<PAGE>
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
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, 1999
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. [X]
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 1, 2000 as
reported on The Nasdaq National Market, was approximately $1,706,294,879. Shares
of Common Stock held by each officer and director and by each person who 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 1, 2000, the Registrant had 18,082,518 outstanding 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, 1999, filed with the Securities and Exchange Commission (the
"Commission") on March 15, 2000, to include certain information which was not
previously included therein.
VEECO INSTRUMENTS INC.
ANNUAL REPORT ON FORM 10-K/A
TABLE OF CONTENTS
PART III
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Item 10. Directors and Executive Officers of the Registrant 2
Item 11. Executive Compensation 5
Item 12. Security Ownership of Certain Beneficial Owners and Management 11
Item 13. Certain Relationships and Related Transactions 12
</TABLE>
1
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The Directors and Executive Officers of Veeco, and their ages, as of March
20, 2000, are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
Edward H. Braun 60 Director, Chairman, Chief Executive Officer and President (1)
Richard A. D'Amore 46 Director (2) (3)
Joel A. Elftmann 60 Director (2)
Heinz K. Fridrich 67 Director (2)
Dr. Paul R. Low 67 Director (1) (3)
Roger D. McDaniel 61 Director (1) (3)
Irwin H. Pfister 55 Director (2)
Walter J. Scherr 74 Director
Don R. Kania, Ph.D. 45 Vice President, General Manager Metrology Group-California
John P. Kiernan 38 Vice President, Corporate Controller
Lloyd J. LaComb, Jr., Ph.D. 39 Vice President, General Manager Metrology Group-Arizona
Emmanuel N. Lakios 38 President, Process Equipment Group
Robert P. Oates 46 Vice President, General Manager Industrial Measurement Group
John F. Rein, Jr. 53 Vice President, Finance, Chief Financial Officer, Treasurer and Secretary
Joseph Z. Rivlin 64 Executive Vice President, Worldwide Field Operations
Francis Steenbeke 54 Vice President, International Sales and Marketing
</TABLE>
- ----------
(1) Member of the Nominating Committee
(2) Member of the Audit Committee
(3) Member of the Compensation Committee
EDWARD H. BRAUN has been a Director, Chairman, Chief Executive Officer
and President of Veeco 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 Veeco 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 ("SEMI"), of which he was Chairman of the Board in
1993.
RICHARD A. D'AMORE has been a Director of Veeco since January 1990. Mr.
D'Amore has been a General Partner of North Bridge Venture Partners since 1992.
In addition to Veeco, Mr. D'Amore is a director of Solectron Corporation,
Silverstream Software and Centra Software.
JOEL A. ELFTMANN has been a Director of Veeco since May 1994. Mr.
Elftmann is a co-founder of and has been the Chairman of the Board of FSI
International ("FSI"), a manufacturer of semiconductor processing products,
since 1983. From August 1983 through August 1989, and from May 1991 through
December, 1999, he also served as Chief Executive Officer of FSI. From May 1991
to January 1998 and from August 1999 to December 1999, he also served as
President of FSI.
HEINZ K. FRIDRICH has been a Director of Veeco since May 1998. Mr.
Fridrich is a courtesy professor in the
2
<PAGE>
Department of Industrial and Systems Engineering of the University of
Florida. He joined the University of Florida in 1994 after 43 years with IBM,
including serving as Vice President and General Manager of IBM's largest
development and manufacturing site for semiconductors and electronic
packaging, and most recently as IBM Vice President responsible for worldwide
manufacturing and quality. He is also a director of Central Hudson Gas &
Electric Company and Solectron Corp.
DR. PAUL R. LOW has been a Director of Veeco since May 1994. Dr. Low
has been 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 IBM from 1989
through 1992 and a member of IBM's Management Board from 1990 to 1992. Dr.
Low is also a director of Applied Materials Corporation, Integrated Packaging
Assembly Corp., Solectron Corporation, VLSI Technology and Xionics Document
Technologies.
ROGER D. MCDANIEL has been a Director of Veeco since May 1998. From
1997 to April 1999, Mr. McDaniel was President and Chief Executive Officer of
SpeedFam-IPEC, Inc., a leading manufacturer of chemical-mechanical
planarization (CMP) equipment for the semiconductor industry. Through August
1996, Mr. McDaniel was Chief Executive Officer of MEMC Electronic Materials,
Inc., the world's second-largest producer of silicon wafers. Mr. McDaniel is
a Director and past Chairman of SEMI. He also is a director of SpeedFam-IPEC.
