exists upon (i) the
acquisition by any person of 40% or more of the outstanding common stock or
voting securities of Thermo Electron; (ii) the failure of the Thermo Electron
board of directors to include a majority of directors who are "continuing
directors", which term is defined to include directors who were members of
Thermo Electron's board on the date of the agreement or who subsequent to the
date of the agreement were nominated or elected by a majority of directors who
were "continuing directors" at the time of such nomination or election; (iii)
the consummation of a merger, consolidation, reorganization, recapitalization or
statutory share exchange involving Thermo Electron or the sale or other
disposition of all or substantially all of the assets of Thermo Electron unless
immediately after such transaction (a) all holders of Thermo Electron common
stock immediately prior to such transaction own more than 60% of the outstanding
voting securities of the resulting or acquiring corporation in substantially the
same proportions as their ownership immediately prior to such transaction and
(b) no person after the transaction owns 40% or more of the outstanding voting
securities of the resulting or acquiring corporation; or (iv) approval by
stockholders of a complete liquidation or dissolution of Thermo Electron.
In 1998, Thermo Electron authorized an executive retention agreement with
Mr. Corte. This agreement provides that in the event Mr. Corte's employment is
terminated under the circumstances described above, he would be entitled to a
lump sum payment equal to the sum of (a) one times his highest annual base
salary in any 12 month period during the prior five-year period, plus (b) one
times his highest annual bonus in any 12 month period during the prior five-year
period. In addition, Mr. Corte would be provided benefits for a period of one
year after such termination substantially equivalent to the benefits package he
would have been otherwise entitled to receive if he was not terminated.
Further, all repurchase rights of Thermo Electron and its subsidiaries shall
lapse in their entirety with respect to all options that he holds in Thermo
Electron and its subsidiaries, including the Corporation, as of the date of the
change in control. Finally, Mr. Corte would be entitled to a cash payment equal
to $15,000 to be used toward outplacement services.
Assuming that the severance benefits would have been payable as of January
1, 1999, the lump sum salary and bonus payment under such agreement to Mr.
Corte would have been approximately $240,000. In the event that payments under
this agreement are deemed to be so called "excess parachute payments" under the
applicable provisions of the Internal Revenue Code of 1986, as amended (the
"Internal Revenue Code"), Mr. Corte would be entitled to receive a gross-up
payment equal to the amount of any excise tax payable by him with respect to
such payment, plus the amount of all other additional taxes imposed on him,
attributable to the receipt of such gross-up payment.
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Compensation Philosophy
Decisions on compensation for the Corporation's executive officers are made
by the human resources committee of the board of directors (the "Committee").
The Committee follows guidelines established by the human resources committee of
the board of directors of its ultimate parent company, Thermo Electron. The
compensation policies followed by the Committee are designed to reward and
motivate executives in achieving
11
<PAGE>
long-term value for Stockholders and other business objectives, to attract and
retain dedicated, talented individuals to accomplish the Corporation's
objectives, to recognize individual contributions as well as the performance of
the Corporation and its subsidiaries, and to encourage stock ownership by
executives through stock-based compensation and stock retention programs in
order to link executive and Stockholder interests.
The Committee evaluates the competitiveness of its compensation practices
through the use of market surveys and competitive analyses prepared by its
outside compensation consultants and by participating in annual compensation
surveys, primarily "Project 777", an executive compensation survey prepared by
Management Compensation Services, a division of Hewitt Associates. The majority
of firms represented in the Project 777 survey are included in the Standard &
Poor's 500 Index but do not necessarily correspond to the companies included in
the Corporation's peer group index, the Dow Jones Total Return Index for the
Diversified Technology Industry Group. Internal fairness of compensation within
the organization is also an important element of the Committee's compensation
philosophy. Compensation of executives is evaluated by comparing it to the
compensation of other executives within the Thermo Electron organization who
have responsibility to manage businesses of comparable size and complexity.
