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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:
[X] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
THERMO VISION CORP.
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(Name of Registrant as Specified In Its Charter)
THERMO VISION 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:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(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>
[THERMO VISION CORPORATION LOGO APPEARS HERE]
8 East Forge Parkway
Franklin, Massachusetts 02038
April 12, 1999
Dear Stockholder:
The enclosed Notice calls the 1999 Annual Meeting of the Stockholders of
Thermo Vision 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 to me 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/ Kristine Stotz Langdon
KRISTINE STOTZ LANGDON
President and Chief Executive Officer
<PAGE>
[THERMO VISION CORPORATION LOGO APPEARS HERE]
8 East Forge Parkway
Franklin, Massachusetts 02038
April 12, 1999
To the Holders of the Common Stock of
THERMO VISION CORPORATION
NOTICE OF ANNUAL MEETING
The 1999 Annual Meeting of the Stockholders of Thermo Vision 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 five 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
<PAGE>
PROXY STATEMENT
The enclosed proxy is solicited by the board of directors of Thermo Vision
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 8 East Forge
Parkway, Franklin, Massachusetts 02038. 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
five 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
8,051,577 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
Five directors are to be elected at the meeting, each to hold office until
his or her successor is elected and qualified or until his or her earlier
resignation, death or removal.
1
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Nominees For Directors
Set forth below are the names of the persons nominated as directors, their
ages, their offices in the Corporation, if any, their principal occupation or
employment for the past five years, the length of their tenure as directors and
the names of other public 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.
<TABLE>
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<C> <S>
D. Allan Bromley Dr. Bromley, 73, has been a director of the
Corporation since September 1997. Dr. Bromley has
been Sterling Professor of the Sciences, Yale
University, since 1993 and has also served as Dean of
Engineering at Yale University since 1994. Prior to
1993, he served as the Henry Ford II Professor of
Physics at Yale University for over 20 years. From
1989 to 1993, he served as the Assistant to the
President for Science and Technology, and Director,
Office of Science and Technology Policy of the
Executive Office of the White House.
- --------------------------------------------------------------------------------
Elias P. Gyftopoulos Dr. Gyftopoulos, 71, has been a director of the
Corporation since April 1998. He is Professor
Emeritus of the Massachusetts Institute of
Technology, where he was the Ford Professor of
Mechanical Engineering and of Nuclear Engineering for
more than 20 years prior to his retirement in 1996.
Dr. Gyftopoulos is also a director of Thermo
BioAnalysis Corporation, Thermo Cardiosystems Inc.,
Thermo Electron, ThermoLase Corporation, ThermoRetec
Corporation, ThermoSpectra Corporation and Trex
Medical Corporation.
- --------------------------------------------------------------------------------
Kristine Stotz Langdon Ms. Langdon, 40, has been a director of the
Corporation as well as its president and chief
executive officer since its inception in November
1995. She served as president of Thermo Jarrell Ash
Corporation, a manufacturer of elemental
spectrometers and a subsidiary of Thermo Optek
Corporation, a majority-owned subsidiary of Thermo
Instrument, from January 1996 until October 1996 and
served as a vice president of Thermo Optek
Corporation from its inception in August 1995 until
the Corporation's spinout from Thermo Optek
Corporation in December 1997. Ms. Langdon was special
assistant to the presidents of Thermo Electron and
Thermo Instrument from August 1991 to April 1994 and
director of business development of Thermo Jarrell
Ash Corporation from April 1994 until being named
president and chief executive officer of the
Corporation. From 1987 to 1991, Ms. Langdon was
employed by McKinsey & Co., a management consulting
firm, most recently as an engagement manager.
</TABLE>
2
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<TABLE>
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<C> <S>
Earl R. Lewis Mr. Lewis, 55, has been a director of the Corporation
since its inception in November 1995. 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, measurement and detection,
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, that manufactures 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 also a director of
Metrika Systems Corporation, ONIX Systems Inc.,
SpectRx Inc., Thermo BioAnalysis Corporation, Thermo
Instrument, Thermo Optek Corporation, ThermoQuest
Corporation and ThermoSpectra Corporation.
- --------------------------------------------------------------------------------
Melissa F. Riordan Ms. Riordan, 42, has been a director of the
Corporation since October 1998. She served as the
treasurer of Thermo Electron from 1997 until 1998.
From 1988 to 1997, Ms. Riordan was a stockbroker at
NatWest Securities Corp. Ms. Riordan is also a
director of ThermoLase Corporation.
