<PAGE>
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- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
[ x ] AMENDMENT NO. 1 TO ANNUAL REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION
13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-16244
VEECO INSTRUMENTS INC.
(Registrant)
Delaware 11-2989601
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
Terminal Drive 11803
Plainview, New York (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (516) 349-8300
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.01 per share
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Registration S-K is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by references in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of
the Registrant, based on the closing price of the Common Stock on March 2, 1998
as reported on the Nasdaq National Market, was approximately $171,781,000.
Shares of Common Stock held by each officer and director and by each person who
<PAGE>
owns 5% or more of the outstanding Common Stock have been excluded from this
computation in that such persons may be deemed to be affiliates. This
determination of affiliate status is not necessarily a conclusive determination
for other purposes.
At March 2, 1998, the Registrant had outstanding 8,963,160 shares of Common
Stock.
DOCUMENTS INCORPORATED BY REFERENCE
None
================================================================================
<PAGE>
The Registrant, Veeco Instruments Inc. ("Veeco" or the "Company"), hereby amends
its Annual Report on Form 10-K (the "10-K") for the year ended December 31,
1997, filed with the Securities and Exchange Commission (the "Commission") on
March 31, 1998, to include certain information which had been incorporated by
reference to the Company's definitive proxy statement, which will not be filed
with the Commission within 120 days after the end of the Company's fiscal year.
1
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VEECO INSTRUMENTS INC.
1997 FORM 10-K/A ANNUAL REPORT
TABLE OF CONTENTS
PART III
<TABLE>
<CAPTION>
Page
----
<S> <C>
Item 10. Directors and Executive Officers of the
Registrant...................................................... 3
Item 11. Executive Compensation............................................ 6
Item 12. Security Ownership of Certain Beneficial
Owners and Management........................................... 11
Item 13. Certain Relationships and Related
Transactions.................................................... 12
</TABLE>
2
<PAGE>
Part III
Items 10, 11, 12 and 13 are hereby amended in their entirety as follows:
Item 10. Directors and Executive Officers of the Registrant
The Directors and executive officers of the Company, as of March 31, 1998, are
as follows:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Edward H. Braun........................ 58 Director, Chairman, Chief Executive Officer and
President(3)
Richard A. D'Amore..................... 44 Director(1)(2)(3)
Joel A. Elftmann....................... 58 Director(1)(2)
Dr. Paul R. Low........................ 65 Director(1)(2)(3)
Walter J. Scherr....................... 73 Director
James C. Wyant......................... 54 Director
Thomas A. Cully........................ 52 Assistant Treasurer
Don R. Kania Ph.D...................... 43 Chief Technology Officer
John P. Kiernan........................ 36 Corporate Controller
Emmanuel N. Lakios..................... 36 Executive Vice President-Worldwide
Field Operations
Robert P. Oates........................ 44 Vice President and General Manager- Industrial
Measurement Products
David S. Perloff Ph.D.................. 56 President - Process Metrology Group
John F. Rein, Jr....................... 51 Vice President-Finance, Chief Financial Officer,
Treasurer and Secretary
Francis Steenbeke...................... 52 Vice President-International Sales and Marketing
</TABLE>
- ------------
(1) Member of the Audit Committee
(2) Member of the Compensation Committee
(3) Member of the Nominating Committee
Edward H. Braun has been a Director, Chairman, Chief Executive Officer and
President of the Company since January 1990. Prior to 1990, Mr. Braun was
employed as the Executive Vice President and Chief Operating Officer of Veeco
Instruments Inc. (now Lambda Electronics, Inc.), the company from which the
Company acquired its business operations (the "Predecessor"). Mr. Braun joined
the Predecessor in 1966 as a Regional Sales Manager/Sales Engineer and held
numerous positions with the Predecessor, including Director of Marketing,
Director of Operations, and General Manager. Mr. Braun is a member of the board
of Semiconductor Equipment and Materials International, of which he was Chairman
of the Board in 1993.
Richard A. D'Amore has been a Director of the Company since January 1990.
Mr. D'Amore has been a General Partner of Hambro International Venture Fund II,
L.P. since 1982 and a General Partner of North Bridge Venture Partners since
1992. In addition to the Company, Mr. D'Amore is a director of Solectron
Corporation and Xionics Document Technologies.
Joel A. Elftmann has been a Director of the Company since May 1994.