The compensation program of the Corporation consists of annual cash
compensation and long-term incentive compensation. Annual cash compensation is
composed of base salary and performance-based incentive compensation, which is
reviewed and determined annually. Long-term incentive compensation is in the
form of stock-based compensation such as stock options and restricted stock
awards. The process for determining the components of executive compensation
for the executive officers is described below.
Components of Executive Compensation
Annual Cash Compensation
Annual cash compensation consists of base salary and performance-based
incentive compensation. The cash incentive compensation paid to an executive
varies from year to year based on the performance of the Corporation and the
executive.
The Committee assesses the competitiveness of annual cash compensation by
establishing for each executive position at the beginning of each fiscal year a
salary and reference incentive compensation for the position that together are
intended to approximate the mid-point of competitive total annual cash
compensation for organizations that are of comparable size and complexity as the
Corporation.
Base Salary. Generally, executive salaries are adjusted gradually over
time to reflect competitive salary levels or other considerations, such as
geographic or regional market data, industry trends or internal fairness within
the Corporation. The Committee may also adjust individual salaries to reflect
the assumption of increased responsibilities. The salary increases in fiscal
1998 for the chief executive officer and the other named executive officers
generally reflect this practice of gradual adjustment and moderation. One of
the named executive officers is a citizen of Germany. Due to the fluctuation in
currency exchange rates and changes in the Committee's method of determining his
compensation (See footnote (5) to the Summary Compensation Table), the
presentation of his salary in the Summary Compensation Table makes it appear
that his salary decreased from fiscal 1997 to fiscal 1998, when in actuality,
his salary in U.S. dollars increased.
Performance-based Incentive Compensation. The amount of incentive
compensation actually earned by an executive from year to year varies with the
performance of the Corporation and the executive. The Committee evaluates
performance (1) by formulae using financial measures of profitability and
contribution to Stockholder value and (2) by subjectively evaluating the
executive's contribution to the achievement of the Corporation's long-term
objectives. In fiscal 1998, the formulae used by the Committee measured return
on net assets, return on sales, earnings improvement over a three-year period
for the Corporation and, to a lesser extent, the Corporation's parent companies,
and three-year growth in earnings per share for the same companies. The
financial measures are not financial targets that are met, not met or exceeded,
but assess the financial performance relative to the financial performance of
comparable companies and are designed to penalize below-average performance and
reward above-average performance. The relative weighting of the financial
measures and subjective evaluation varies depending on the executive's role and
responsibilities within the organization.
12
<PAGE>
The incentive compensation awarded to the named executive officers (other
than the chief executive officer, which is discussed below under the caption
"1998 CEO Compensation") for fiscal 1998 reflected the performance of the
business units for which they were responsible and the Corporation as a whole.
Long-term Incentive Compensation
The primary goal of the Corporation and its parent companies is to excel in
the creation of long-term value for the Stockholders. The principal incentive
tool used to achieve this goal is the periodic award to key employees of stock-
based compensation in shares of Common Stock and the common stock of other
Thermo Electron companies.
The Committee and management believe that awards of stock-based
compensation in both the Corporation and other companies within the Thermo
Electron group of companies accomplish many objectives. The grant of stock-based
compensation to key employees encourages equity ownership in the Corporation,
and closely aligns management's interests to the interests of all the
Stockholders. The emphasis on stock-based compensation also results in
management's compensation being closely linked to stock performance. In
addition, because the employee's rights in stock-based compensation vest over
periods of varying durations and are subject to forfeiture if the employee
leaves the Corporation prematurely, stock-based compensation is an incentive for
key employees to remain with the Corporation long-term. The Committee believes
stock-based compensation awards in its parent companies, Thermo Electron and
Thermo Instrument, and the other majority-owned subsidiaries of Thermo Electron
and Thermo Instrument, are an important tool in providing incentives for
performance within the entire organization.