</TABLE>
Committees of the Board of Directors and Meetings
The board of directors has established an audit committee and a human
resources committee, each consisting solely of directors who are not employees
of the Corporation, of Thermo Electron or of any other companies affiliated with
Thermo Electron ("outside directors"). The present members of the audit
committee are Dr. Bromley (Chairman) and Dr. Gyftopoulos. 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 Dr. Gyftopoulos (Chairman) and Dr. Bromley. 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 five 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 or she 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. Ms. Langdon and Mr. Lewis are both 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.
3
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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
or her cash fees until he or she ceases to serve as a director, dies or retires
from his or her 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 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
Common Stock. When payable, amounts deferred may be disbursed solely in shares
of Common Stock accumulated under the Deferred Compensation Plan. A total of
25,000 shares of Common Stock has been reserved for issuance under the Deferred
Compensation Plan. As of January 2, 1999, approximately 89 units had been
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 this plan.
In 1998, options to purchase 15,000 shares of Common Stock were granted to each
of the non-executive directors of the Corporation at an exercise price of $7.29
per share. 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 level 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 and
Retention Policies."
In addition, the Committee has a policy requiring directors to hold shares
of the 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 and Retention 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
4
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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.
While certain directors and executive officers of the Corporation are also
directors and executive officers of Thermo Electron or its subsidiaries other
than the Corporation, all such persons disclaim beneficial ownership of the
shares of Common Stock beneficially owned by Thermo Electron.
<TABLE>
<CAPTION>
Thermo Vision Thermo Instrument Thermo Electron
Name (1) Corporation (2) Systems Inc. (3) Corporation (4)
-------- --------------- ---------------- ---------------
<S> <C> <C> <C>
Thermo Electron Corporation (5)....... 6,401,844 N/A N/A
Nicholas Company, Inc. (6) and
Nicholas Limited Edition, Inc....... 408,580 N/A N/A
D. Allan Bromley...................... 16,000 0 0
Elias P. Gyftopoulos.................. 16,089 57,743 71,856
Kristine Stotz Langdon................ 136,710 16,223 18,027
Earl R. Lewis......................... 42,720 338,250 204,878
Melissa F. Riordan.................... 2,000 0 30,000
Allen J. Smith........................ 27,000 0 2,000
All directors and current executive
officers as a group (8 persons)....... 247,119 473,927 858,511
</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 Dr. Bromley, Dr. Gyftopoulos,
Ms. Langdon, Mr. Lewis, Ms. Riordan, Mr. Smith and all directors and
current executive officers as a group include 15,000, 15,000, 135,000,
25,000, 2,000, 27,000, and 221,000 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 Ms. Langdon include a total of 1,710 shares held in custodial
accounts for the benefit of two minor children. Shares of Common Stock
beneficially owned by Mr. Lewis include 350 shares owned by his spouse and
a total of 1,140 shares held by his son. Shares beneficially owned by Dr.
Gyftopoulos and all directors and current executive officers as a group
include 89 shares that had been allocated through January 2, 1999 to Dr.
Gyftopoulos' account maintained 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 other than Ms. Langdon, who
beneficially owned 1.67% of such Common Stock; all directors and current
executive officers as a group beneficially owned 3.04% of Common Stock
outstanding as of such date.
(3) Shares of the common stock of Thermo Instrument beneficially owned by Dr.
Gyftopoulos, Ms. Langdon, Mr. Lewis and all directors and current executive
officers as a group include 12,648, 15,858, 322,085, and 405,667 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 current executive officers as a group include 963 shares,
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 beneficially owned by Ms. Langdon
include 365 shares held in custodial accounts for the benefit of two minor
children. Shares beneficially owned by Mr. Lewis
5
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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 beneficially owned less than 1% of the Thermo
Instrument common stock outstanding as of such date.
(4) Shares of the common stock of Thermo Electron beneficially owned by
Dr. Gyftopoulos, Ms. Langdon, Mr. Lewis, Ms. Riordan and all current
directors and executive officers as a group include 9,125, 17,325, 202,350,
25,000, and 716,572 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 beneficially owned by Dr. Gyftopoulos and all
other directors and current executive officers as a group include 152
shares that have been allocated, through January 2, 1999, to
Dr. Gyftopoulos' account maintained under Thermo Electron's deferred
compensation plan for directors. Shares beneficially owned by all directors
and current executive officers as a group include 2,497 shares, allocated
through January 31, 1999 to their respective accounts maintained pursuant
to the ESOP. Shares beneficially owned by Ms. Langdon include 702 shares
held in custodial accounts for the benefit of her two 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 beneficially owned less
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 79.54% 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.