Mr. Elftmann has been the Chairman of the Board and President of FSI
International ("FSI"), a manufacturer of semiconductor processing
3
<PAGE>
products, since 1983. From August 1983 through August 1989, and from May 1991
through the present, he also served as Chief Executive Officer of FSI.
Dr. Paul R. Low has been a Director of the Company since May 1994. Dr. Low
has been the President and Chief Executive Officer of PRL Associates, a
technology consulting firm, since founding the firm in 1992. Previously, Dr. Low
was Vice President-General Manager, Technology Products for International
Business Machines, Inc. ("IBM") from 1989 through 1992 and a member of IBM's
Management Board from 1990 to 1992. Dr. Low is a director of Applied Materials
Corporation, Integrated Packaging Assembly Corp., Solectron Corporation, VLSI
Technology and Xionics Document Technologies.
Walter J. Scherr has been a Director of the Company since January 1990.
Since December 1995 Mr. Scherr has been employed by the Company as a consultant.
From December 1993 through December 1995 he was Executive Vice President of the
Company. From January 1990 through December 1993, he was the Chief Financial
Officer of the Company. Mr. Scherr joined the Predecessor in 1986 as the General
Manager of the Predecessor's UPA Technology division of the Predecessor's
Instrument Group. Prior to joining the Predecessor, Mr. Scherr was the principal
and founder of Visual Sciences, Inc./Panafax (the first publicly traded
facsimile company); prior to that, he held a variety of other financial and
operating management positions with Litton Industries and Sperry Gyroscope Co.
James C. Wyant has been a director of the Company since July 1997. From
1984 to July 1997, Dr. Wyant was Chairman of the Board and President of Wyko
Corporation. Dr. Wyant has been a Professor of Optical Sciences at the
University of Arizona since 1974. Prior to joining the faculty at the University
of Arizona, Dr. Wyant spent six years at the Itek Corporation, first as an
optical engineer and later, as manager of advanced optical techniques.
Thomas A. Cully has been Assistant Treasurer of the Company since November,
1997 and was appointed an executive officer in January 1998. Prior to November,
1997, Mr. Cully was employed in various other financial management positions
within the Company. Mr. Cully was employed by the Predecessor from 1979 to 1991,
where he held the position of Manager of Internal Audit; prior to that, he held
various audit positions with Ernst & Young LLP from 1972 to 1979.
Dr. Don R. Kania Ph.D. has been Chief Technology Officer of the Company
since January 1998. Starting in 1993, Dr. Kania was a senior manager at Lawrence
Livermore Laboratory. There he directed the Advanced Microtechnology Program in
the development of advanced sensors for data storage, extreme ultraviolet
lithography for semiconductor manufacturing and several other leading-edge
technologies. From 1991 to 1993, Dr. Kania was Research Director at Crystallume,
a thin film diamond company. Dr. Kania's other experience includes nine years of
research experience at the Department of Energy's Los Alamos and Livermore
Laboratories.
John P. Kiernan has been Corporate Controller of the Company since
February 1995. Prior to joining the Company, Mr. Kiernan was an Audit Senior
Manager at Ernst & Young LLP from October 1991 through January 1995 and held
various audit staff positions with Ernst & Young LLP from June 1984 through
September 1991.
Emmanuel N. Lakios has been Executive Vice President of Worldwide Field
Operations since October, 1997. From June 1991 to October 1997 Mr. Lakios had
been Vice President and General Manager of Process Equipment. Prior to 1991,
Mr. Lakios was employed in various other positions within the Company.
Mr. Lakios joined the Predecessor in June 1984 as an engineer and held positions
of Program Manager, Product Marketing Manager and Director of Engineering.
Robert P. Oates has been Vice President and General Manager-Industrial
Measurement Products since March 1995. From September 1994 until March 1995,
Mr. Oates had been Vice President and General Manager-XRF Thickness Measurement
Systems of the Company, and he was Vice President and Treasurer of the Company
from January 1993 through September 1994. From January 1990 through
December 1992, he was
4
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Assistant Treasurer of the Company. Mr. Oates was employed by the Predecessor
from 1976 to 1990, where he held a variety of financial positions.