In determining awards, the Committee considers for each executive officer
the annual value of stock-based compensation in the Corporation and other
companies within the Thermo Electron organization that vest in the next year and
compares the individual's total compensation using this value to competitive
data. The Committee uses a modified Black-Scholes option pricing model to
determine the value of an award. In addition, the Committee considers the
aggregate amount of outstanding awards granted to all employees to monitor the
number of outstanding awards under the Corporation's stock-based compensation
programs. In determining the appropriate number of outstanding awards, the
Committee considers such factors as the size of the company, its stage of
development, and its growth strategy, as well as the aggregate awards and
compensation practices of comparable companies.
The Committee periodically awards stock-based compensation in the form of
stock options or restricted stock based on an assessment of the total
compensation of the executive, the actual and anticipated contributions of the
executive (which includes a subjective assessment by the Committee of the
executive's future potential within the organization), as well as the value of
previously awarded stock-based compensation, as described above. Such stock-
based compensation awards were made to the named executive officers in 1998.
Stock Ownership Policies
The Corporation's compensation program is also designed to encourage
executives to own shares of the Corporation's Common Stock. The Committee
believes that encouraging executives to own and retain stock acquired through
its stock-based compensation program or otherwise provides additional incentive
for executive officers to follow strategies designed to maximize long-term value
to Stockholders.
The Committee established a stock holding policy for executive officers of
the Corporation that required executive officers to own a multiple of their
compensation in shares of Common Stock. For the chief executive officer, the
multiple is one times his base salary and reference bonus for the fiscal year.
For all other officers, the multiple was one times the officer's base salary.
The Committee deemed it appropriate to permit officers to achieve these
ownership levels over a three-year period. The policy has been amended to apply
only to the chief executive officer.
In order to assist executive officers in complying with the policy, the
Committee also adopted a stock holding assistance plan under which the
Corporation was authorized to make interest-free loans to executive officers to
enable them to purchase shares of Common Stock in the open market. This plan
was also amended to apply only to the chief executive officer. The loans are
required to be repaid upon the earlier of demand or the fifth anniversary
13
<PAGE>
of the date of the loan, unless otherwise determined by the Committee. In 1997,
Mr. Corte received a loan in the principal amount of $51,907.85 under this plan,
of which the entire amount was outstanding as of January 31, 1999. See
"Relationship with Affiliates - Stock Holding Assistance Plan."
The Committee also has established a policy requiring its executive
officers to hold shares of 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.
Policy on Deductibility of Compensation
Section 162(m) of the Internal Revenue Code limits the tax deduction
available to public companies for annual compensation paid to executive officers
in excess of $1 million unless the compensation qualifies as "performance-based"
or is otherwise exempt under Section 162(m). The Committee considers the
potential effect of Section 162(m) in designing its compensation program, but
reserves the right to use its independent judgment to approve nondeductible
compensation, while taking into account the financial effects such action may
have on the Corporation. From time to time, the Committee reexamines the
Corporation's compensation practices and the potential effect of Section 162(m).
1998 CEO Compensation
The compensation of Mr. Corte is established using the same criteria as
described above for all executive officers. The Committee approved a salary
increase for Mr. Corte for fiscal 1998 that reflected its practice of gradual
adjustment, taking into account the factors described above under "Components of
Executive Compensation - Annual Cash Compensation - Base Salary." In determining
Mr. Corte's performance-based incentive compensation for fiscal 1998, the
Committee considered the financial performance of the Corporation, using the
measures described above for all executive officers under the caption
"Components of Executive Compensation Annual Cash Compensation Performance-
based Incentive Compensation." The Committee's subjective evaluation of Mr.
Corte's performance considered, among other things, his effectiveness in
furthering the Corporation's business and financial objectives.