IRWIN H. PFISTER has been a Director of Veeco since May 1998. Mr.
Pfister is Executive Vice President of Schlumberger Ltd. He is responsible
for the management of the Test and Transactions Group, an international
business segment serving the semiconductor, financial, telecom and IP network
domains. Mr. Pfister joined Schlumberger in May 1986 and has held several
management positions. From January 1990 to June 1997, Mr. Pfister was
President of the Semiconductor Solutions Group.
WALTER J. SCHERR has been a Director of Veeco since January 1990.
Since December 1995, Mr. Scherr has been employed by Veeco as a consultant.
From December 1993 through December 1995, he was Executive Vice President of
Veeco. From January 1990 through December 1993, he was the Chief Financial
Officer of Veeco. Mr. Scherr joined the Predecessor in 1986 as the General
Manager of the 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.
DON R. KANIA, PH.D. has been Vice President, General Manager of the
California Metrology Group since May 1999. Prior thereto, he was Chief
Technology Officer of Veeco since January 1998. Starting in 1993, Dr. Kania
was a senior manager at Lawrence Livermore Laboratory where 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 Vice President, Corporate Controller of
Veeco since November 1998. From February 1995 to November 1998, Mr. Kiernan
was Corporate Controller of Veeco. Prior to joining Veeco, 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.
LLOYD J. LACOMB, JR., PH.D. has been the Vice President, General
Manager of the Arizona Metrology Group since
3
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October 1998. From March 1998 to September 1998 Mr. LaComb was the Vice
President of Engineering & Operations, and from July 1997 to March 1998 he
was the Director of Engineering for the Arizona Metrology Group. Prior to
joining Veeco, Mr. LaComb was the Director of Engineering for Alara from
January 1997 to July 1997, the Director of Advanced Development for Tencor
Instruments from 1996 to 1997 and the Director of Engineering of Tencor
Instruments from 1995 to 1996.
EMMANUEL N. LAKIOS has been President, Process Equipment Group since
February 1998. From June 1997 to February 1998, Mr. Lakios was Executive Vice
President of Worldwide Field Operations. From June 1991 to June 1997, Mr.
Lakios was Vice President and General Manager of Process Equipment. Prior to
1991, Mr. Lakios was employed in various other positions within Veeco. 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, General Manager, Industrial
Measurement Group since March 1995. From September 1994 until March 1995, Mr.
Oates was Vice President and General Manager-XRF Thickness Measurement
Systems of Veeco, and he was Vice President and Treasurer of Veeco from
January 1993 through September 1994. From January 1990 through December 1992,
he was Assistant Treasurer of Veeco. Mr. Oates was employed by the
Predecessor from 1976 to 1990, where he held a variety of financial positions.
JOHN F. REIN, JR. has been Vice President-Finance and Chief
Financial Officer of Veeco since December 1993, and became Treasurer and
Secretary of Veeco in October 1994. Prior to joining Veeco, Mr. Rein served
for eight years as Vice President-Finance for Axsys Technologies, Inc. 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.
JOSEPH Z. RIVLIN has been Executive Vice President, Worldwide Field
Operations since July 1998. Prior to joining Veeco, Mr. Rivlin was Vice
President of Sales at Electro-Scientific Industries since 1994. From 1986 to
1994, he served as President and CEO of XRL, Inc., a semiconductor equipment
supplier.
FRANCIS STEENBEKE has been Vice President-International Sales and
Marketing of Veeco 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.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
The Board of Directors of Veeco has established an Audit Committee,
a Compensation Committee and a Nominating Committee. The Audit Committee
reviews the scope and results of the audit and other services provided by
Veeco's independent auditors. The Compensation Committee sets the
compensation levels of senior management and administers the Veeco
Instruments Inc. 1992 Employees' Stock Option Plan (the "Employees' Plan")
and the Veeco Instruments Inc. Employees Stock Purchase Plan. All members of
the Compensation Committee are (x) "Non-Employee Directors" within the
meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended
(the "Securities Exchange Act"), and (y) "outside directors" within the
meaning of Section 162(m)(4)(C) of the Internal Revenue Code of 1986, as
amended (the "Code") and any applicable regulations. The Nominating Committee
searches for persons qualified to serve on the Board of Directors and makes
recommendations to the Board of Directors with respect thereto. The
Nominating Committee will consider nominees recommended by Stockholders. No
formal procedures are required to be followed by Stockholders in submitting
such recommendations. The Audit Committee currently consists of Messrs.