David S. Perloff Ph.D. has been President of Veeco Process Metrology since
October 1997. Dr. Perloff was the founder of Prometrix Corporation in 1983, and
served as its President until its acquisition by Tencor Instruments in 1993. At
Tencor, he held the position of Vice President and General Manager of the Film
Measurement Division until April 1996. Earlier, Dr. Perloff held various
management positions at Corning Glass Works Signetics and N.V. Philips in the
period 1969-1983.
John F. Rein, Jr. has been Vice President-Finance and Chief Financial
Officer of the Company since December 1993, and became Treasurer and Secretary
of the Company in October 1994. Prior to joining the Company, Mr. Rein served
for eight years as Vice President-Controller for Axsys Technologies, Inc.
(formerly known as Vernitron Corporation). From 1979 to 1986, Mr. Rein was
Treasurer of Industrial General Corporation; prior to that, he was on the audit
staff of Ernst & Young LLP.
Francis Steenbeke has been Vice President-International Sales and Marketing
of the Company since January 1990. Mr. Steenbeke joined the Predecessor in 1968
as a sales engineer and held a variety of general management and sales positions
with the Predecessor until January 1990.
5
<PAGE>
Item 11. Executive Compensation
Executive Compensation
The following table sets forth a summary of annual and long-term
compensation awarded to, earned by, or paid to the Chief Executive Officer of
Veeco and each of the four most highly compensated executive officers (as
defined in Rule 3b-7 promulgated under the Securities Exchange Act) of Veeco
(other than the Chief Executive Officer) whose total annual salary and bonus for
the year ended December 31, 1997 was in excess of $100,000 (collectively, the
"Named Officers"):
<TABLE>
<CAPTION>
Annual Compensation
-------------------
Long Term
Compensation
Awards
Other Annual Securities
Compensa- Underlying All Other
Year Salary(1) Bonus(2) tion(3) Options(#) Compensation
---- --------- -------- ------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Edward H. Braun................... 1997 $315,131 $185,000 $10,200 60,000 $2,352(4)(5)
Chairman, Chief Executive 1996 288,950 55,000 10,200 12,000 1,800(4)
Officer and President 1995 274,918 108,000 10,200 25,000 1,800(4)
Emmanuel N. Lakios................ 1997 185,539 120,000 8,400 32,000 1,605(4)(5)(6)
Executive Vice President of 1996 143,720 242,033 8,400 12,000 2,094(4)(5)(6)
Field Operations 1995 125,650 165,500 8,400 35,000 6,981(4)(5)(6)
John F. Rein, Jr.................. 1997 175,480 80,000 8,400 42,000 2,847(4)(5)(6)
Vice President- Finance, Chief 1996 151,186 30,000 8,400 10,000 2,259(4)(5)(6)
Financial Officer, Treasurer 1995 140,150 60,000 8,400 20,000 1,926(4)(5)(6)
and Secretary
Francis Steenbeke (7).............. 1997 147,570 40,000 44,400(8) 10,000 -
Vice President- International 1996 142,910 40,000 44,400(8) 8,000 -
Sales and Marketing 1995 148,828 60,000 36,663(8) 15,000 -
Robert P. Oates.................... 1997 133,240 5,000 8,400 10,000 1,867(4)(5)(6)
Vice President and General 1996 123,700 7,575 8,400 5,000 1,853(4)(5)(6)
Manager - Industrial 1995 119,769 10,000 8,400 15,000 1,838(4)(5)(6)
Measurement Products
Dr. Timothy J. Stultz............. 1997 178,729 - 38,400 20,000 2,490(4)(5)(6)
Vice President and General 1996 165,769 25,000 70,090(9) 10,000 2,365(4)(5)(6)
Manager- Process Metrology- 1995 147,663 60,000 24,214(9) 15,000 1,679(4)(5)(6)
Santa Barbara
</TABLE>
- --------------
(1) Amounts shown include the dollar value of base salary (cash and
non-cash) earned and received by the Named Officers.
(2) Bonuses listed for 1997 include bonuses for the year ended
December 31, 1997, all or part of which were paid in March 1998.
Bonuses listed for 1996 include bonuses for the year ended
December 31, 1996, all or part of which were paid in February 1997.
Bonuses listed for 1995 include bonuses for the year ended
December 31, 1995, all or part of which were paid in February 1996.
6
<PAGE>
(3) Unless otherwise described in other notes to this table,
reflects reimbursement for automobile-related expenses.