(6) Information regarding the number of shares of Common Stock beneficially
owned by Nicholas Company, Inc. and Nicholas Limited Edition, Inc. is based
upon the most recent Schedule 13G of Nicholas Company, Inc. received by the
Corporation, which reported such ownership as of December 31, 1998. The
address of Nicholas Company, Inc. is 700 N. Water Street, Suite 1010,
Milwaukee, Wisconsin 53202. According to the 13G, (i) Nicholas Company,
Inc. acts as the investment advisor to Nicholas Limited Edition, Inc.;
(ii) Nicholas Company, Inc. has sole dispositive power, (iii) Nicholas
Limited Edition, Inc. retains sole voting power, with respect to the
shares; and (iv) Mr. Albert O. Nicholas, Chief Executive Officer, chairman,
and majority shareholder of Nicholas Company, Inc. disclaims beneficial
ownership of such shares. As of December 31, 1998, Nicholas Company, Inc.
and Nicholas Limited Edition, Inc., beneficially owned approximately 5.08%
of the outstanding Common Stock.
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
Instrument and its parent company, Thermo Electron, to file with the Securities
and Exchange Commission initial reports of ownership and periodic reports of
changes in ownership of the Corporation's securities. Based upon a review of
such filings, all Section 16(a) filing requirements applicable to such persons
were complied with during 1998, except in the following instance. Mr. Earl R.
Lewis, a director of the Corporation, filed one Form 4 late, reporting one open
market purchase of shares of Common Stock.
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 and one other most highly
compensated executive officer. These executive officers are together referred to
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.
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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.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Compensation
------------
Annual Compensation Securities Underlying
Name and Fiscal ------------------- Options (No. of Shares All Other
Principal Position Year Salary Bonus and Company) (1) Compensation (2)
------------------ ---- ------ ----- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
Kristine Stotz Langdon 1998 $132,500 $30,000 100,000(VIZ) $5,625
President and Chief 3,600(TMO)
Executive Officer 7,500(MKA)
7,500(ONX)
4,000(RGI)
2,000(TDX)
1,000(TISI)
10,000(THI)
2,000(TRIL)
2,000(TRCC)
1997 $125,000 $57,500 35,000(VIZ) $5,344
1996 $100,000 $40,000 75,000(TOC) $5,344
5,000(TMQ)
- -----------------------------------------------------------------------------------------------------
Allen J. Smith (3) 1998 $120,000 $25,000 12,000(VIZ) $5,625
Vice President 1997 $115,000 $40,000 15,000(VIZ) $5,344
1996 $ 98,923 $30,000 22,500(TOC) $4,073
- -----------------------------------------------------------------------------------------------------
</TABLE>
(1) Options granted by the Corporation are designated in the table as "VIZ." 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), Metrika Systems
Corporation (designated in the table as MKA), 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 Systems Inc. (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), and Trex Communications Corporation (designated in the
table as TRCC).
(2) Represents the amount of matching contributions made by the Corporation on
behalf of named executive officers participating in the Thermo Electron
401(k) plan.
(3) Mr. Smith was appointed vice president of the Corporation in August 1997.
He has been chairman of Oriel Corporation, which was acquired by the
Corporation from Thermo Optek Corporation in February 1996, since October
1994. Reported in the table under "Annual Compensation" and "All Other
Compensation" is Mr. Smith's compensation for fiscal 1996, 1997, and 1998
paid by Thermo Optek Corporation and the Corporation subsequent to the
acquisition of Oriel Corporation in February 1996.
7
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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 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>
Kristine Stotz Langdon 100,000(VIZ) 37.59% $ 2.73 10/07/03 $75,000 $167,000
3,600(TMO) 0.11%(3) $16.20 09/23/03 $16,128 $ 35,604
7,500(MKA) 2.64%(3) $15.86 03/10/05 $48,450 $112,875
7,500(ONX) 0.77%(3) $14.25 03/10/05 $43,500 $101,400
4,000(RGI) 0.75%(3) $ 4.00 01/21/05 $ 6,520 $ 15,160
2,000(TDX) 0.22%(3) $ 9.56 01/21/05 $ 7,780 $ 18,140
1,000(TISI) 1.67%(3) $10.00 01/21/08 $ 6,290 $ 15,940
10,000(THI) 1.33%(3) $13.54 09/25/03 $37,400 $ 82,700
2,000(TRIL) 1.11%(3) $ 8.25 01/21/08 $10,380 $ 26,300
2,000(TRCC) 0.16%(3) $ 4.00 01/21/08 $ 5,040 $ 12,740
- -----------------------------------------------------------------------------------------------------------------
Allen J. Smith 12,000(VIZ) 4.51% $ 2.73 10/07/03 $ 9,000 $ 20,040
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) All of the options granted during fiscal 1998 were immediately exercisable
as of the end of fiscal 1998, 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 five-year period, depending on the option term,
which may vary from five to ten 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.