D'Amore, Elftmann, Fridrich and Pfister. The Compensation Committee currently
consists of Messrs. D'Amore, Low and McDaniel. The Nominating Committee
currently consists of Messrs. Braun, Low and McDaniel. During the fiscal year
ended December 31, 1999, the Compensation Committee and the Nominating
Committee each met once and the Audit Committee met twice.
4
<PAGE>
During the fiscal year ended December 31, 1999, Veeco's Board of
Directors held seven meetings (including regularly scheduled and special
meetings). All of the current Directors attended at least 75% of the meetings
of the Board of Directors and of the Board of Directors committees of which
they were members during the fiscal year ended December 31, 1999.
Class I Directors hold office until the 2001 Annual Meeting of
Stockholders, Class II Directors hold office until the 2002 Annual Meeting of
Stockholders and Class III Directors hold office until the 2000 Annual
Meeting of Stockholders. Executive officers are appointed by the Board of
Directors and hold office until their successors are chosen and qualified,
subject to earlier removal by the Board of Directors.
ITEM 11. EXECUTIVE COMPENSATION.
EXECUTIVE COMPENSATION-ANNUAL 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 under the Securities Exchange Act) of Veeco other than
the Chief Executive Officer (collectively, the "Named Officers"):
ANNUAL COMPENSATION
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
SECURITIES
Name and OTHER ANNUAL UNDERLYING ALL OTHER
Principal Position YEAR SALARY BONUS(1) COMPENSATION(2) OPTIONS(#) COMPENSATION(3)
- -------------------------- ---- --------- -------- ------------ ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Edward H. Braun........... 1999 $396,625 $246,000 -- 100,000 $3,924
Chairman, Chief Executive 1998 344,875 50,000 -- 100,000 3,434
Officer and President 1997 315,131 185,000 -- 60,000 2,352
John F. Rein, Jr.......... 1999 215,000 90,000 -- 40,000 3,776
Vice President, Finance, 1998 200,000 30,000 -- 40,000 3,685
Chief Financial Officer, 1997 175,480 80,000 -- 42,000 2,847
Treasurer and Secretary
Emmanuel N. Lakios......... 1999 212,000 170,000 -- 40,000 2,970
President, Process Equipment 1998 200,000 20,000 -- 20,000 3,221
Group 1997 185,539 120,000 -- 32,000 1,605
Don R. Kania, Ph.D.......... 1999 202,538 73,000 46,896 (4) 30,000 1,976
Vice President, General 1998 172,500 50,000 -- 25,000 251
Manager Metrology Group 1997 -- -- -- -- --
California(5)
Joseph Z. Rivlin............. 1999 192,500 97,679 82,442 (6) 22,000 4,673
Executive Vice President 1998 88,943 81,130 -- 30,000 954
World Wide Field 1997 -- -- -- -- --
Operations(7)
</TABLE>
5
<PAGE>
- -------------------------
(1) Bonuses listed for a particular year represent bonuses paid with respect
to such year even though all or part of such bonuses may have been paid
during the first quarter of the subsequent year. Bonus amount includes
commissions paid to Mr. Rivlin.
(2) In accordance with the rules of the Securities and Exchange Commission,
other compensation in the form of perquisites and other personal
benefits has been omitted in those instances where such compensation
did not exceed the lesser of $50,000 or 10% of the total annual salary
and bonus for the executive officer for such fiscal year.
(3) Reflects payments by Veeco of premiums for group term life insurance and
contributions by Veeco to Veeco's 401(k) Plan and premiums for supplemental
long-term disability insurance, as applicable.
(4) Includes a $7,800 car allowance and a $39,096 relocation allowance paid
to Dr. Kania.
(5) Dr. Kania joined Veeco in January 1998.
(6) Includes an $8,400 car allowance and a $74,042 relocation allowance paid
to Mr. Rivlin.
(7) Mr. Rivlin joined Veeco in July 1998.
The following table sets forth certain information concerning
individual grants of stock options made during 1999 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 Common Stock as reported by the Nasdaq
National Market ("NASDAQ") on the date of the grant ($32.125 on June 23,
1999) 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 ($29.8125); and (b) the number of shares of
Common Stock underlying the option grant at December 31, 1999.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS/SARS EXERCISE OR PRICE APPRECIATION FOR
UNDERLYING GRANTED TO BASE PRICE OPTION TERMS ($)
OPTIONS/SARS EMPLOYEES IN PER EXPIRATION ------------------------
NAME GRANTED(1) FISCAL YEAR SHARE($)(2) DATE(3) 5% 10%
- ---- ---------- ----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Edward H. Braun 100,000 12.09% $29.8125 6/22/2009 $1,874,892 $4,751,345
John F. Rein, Jr. 40,000 4.84% $29.8125 6/22/2009 $749,957 $1,900,538
Emmanuel N. Lakios 40,000 4.84% $29.8125 6/22/2009 $749,957 $1,900,538
Don R. Kania, Ph.D. 30,000 3.63% $29.8125 6/22/2009 $562,468 $1,425,403
Joseph Z. Rivlin 22,000 2.66% $29.8125 6/22/2009 $412,476 $1,045,296
- -----------
</TABLE>
(1) Represents option grants made on June 23, 1999, pursuant to the
Employees' Plan. One-third of the options become exercisable on each
of the first three anniversaries of the grant date.