Does not include any discount a Named Officer received on
the purchase of the common stock, $.01 par value per
share, of Veeco (the "Veeco Common Stock") under the Veeco
Instruments Inc. Employee Stock Purchase Plan since
full-time employees generally are eligible to participate
in such plan.
(4) Reflects payments by Veeco of premiums for group term life
insurance.
(5) Reflects contributions by Veeco to Veeco's 401(k) Plan.
(6) Reflects payments by Veeco of premiums for supplemental
long-term disability insurance.
(7) Certain components of Mr. Steenbeke's compensation have
been paid in French Francs. In 1997, Mr. Steenbeke was
paid 859,740 French Francs in salary. In 1996,
Mr. Steenbeke was paid 813,156 French Francs in salary and
227,600 French Francs in bonus. In 1995, Mr. Steenbeke
was paid 742,560 French Francs in salary, 302,200 French
Francs in bonus and 90,525 French Francs as a portion of
his other annual compensation.
(8) For 1997 and 1996, includes an $8,400 car allowance and a
$36,000 housing allowance paid to Mr. Steenbeke. For 1995,
includes a $15,000 housing allowance and a $21,663
automobile allowance (the equivalent of $18,163 of which
was paid in French Francs) paid to Mr. Steenbeke. The
1996 allowances and 1995 allowances (other than the
$18,163 (or 90,525 French Francs) automobile allowance)
were provided because Mr. Steenbeke was required to
perform services for Veeco in the United States for the
entire year in 1997 and 1996 and for five months during
1995.
(9) In addition to a reimbursement of $8,400 in each of 1995,
1996 and 1997 for automobile-related expenses, Dr. Stultz
was paid, in connection with his relocation to Santa
Barbara, California, a housing allowance of $15,814 in
1995, $61,690 in 1996 and $30,000 in 1997. See also "Item
13. Certain Relationships and Related Transactions".
7
<PAGE>
The following table sets forth certain information concerning individual
grants of stock options made during 1997 to the Named Officers. Also reported
are potential realizable values of each such stock option at assumed annual
rates of stock price appreciation for the term of the option representing the
product of (a) the difference between: (i) the product of the closing price per
share of Veeco Common Stock as reported by NASDAQ on the date of the grant
($25.625 on January 17, 1997 and $29.25 on April 25, 1997, respectively) and the
sum of one plus the adjusted stock price appreciation rate (5% and 10%)
compounded annually over the term of the option (10 years) and (ii) the exercise
price of the option ($24.875 for grants on January 17, 1997 and $31.00 for
grants on April 25, 1997); and (b) the number of shares of Veeco Common Stock
underlying the option grant at December 31, 1997.
Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants Option Term($)
----------------- --------------
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise or
Options/SARs Employees in Base Price Per Expiration
Name Granted(1) Fiscal Year Share($)(2) Date(3) 5% 10%
- ---- ---------- ----------- ----------- ------- --- ---
<S> <C> <C> <C> <C> <C> <C>
Edward H. Braun................ 20,000 3.03% $24.875 01/17/07 $337,300 $ 831,700
Edward H. Braun................ 40,000 6.06% $31.00 04/25/07 $665,600 $ 1,794,400
Emmanuel N. Lakios............. 12,000 1.82% $24.875 01/17/07 $202,380 $ 499,020
Emmanuel N. Lakios............. 20,000 3.03% $31.00 04/25/07 $332,800 $ 897,200
John F. Rein, Jr............... 12,000 1.82% $24.875 01/17/07 $202,380 $ 499,020
John F. Rein, Jr............... 30,000 4.55% $31.00 04/25/07 $499,200 $ 1,345,800
Francis Steenbeke.............. 10,000 1.52% $24.875 01/17/07 $168,650 $ 415,850
Robert P. Oates................ 10,000 1.52% $24.875 01/17/07 $168,650 $ 415,850
Dr. Timothy J. Stultz.......... 10,000 1.52% $24.875 01/17/07 $168,650 $ 415,850
Dr. Timothy J. Stultz.......... 10,000 1.52% $31.000 04/25/07 $166,400 $ 448,600
</TABLE>
- -----------
(1) On January 17, 1997 and April 25, 1997, respectively, pursuant to
the Veeco Instruments Inc. Amended and Restated 1992 Employees'
Stock Option Plan (the "Employees' Plan") options to acquire an
aggregate of 146,300 shares and 120,000 shares, respectively, of
Veeco Common Stock were granted to certain employees of Veeco,
including the Named Officers. The options granted to the Named
Officers become exercisable as follows: (i) for one-third of the
shares covered thereby, on the first anniversary of the grant date;
(ii) for an additional one-third of the shares covered thereby, on
the second anniversary of the grant date; and (iii) for the
remaining shares covered thereby, on the third anniversary of the
grant date.