Awards to Mr. Corte of stock-based compensation in Common Stock are
reviewed and determined periodically by the Committee using the criteria
described above under the caption "Long-term Incentive Compensation." An award
of options to purchase 10,000 shares of Common Stock was made by the Committee
to Mr. Corte in fiscal 1998 based on the Committee's assessment of Mr. Corte's
total compensation. The awards to Mr. Corte in fiscal 1998 of options to
purchase 3,600 shares of the common stock of Thermo Electron, 10,000 shares of
the common stock of Thermo Instrument, 7,500 shares of the common stock of ONIX
Systems Inc. and 7,500 shares of the common stock of Thermo Vision Corporation
were made by the human resources committees of the board of directors of the
granting companies using a methodology similar to that described for the
Corporation.
Due to Mr. Corte's position as a chief executive officer of a majority-
owned subsidiary of Thermo Electron, from time to time he may receive awards to
purchase shares of the common stock of majority-owned subsidiaries of Thermo
Electron from as part of Thermo Electron's stock option program. Awards of
stock options to purchase 2,000 shares of the common stock of The Randers Killam
Group Inc., 1,000 shares of the common stock of Thermedics Detection Inc., 500
shares of the common stock of Thermo Information Solutions Inc., 1,000 shares of
the common stock of Thermo Trilogy Corporation, and 1,000 shares of the common
stock of Trex Communications Corporation, were made to Mr. Corte under this
program in fiscal 1998.
14
<PAGE>
Mr. Helm served as the Corporation's chief executive officer until February
1998. The Committee, in December 1997, approved a salary increase for Mr. Helm
for fiscal 1998 consistent with its policy of gradual adjustment. None of Mr.
Helm's 1998 performance-based incentive compensation was paid by the
Corporation. No awards of stock-based compensation in Common Stock were made
by the Committee to Mr. Helm in fiscal 1998.
Joseph A. Baute (Chairman)
Willard R. Becraft
COMPARATIVE PERFORMANCE GRAPH
The Securities and Exchange Commission requires that the Corporation
include in this proxy statement a line-graph presentation comparing cumulative,
five-year shareholder returns for the Corporation's Common Stock with a broad-
based market index and either a nationally recognized industry standard or an
index of peer companies selected by the Corporation. The Corporation's Common
Stock has been publicly-traded only since June 20, 1997 and, as a result, the
following graph commences as of such date. The Corporation has compared its
performance with the American Stock Exchange Market Value Index and the Dow
Jones Total Return Index for the Diversified Technology Industry Group as of the
last trading day of the Corporation's fiscal year.
Comparison of Total Return Among Metrika Systems Corporation,
the American Stock Exchange Market Value Index and the Dow Jones
Total Return Index for the Diversified Technology Industry Group from
June 20, 1997 to December 31, 1998
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
06/20/97 01/02/98 12/31/98
----------------------------------------------------
<S> <C> <C> <C>
MKA 100 99 56
----------------------------------------------------
AMEX 100 110 113
----------------------------------------------------
DJDTC 100 95 96
----------------------------------------------------
</TABLE>
The total return for the Corporation's Common Stock (MKA), the American
Stock Exchange Market Value Index (AMEX) and the Dow Jones Total Return Index
for the Diversified Technology Industry Group (DJ DTC) assumes the reinvestment
of dividends, although dividends have not been declared on the Corporation's
Common Stock. The American Stock Exchange Market Value Index tracks the
aggregate performance of equity securities of companies listed on the American
Stock Exchange. The Corporation's Common Stock is traded on the American Stock
Exchange under the ticker symbol "MKA."
15
<PAGE>
RELATIONSHIP WITH AFFILIATES
Thermo Electron has, from time to time, caused certain subsidiaries to sell
minority interests to investors, resulting in several majority-owned, private
and publicly-held subsidiaries. Thermo Instrument has created the Corporation as
a majority-owned, publicly-held subsidiary. The Corporation and such other
majority-owned Thermo Electron subsidiaries are hereinafter referred to as the
"Thermo Subsidiaries."