6
<PAGE>
(2) Represents the closing price per share of Common Stock as reported
by NASDAQ on the trading day immediately preceding the date of grant.
(3) Options may terminate at an earlier date upon the occurrence of
certain events.
The following table sets forth certain information concerning the
number of shares of Common Stock acquired upon the exercise of options by the
Named Officers during 1999 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 Common Stock on the date
of exercise. Also reported are the number of options to purchase Common Stock
held by the Named Officers as of December 31, 1999 and values for
"in-the-money" options that represent the positive spread between the
exercise price of the outstanding options ($14.50 to $31.00) and the closing
price ($46.8125) of the Common Stock on December 31, 1999 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
SECURITIES OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END
ACQUIRED VALUE ----------------------------- ----------------------------
NAME ON EXERCISE REALIZED EXERCISEABLE UNEXERCISEABLE EXERCISEABLE UNEXERCISEABLE
- ---- ----------- -------- ------------ -------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Edward H. Braun -- -- 77,332 186,668 $1,603,808 $3,577,942
John F. Rein, Jr. 15,000 $593,438 48,833 80,667 $1,038,253 $1,534,216
Emmanuel Lakios 10,000 $239,250 18,000 64,001 $331,305 $1,177,354
Don R. Kania, Ph.D. 3,000 $86,063 5,333 46,667 $119,326 $882,924
Joseph Z. Rivlin 10,000 $64,688 -- 42,000 -- $845,250
</TABLE>
DIRECTOR COMPENSATION
Directors, other than those who are employees of Veeco, receive a
per meeting fee of $2,000 for attendance in person at Board of Directors and
committee meetings (where such committee meetings are held apart from Board
meetings) and a fee of $1,000 for participation in telephonic Board or
committee meetings. Pursuant to the Veeco Instruments Inc. 1994 Stock Option
Plan for Outside Directors (the "Directors' Plan"), each non-employee
Director who meets the eligibility criteria for such plan receives an annual
grant of 7,000 options. In 1999, Richard A. D'Amore, Joel A. Elftmann, Heinz
K. Fridrich, Dr. Paul R. Low, Roger D. McDaniel and Irwin H. Pfister each
received grants 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 acquisitions and new business opportunities, as well as other matters. Mr.
Scherr received $132,500 pursuant to such consulting arrangement with respect
to 1999. On June 23, 1999, Mr. Scherr also received options to purchase 7,000
shares of Common Stock at an exercise price of $29.8125 per share pursuant to
Employees' Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Veeco's Compensation Committee is comprised of Messrs. D'Amore, Low
and McDaniel.
7
<PAGE>
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:
a. Executive officers' compensation should be tied to annual
performance goals that maximize stockholder value.
b. Veeco emphasizes variable incentive compensation in order to
ensure continuously improving corporate performance and to
align the interests of executive officers with those of the
stockholders.
c. 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:
a. Base Salary-Base salaries have been set within salary ranges
based on compensation reports published by Radford Associates
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.
b. 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 100% of base salary for the chief executive
officer and up to 80% of base salary for the other
executive officers for achievement of 120% of business plan
objectives. In exceptional circumstances, when Veeco or a
business unit exceeds 120% 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 1999, this plan was objectively based on operating
income criteria and subjectively on the ability of
executive management to strategically position Veeco for
growth.
c. 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 Stockholder value. The committee believes that stock
options encourage officers to relate their long-term economic
interests to those of other 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.
8
<PAGE>
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 received a bonus of $246,000 in
1999. Mr. Braun's bonus was based upon the financial performance of Veeco
compared to that of Veeco's peer companies, as well as the strategic
initiatives and acquisitions accomplished during the year, including the
merger with Ion Tech, Inc.