(2) Represents the closing price per share of the Veeco Common Stock as
reported by NASDAQ on the last date preceding the date of grant on
which a sale was reported.
(3) Options may terminate at an earlier date upon the occurrence of
certain events.
8
<PAGE>
The following table sets forth certain information concerning the number of
shares of Veeco Common Stock acquired upon the exercise of options by the Named
Officers during 1997 and the value realized upon such exercises determined by
calculating the positive spread between the exercise price of the options
exercised and the closing price of the Veeco Common Stock on the date of
exercise. Also reported are the number of options to purchase Veeco Common Stock
held by the Named Officers as of December 31, 1997 and values for "in-the-money"
options that represent the positive spread between the exercise price of the
outstanding options ($4.50 to $14.50) and the closing price ($22.00) of the
Veeco Common Stock on December 31, 1997 as reported by NASDAQ.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Value of Unexercised
Number of Number of Unexercised In-the-Money Options at
Securities Options at Fiscal Year-End Fiscal Year-End
Acquired on Value -------------------------- ---------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- --------- -------- ----------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Edward H. Braun........... - - 20,666 76,334 $173,744 $131,881
Emmanuel N. Lakios........ 31,222 $765,926 - 51,667 - $180,003
John F. Rein, Jr.......... - - 46,666 55,334 $709,995 $107,505
Francis Steenbeke......... 12,667 $311,300 - 20,333 - $83,123
Robert P. Oates........... 22,120 $792,460 11,666 18,334 $ 98,703 $68,114
Dr. Timothy J. Stultz..... 15,000 $505,000 13,333 31,667 $111,248 $93,128
</TABLE>
Director Compensation
Directors, other than those who are employees of Veeco, receive a per
meeting fee of $2,000 for attendance at Board of Directors and committee
meetings. In addition, each of the current non-employee directors received
16,999 options, in the aggregate, to purchase Veeco Common Stock pursuant to
the Veeco Instruments Inc. 1994 Stock Option Plan for Outside Directors (the
"Directors Plan") and under such plan each non-employee director who meets the
eligibility criteria for such plan will receive an annual grant of 7,000
options. Mr. Braun, the Chairman, Chief Executive Officer and President of
Veeco, receives no compensation for his service as a director.
Veeco is party to an agreement with Walter J. Scherr, a director of Veeco,
pursuant to which he is employed as a consultant to Veeco with respect to
acquisition and new business opportunities, as well as other matters. During
1997, Mr. Scherr received $78,967 pursuant to such consulting arrangement. On
April 25, 1997, Mr. Scherr also received options to purchase 20,000 shares of
Veeco Common Stock at an exercise price of $31.00 per share pursuant to the
Employees' Plan. Mr. Scherr also received a discretionary additional payment of
$35,000 in consideration for services with respect to mergers and acquisitions
activities in 1997, which payment was made in March 1998.
Compensation Committee Interlocks and Insider Participation
Veeco's Compensation Committee is comprised of Messrs. D'Amore, Elftmann
and Low.
9
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COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Compensation Philosophy
The Compensation Committee of the Board of Directors is comprised of
three outside, non-employee directors. The Committee reviews and approves
all of Veeco's executive compensation programs. The Compensation program is
based on the following principles:
1) Executive officers' compensation should be tied to annual
performance goals that maximize Veeco Stockholder value.
2) Veeco emphasizes variable incentive compensation in order to ensure
continuously improving corporate performance and to align the interests of
executive officers with those of stockholders of Veeco ("Veeco
Stockholders").
3) Compensation must be competitive in order to attract, motivate and
retain the management talent needed to achieve Veeco's business objectives.
In determining competitive levels, the committee reviews information of
comparative companies from both independent survey data and public company
filings.
Components of Compensation
Veeco's executive compensation program consists of three principal
elements:
1) Base Salary-Base salaries have been set within salary ranges based
on compensation reports published by Radford Associates and Alexander and
Alexander Consulting Group and a study performed by Ernst & Young LLP on
comparable size and type manufacturing companies. Individual salary
increases are based on the officer's contribution to Veeco and the
relationship of current pay to the current value of the job.