Thermo Electron and each of the Thermo Subsidiaries recognize that the
benefits and support that derive from their affiliation are essential elements
of their individual performance. Accordingly, Thermo Electron and each of the
Thermo Subsidiaries, including the Corporation, have adopted the Thermo Electron
Corporate Charter (the "Charter") to define the relationships and delineate the
nature of such cooperation among themselves. The purpose of the Charter is to
ensure that (1) all of the companies and their stockholders are treated
consistently and fairly, (2) the scope and nature of the cooperation among the
companies, and each company's responsibilities, are adequately defined, (3) each
company has access to the combined resources and financial, managerial and
technological strengths of the others, and (4) Thermo Electron and the Thermo
Subsidiaries, in the aggregate, are able to obtain the most favorable terms from
outside parties.
To achieve these ends, the Charter identifies the general principles to be
followed by the companies, addresses the role and responsibilities of the
management of each company, provides for the sharing of group resources by the
companies and provides for centralized administrative, banking and credit
services to be performed by Thermo Electron. The services provided by Thermo
Electron include collecting and managing cash generated by members, coordinating
the access of Thermo Electron and the Thermo Subsidiaries (the "Thermo Group")
to external financing sources, ensuring compliance with external financial
covenants and internal financial policies, assisting in the formulation of long-
range planning and providing other banking and credit services. Pursuant to the
Charter, Thermo Electron may also provide guarantees of debt or other
obligations of the Thermo Subsidiaries or may obtain external financing at the
parent level for the benefit of the Thermo Subsidiaries. In certain instances,
the Thermo Subsidiaries may provide credit support to, or on behalf of, the
consolidated entity or may obtain financing directly from external financing
sources. Under the Charter, Thermo Electron is responsible for determining that
the Thermo Group remains in compliance with all covenants imposed by external
financing sources, including covenants related to borrowings of Thermo Electron
or other members of the Thermo Group, and for apportioning such constraints
within the Thermo Group. In addition, Thermo Electron establishes certain
internal policies and procedures applicable to members of the Thermo Group. The
cost of the services provided by Thermo Electron to the Thermo Subsidiaries is
covered under existing corporate services agreements between Thermo Electron and
the Thermo Subsidiaries.
The Charter currently provides that it shall continue in effect so long as
Thermo Electron and at least one Thermo Subsidiary participate. The Charter may
be amended at any time by agreement of the participants. Any Thermo Subsidiary,
including the Corporation, can withdraw from participation in the Charter upon
30 days' prior notice. In addition, Thermo Electron may terminate a subsidiary's
participation in the Charter in the event the subsidiary ceases to be controlled
by Thermo Electron or ceases to comply with the Charter or the policies and
procedures applicable to the Thermo Group. A withdrawal from the Charter
automatically terminates the corporate services agreement and tax allocation
agreement (if any) in effect between the withdrawing company and Thermo
Electron. The withdrawal from participation does not terminate outstanding
commitments to third parties made by the withdrawing company, or by Thermo
Electron or other members of the Thermo Group, prior to the withdrawal. In
addition, a withdrawing company is required to continue to comply with all
policies and procedures applicable to the Thermo Group and to provide certain
administrative functions mandated by Thermo Electron so long as the withdrawing
company is controlled by or affiliated with Thermo Electron.