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 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
Roger D. McDaniel
9
<PAGE>
[GRAPH]
<TABLE>
<CAPTION>
QUARTERLY PERIOD VEECO NASDAQ
ENDING INSTRUMENTS INC. PEER GROUP INDEX MARKET INDEX
------ --------------- ---------------- ------------
<S> <C> <C> <C>
12/31/94 100.00 100.00 100.00
3/31/95 138.27 128.20 102.95
6/30/95 165.43 186.81 112.63
9/30/95 259.26 206.75 125.49
12/31/95 143.21 152.20 124.48
3/31/96 148.15 130.07 130.23
6/30/96 139.51 113.77 139.88
9/30/96 143.21 107.60 143.74
12/31/96 217.28 140.48 150.50
3/31/97 290.12 170.13 142.85
6/30/97 382.72 241.65 169.00
9/30/97 624.07 328.51 197.04
12/31/97 217.28 198.86 184.62
3/31/98 367.28 226.09 216.37
6/30/98 245.68 184.77 221.96
9/30/98 311.11 152.52 200.04
12/31/98 524.69 257.68 260.05
3/31/99 364.81 353.82 290.54
6/30/99 335.80 433.22 316.14
9/30/99 276.54 452.69 321.29
12/31/99 462.35 750.13 474.52
</TABLE>
Information is presented beginning with December 31, 1994 and assumes $100
invested on December 31, 1994 and
10
<PAGE>
reinvestment of dividends, if any.
The peer group chosen by Veeco consists of the following corporations:
Applied Materials, Inc., KLA-Tencor Corporation, Kulicke & Soffa Ind., LAM
Research Corp., Mattson Technology, Inc., Novellus Systems, Inc., Silicon
Valley Group, Inc. and Ultratech Stepper, Inc.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information regarding the
beneficial ownership of Common Stock as of March 20, 2000 (unless otherwise
specified below) by (i) each person known by Veeco to own beneficially more
than five percent of the outstanding shares of Common Stock, (ii) each
director of Veeco, (iii) each of the Named Officers and (iv) 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)
----------------------------------- PERCENTAGE OF TOTAL
NAME OF BENEFICIAL OWNER SHARES OPTIONS TOTAL SHARES OUTSTANDING
- ------------------------ ------ ------- -------- -------------------
<S> <C> <C> <C> <C>
5% or Greater Stockholder:
- --------------------------
James P. Wyant, Ph.D. (2) 975,127 - 975,127 5.4%
Directors:
- ----------
Edward H. Braun 125,019 97,333 222,352 1.2%
Richard A. D'Amore 16,701 30,999 47,700 *
Joel A. Elftmann (3) 2,000 30,999 32,999 *
Heinz K. Fridrich - 14,000 14,000 *
Paul R. Low - 30,999 30,999 *
Roger McDaniel - 14,000 14,000 *
Irwin H. Pfister - 14,000 14,000 *
Walter J. Scherr - 18,668 18,668 *
Named Executive Officers
- ------------------------
Don R. Kania, Ph.D. - 13,666 13,666 *
Emmanuel N. Lakios 1,232 28,667 29,899 *
John F. Rein, Jr. 1,946 62,833 64,779 *
Joseph Z. Rivlin 293 - 293 *
All Executive Officers and Directors
as a Group (16 persons) 187,757 424,394 612,151 6.6%
</TABLE>
- --------
* Denotes less than a 1% interest.
(1) A person is deemed to be the beneficial owner of securities owned or
which can be acquired by such person within 60 days of the measurement
date upon the exercise of warrants and/or stock options. Each person's
percentage ownership is determined by assuming that warrants and stock
options beneficially owned by such person (but not those held by any
other person) have been exercised.
(2) Share ownership information is based on information contained in an
amendment to a schedule 13D filed with the Securities and Exchange
Commission on February 11, 2000. Dr. Wyant shares voting and
dispositive power with respect to these shares with his wife, Louise A.
Wyant.
(3) Includes 2,000 shares of Common Stock held by the Elftmann Family
Limited Partnership, of which Mr. Elftmann is the general partner.
11
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Exchange Act requires Veeco's officers and
directors, and persons who own more than ten percent of a registered class of
Veeco's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. These persons are
required by regulation of the Commission to furnish Veeco with copies of all
Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it,
or written representations from certain persons that no Forms 5 were required
for those persons, Veeco believes that during the fiscal year ended December
31, 1999, Veeco's officers, directors and greater than ten percent beneficial
owners complied with all applicable Section 16(a) filing requirements.
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 in
the City of Plainview, State of New York on April 3, 2000.
VEECO INSTRUMENTS INC.
By:
-----------------------------------
Edward H. Braun
Chairman, Chief Executive Officer
and President
12