2) Annual Incentive Awards-Annual incentive awards are based on
performance against objectives in the calendar year and are ordinarily
payable in the first quarter of the succeeding year. Incentive awards for
executive officers are a percentage of base salary. The percentage can
range to up to 80% of base salary for the chief executive officer and up to
60% of base salary for the other executive officers for achievement of 110%
of business plan objectives. In exceptional circumstances, when Veeco or a
business unit exceeds 110% of planned objectives, the Compensation
Committee may selectively make incentive awards at a higher level. Annual
incentive awards are based on selected financial criteria tied to the
annual business plan. In 1997, this plan was objectively based on operating
income criteria and subjectively on the ability of executive management to
strategically position Veeco for growth.
3) Stock Option Grants-Stock option grants are awarded as a
recognition of exceptional current performance and an expectation of
continued high quality contribution to enhancing Veeco Stockholder value.
The committee believes that stock options encourage officers to relate
their long-term economic interests to those of other Veeco Stockholders.
Stock options are granted at fair market value on the date of grant and
vest over three years. The options have an exercise period of ten years
from the date of grant.
Chief Executive Officer's Compensation
The compensation of Veeco's Chief Executive Officer, Edward H. Braun, is
determined by the Compensation Committee in accordance with the policies
described above relating to all executive officers' compensation. In particular,
the Compensation Committee established Mr. Braun's base salary after an
evaluation of his personal performance and the committee's objective to have his
base salary comparable with salaries being paid to similarly situated chief
executive officers. Mr. Braun's bonus was based upon Veeco's operating income
achieved compared with the 1997 business plan, as well as development of and
progress in Veeco's long-term goals and strategies.
10
<PAGE>
Policy on Deductibility of Compensation
Section 162(m) of the Code limits to $1,000,000 per year Veeco's tax
deduction for compensation paid to each of the Named Officers, unless certain
requirements are met. The Compensation Committee believes it unlikely in the
short term that such limitation will affect Veeco. The Compensation Committee's
present intention is to structure executive compensation so that it will be
fully deductible, while maintaining flexibility to take actions which it deems
to be in the best interest of Veeco and the Veeco Stockholders but which may
result in Veeco paying certain items of compensation that may not be fully
deductible.
Submitted by the Compensation Committee:
Richard A. D'Amore
Paul R. Low
Joel A. Elftmann
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the beneficial
ownership of Veeco Common Stock as of April 15, 1998 (unless otherwise specified
below) by (i) each person known by Veeco to own beneficially more than five
percent of the outstanding shares of Veeco Common Stock, (ii) each director of
Veeco, and (iii) all executive officers and directors of Veeco as a group.
Unless otherwise indicated, Veeco believes that each of the persons or entities
named in the table exercises sole voting and investment power over the shares
that each of them beneficially owns, subject to community property laws where
applicable.
<TABLE>
<CAPTION>
Shares of Common Stock
Beneficially Owned(1)
----------------------
Percent of
Total Shares
Name of Beneficial Owner Shares Options(2) Total Outstanding
- ------------------------ ------ ---------- ----- -----------
<S> <C> <C> <C> <C>
James Wyant(3)................................................ 2,100,127 - 2,100,127 23.4%
John B. Hayes(4).............................................. 763,683 - 763,683 8.5
EQSF Advisers, Inc.(5)........................................ 464,200 - 464,200 5.2
Edward H. Braun............................................... 223,019 52,999 276,018 3.1
Walter J. Scherr.............................................. - 16,665 16,665 *
Richard A. D'Amore............................................ 16,701 16,999 33,700 *
Paul R. Low................................................... - 16,999 16,999 *
Joel A. Elftmann(6)........................................... 2,000 16,999 18,999 *
John F. Rein, Jr.............................................. 1,328 70,666 71,994 *
Francis Steenbeke............................................. 74,339 10,999 85,338 *
Emmanuel N. Lakios............................................ 937 26,332 27,269 *
Robert P. Oates............................................... 10,617 21,666 32,283 *
Dr. Timothy J. Stultz....................................... 589 28,332 28,921 *
All Executive Officers and Directors
as a Group (12 persons)....................................... 2,430,610 284,698 2,715,308 29.4%
</TABLE>
- --------------
* Denotes less than a 1% interest.