As provided in the Charter, the Corporation and Thermo Electron have
entered into a Corporate Services Agreement (the "Services Agreement") under
which Thermo Electron's corporate staff provides certain administrative
services, including general legal advice and services, risk management, employee
benefit administration, tax advice and preparation of tax returns, centralized
cash management and certain financial and other services to the Corporation. The
Corporation was assessed an annual fee equal to 0.8% of the Corporation's
revenues for these services in fiscal 1998. The annual fee will remain at 0.8%
of the Corporation's total revenues for fiscal 1999. The fee is reviewed
annually and may be changed by mutual agreement of the Corporation and Thermo
Electron. During fiscal 1998, Thermo Electron assessed the Corporation $560,000
in fees under the
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Services Agreement. Management believes that the charges under the Services
Agreement are reasonable and that the terms of the Services Agreement are fair
to the Corporation. In 1998, the Corporation paid Thermo Electron an additional
$34,000 for certain administrative services required by the Corporation that
were not covered by the Services Agreement. The Services Agreement automatically
renews for successive one-year terms, unless canceled by the Corporation upon 30
days' prior notice. In addition, the Services Agreement terminates automatically
in the event the Corporation ceases to be a member of the Thermo Group or ceases
to be a participant in the Charter. In the event of a termination of the
Services Agreement, the Corporation will be required to pay a termination fee
equal to the fee that was paid by the Corporation for services under the
Services Agreement for the nine-month period prior to termination. Following
termination, Thermo Electron may provide certain administrative services on an
as-requested basis by the Corporation or as required in order to meet the
Corporation's obligations under Thermo Electron's policies and procedures.
Thermo Electron will charge the Corporation a fee equal to the market rate for
comparable services if such services are provided to the Corporation following
termination.
From time to time, the Corporation may transact business with other
companies in the Thermo Group.
The Corporation leases approximately 54,900 square feet of its 110,000
square foot facility in Erlangen, Germany on a month-to-month basis to a wholly
owned subsidiary of Thermo Instrument. The Thermo Instrument company is
responsible for paying to the Corporation its pro rata share of occupancy
expenses, including utilities and taxes, associated with the facility, which
payments in 1998 amounted to $386,000 in the aggregate.
In 1998, the Corporation purchased several x-ray source components for
$180,000 from a wholly owned subsidiary of ThermoSpectra Corporation, which in
turn is a majority-owned subsidiary of Thermo Instrument.
The Corporation, along with certain other Thermo Subsidiaries, participates
in a notional pool arrangement with Barclays Bank, which includes a $71,017,000
credit facility. The Corporation has access to $4,511,000 under this credit
facility. Only U.K.-based Thermo Subsidiaries participate in this arrangement.
Under this arrangement the Bank notionally combines the positive and negative
cash balances held by the participants to calculate the net interest
yield/expense for the group. The benefit derived from this arrangement is then
allocated based on balances attributable to the respective participants. Thermo
Electron guarantees all of the obligations of each participant in this
arrangement. As of January 2, 1999, the Corporation had a negative cash balance
of approximately $398,000, based on an exchange rate of $1.6708/GBP 1.00 as of
January 2, 1999. For 1998, the average annual interest rate earned on GBP
deposits by participants in this credit arrangement was approximately 7.7225%
and the average annual interest rate paid on overdrafts was approximately
7.485%.
As of January 2, 1999, $12,752,000 of the Corporation's cash equivalents
were invested in a repurchase agreement with Thermo Electron. Under this
agreement, the Corporation in effect lends excess cash to Thermo Electron, which
Thermo Electron collateralizes with investments principally consisting of
corporate notes, U.S. government agency securities, money market funds,
commercial paper and other marketable securities, in the amount of at least 103%
of such obligation. Thermo Electron maintains possession of the underlying
securities and has the right of substitution at its discretion. The
Corporation's funds subject to the repurchase agreement will be readily
convertible on demand into cash by the Corporation and have an original maturity
of three months or less. The repurchase agreement earns a rate based on the 90-
day Commercial Paper Composite Rate plus 25 basis points, set at the beginning
of each quarter.
As of January 2, 1999, the Corporation owed Thermo Electron and its other
subsidiaries an aggregate of $3,901,000 for amounts due under the Services
Agreement and related administrative charges, for other products and services
and for miscellaneous items, net of amounts owed to the Corporation by Thermo
Electron and its other subsidiaries for products, services and for miscellaneous
items. The largest amount of net indebtedness owed by the Corporation to Thermo
Electron and its other subsidiaries since January 3, 1998, was $4,184,000.
These amounts do not bear interest and are expected to be paid in the normal
course of business.