(1) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days of April 15, 1998 upon the exercise
of warrants and/or stock options. Each person's percentage ownership is
determined
11
<PAGE>
by assuming that warrants and stock options held by such person (but not
those held by any other person) which are exercisable within 60 days of
April 15, 1998 have been exercised.
(2) Represents stock options exercisable within 60 days of April 15, 1998.
(3) Mr. Wyant shares voting and dispositive power over 2,100,127 shares of
Veeco Common Stock with his wife, Louise Wyant.
(4) This information is based on a Schedule 13D filed with the Commission
in August 1997. Mr. Hayes' business address is c/o Wyko Corporation, 2650
East Elvira Road, Tucson, Arizona 85706.
(5) This information is based solely on a Schedule 13G filed with the
Commission in February 1998. EQSF Advisers, Inc. beneficially owns and
holds sole dispositive and voting power over 464,200 shares of Veeco Common
Stock. The address of EQSF Advisers, Inc. is 767 Third Avenue, New York, NY
10017.
(6) Includes 2,000 shares of the Veeco Common Stock held by the Elftmann
Family Limited Partnership, a family limited partnership of which
Mr. Elftmann is the general partner.
Item 13. Certain Relationships and Related Transactions
On January 17, 1997, options to purchase shares of the Veeco Common
Stock were issued to each of the following executive officers and significant
employees in the following amounts pursuant to the Employee's Plan, all at an
exercise price of $24.875 per share (the fair market value at the date of
grant): Edward H. Braun, options to purchase 20,000 shares; John F. Rein,
Jr., options to purchase 12,000 shares; Francis Steenbeke, options to
purchase 10,000 shares; Emmanuel N. Lakios, options to purchase 12,000
shares; Robert P. Oates, options to purchase 10,000 shares; Dr. Timothy J.
Stultz, options to purchase 10,000 shares; John P. Kiernan, options to
purchase 2,000 shares; and Thomas A. Cully, options to purchase 500 shares.
On April 25, 1997, options to purchase shares of the Veeco Common Stock were
issued to each of the following executive officers in the following amounts
pursuant to the Employees' Plan, all at an exercise price of $31.00 per share
(the fair market value at the date of grant): Edward H. Braun, options to
purchase 40,000 shares; John F. Rein, Jr., options to purchase 30,000 shares;
Emmanuel N. Lakios, options to purchase 20,000 shares; and Dr. Timothy J.
Stultz, options to purchase 10,000 shares. Also on April 25, 1997, options to
purchase 20,000 shares at an exercise price of $31.00 per share were issued
to Walter J. Scherr under the Employees' Plan. On December 12, 1997, pursuant
to the Employees' Plan, options to purchase 90,000 shares were issued to
David S. Perloff at an exercise price of $26.875 per share (fair market value
on the date of grant). On January 5, 1998, pursuant to the Employees' Plan,
options to purchase 25,000 shares were issued to Don R. Kania at an exercise
price of $24.4375 per share (fair market value on date of grant).
In May 1997, 21,000 options, in the aggregate, were granted to the
non-employee directors pursuant to the Directors Plan.
An involuntary petition for relief under Chapter 7 of Title 11 of the
United States Code was filed against Peak Systems, Inc. (case no. 93-48654)
in the United States Bankruptcy Court for the Northern District of California
on December 10, 1993, and an Order for Relief was granted by the Court to the
petitioning creditors on January 13, 1994. As of April 15, 1998, such case
remained open. Dr. Timothy J. Stultz, Veeco's Vice President and General
Manager-Process Metrology-Santa Barbara, was President and Chief Executive
Officer of Peak Systems, Inc. from September 1983 to November 1993.
In May 1996, Veeco made a loan to Dr. Timothy J. Stultz to finance the
purchase of his home in the principal sum of $100,000, with simple interest on
unpaid principal at the rate of 5% per annum. Interest is payable annually, on
each January 5 during the term of the loan. The principal and all accrued but
unpaid interest will be due in full in one lump sum on January 5, 2001. The loan
is secured by a second mortgage on the property. Dr. Stultz prepaid $20,000 of
principal in 1997.
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<PAGE>
Signatures
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, as amended, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
VEECO INSTRUMENTS INC.
By: /s/ Edward H. Braun
--------------------
Edward H. Braun
Chairman, Chief Executive Officer
and President
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