Stock Holding Assistance Plan
The human resources committee of the Corporation's board of directors (the
"Committee") established a stock holding policy that required executive officers
of the Corporation to acquire and hold a minimum number of shares of Common
Stock. In order to assist the executive officers in complying with this policy,
the Committee also
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adopted a stock holding assistance plan under which the Corporation may make
interest-free loans to the executive officers to enable them to purchase Common
Stock in the open market. The stock holding policy and the stock holding
assistance plan were both subsequently amended to apply only to the chief
executive officer. In 1997, Mr. Corte received a loan in the principal amount of
$51,907.85 under the stock holding assistance plan to purchase 3,200 shares of
Common Stock, of which the entire amount was outstanding as of January 31, 1999.
The loan to Mr. Corte is repayable upon the earlier of demand or the fifth
anniversary of the date of the loan, unless otherwise determined by the
Committee. No new loans were made under this plan in fiscal 1998,
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The board of directors has appointed Arthur Andersen LLP as independent
public accountants for fiscal 1999. Arthur Andersen LLP has acted as independent
public accountants for the Corporation since its inception in 1996.
Representatives of that firm are expected to be present at the meeting, will
have the opportunity to make a statement if they desire to do so and will be
available to respond to questions.
OTHER ACTION
Management is not aware at this time of any other matters that will be
presented for action at the meeting. Should any such matters be presented, the
proxies grant power to the proxy holders to vote shares represented by the
proxies in the discretion of such proxy holders.
STOCKHOLDER PROPOSALS
Proposals of Stockholders intended to be included in the proxy statement
and form of proxy relating to the 2000 Annual Meeting of the Stockholders of the
Corporation and to be presented at such meeting must be received by the
Corporation for inclusion in the proxy statement and form of proxy no later than
December 11, 1999. Notices of Stockholder proposals submitted outside the
processes of Rule 14a-8 of the Exchange Act (relating to proposals to be
presented at the meeting but not included in the Corporation's proxy statement
and form of proxy), will be considered untimely, and thus the Corporation's
proxy may confer discretionary voting authority on the persons named in the
proxy with regard to such proposals, if received after March 1, 2000.
SOLICITATION STATEMENT
The cost of solicitation of proxies will be borne by the Corporation.
Solicitation will be made primarily by mail, but regular employees of the
Corporation may solicit proxies personally or by telephone, facsimile
transmission or telegram. Brokers, nominees, custodians and fiduciaries are
requested to forward solicitation materials to obtain voting instructions from
beneficial owners of stock registered in their names, and the Corporation will
reimburse such parties for their reasonable charges and expenses in connection
therewith.
San Diego, California
April 12, 1999
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FORM OF PROXY
METRIKA SYSTEMS CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 27, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Ernesto A. Corte, Earl R. Lewis and Theo
Melas-Kyriazi, or any one of them in the absence of the others, as attorneys
and proxies of the undersigned, with full power of substitution, for and in the
name of the undersigned, to represent the undersigned at the Annual Meeting of
the Stockholders of Metrika Systems Corporation, a Delaware corporation (the
"Company"), to be held on Thursday, May 27, 1999, at 11:00 a.m. at The Westin
Hotel, 70 Third Avenue, Waltham, Massachusetts, and at any adjournment or
postponement thereof, and to vote all shares of common stock of the Company
standing in the name of the undersigned on March 30, 1999, with all of the
powers the undersigned would possess if personally present at such meeting:
(IMPORTANT - TO BE SIGNED AND DATED ON THE REVERSE SIDE.)
<PAGE>
Please mark your
[X] votes as in this
example.
1. ELECTION OF DIRECTORS OF THE COMPANY (see reverse).
FOR [ ] WITHHELD [ ]
______________________________________
FOR all nominees listed at right, except authority to vote withheld for the
following nominees (if any)
Nominees: Joseph A. Baute, Willard R. Becraft, , Ernesto A. Corte, Denis A.
Helm, John T. Keiser, Earl R. Lewis.
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.