8
<PAGE>
(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.
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.
Aggregated Option Exercises In Fiscal 1998 and
Fiscal 1998 Year-End Option Values
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
Fiscal Fiscal
Shares Year-End Year-End
Acquired on Value (Exercisable/ (Exercisable/
Name Company Exercise Realized (1) Unexercisable) (2) Unexercisable)
---- ------- -------- ------------ ------------------ --------------
<S> <C> <C> <C> <C> <C>
Kristine Stotz Langdon (3) (VIZ) -- -- 135,000/0 $27,000/--
(TMO) -- -- 3,600/0 $ 1,757/--
(MKA) -- -- 7,500/0 $ 0/--
(ONX) -- -- 7,500/0 $ 0/--
(RGI) -- -- 4,000/0 $ 0/--
(TDX) -- -- 2,000/0 $ 0/--
(TISI) -- -- 0/1,000 --/$0 (4)
(THI) -- -- 10,000/0 $13,980/--
(TOC) -- -- 75,000/0 $ 0/--
(TMQ) -- -- 5,000/0 $ 1,565/--
(TRIL) -- -- 0/2,000 --/$0 (4)
(TRCC) -- -- 0/2,000 --/$0 (4)
- ---------------------------------------------------------------------------------------------------------------------------
Allen J. Smith (VIZ) -- -- 27,000/0 $ 3,240/--
(TOC) -- -- 22,500/0 $ 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 fiscal year-end, 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 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 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
9
<PAGE>
ninth anniversary of the 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.
(3) Ms. Langdon became president of the Corporation, then a wholly owned
subsidiary of Thermo Optek Corporation, in January 1995. Prior to that
date, she had been employed by Thermo Electron, and had been granted
options to purchase shares of common stock of Thermo Electron and its
subsidiaries other than the Corporation as compensation for her service to
Thermo Electron. These options are not reported in the table as they were
granted as compensation for service to Thermo Electron companies other than
the Corporation.
(4) No public market for the shares underlying these options existed at fiscal
year end. Accordingly, no value in excess of the exercise price has been
attributed to these options.
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
Ms. Langdon. This agreement provides that in the event Ms. Langdon's employment
is terminated under circumstances described above, Ms. Langdon would be entitled
to a lump sum payment equal to the sum of (a) one times her highest annual base
salary in any 12 month period during the prior five-year period, plus (b) one
times her highest annual bonus in any 12 month period during the prior five-year
period. In addition, Ms. Langdon would be provided benefits for a period one
year after such termination substantially equivalent to the benefits package she
would have been otherwise entitled to receive if she was not terminated.
Further, all repurchase rights of Thermo Electron and its subsidiaries shall
lapse in their entirety with respect to all options that Ms. Langdon holds in
Thermo Electron and its subsidiaries, including the Corporation, as of the date
of the change in control. Finally, Ms. Langdon 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 Ms.
Langdon would have been approximately $196,500. 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") Ms. Langdon would be entitled to receive a gross-
up payment equal to the amount of any excise tax payable by her with respect to
such payment plus the amount of all other additional taxes imposed on her
attributable to the receipt of such gross-up payment.
10
<PAGE>
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 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 named executive officers generally reflect this practice of gradual
adjustment and moderation.
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 formula 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 formula used by the Committee measured return
on net assets, return on sales,
11
<PAGE>
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.
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 was substantially lower in each case
than the incentive compensation awarded the previous year and reflected the
Corporation's financial performance in fiscal 1998.
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 has established a stock holding policy for the chief
executive officer of the Corporation that required the chief executive officer
to own a multiple of her compensation in shares of the Corporation's Common
12
<PAGE>
Stock. The multiple is one times her base salary and reference bonus for the
fiscal year. The Committee deemed it appropriate to permit the chief executive
officer to achieve this ownership level over a three-year period.
In order to assist the chief executive officer in complying with the
policy, the Committee also adopted a stock holding assistance plan under which
the Corporation is authorized to make interest-free loans to the chief executive
officer to enable her to purchase shares of the Common Stock in the open market.
The loans are required to be repaid upon the earlier of demand or the fifth
anniversary of the date of the loan, unless otherwise authorized by the
Committee. No loans were outstanding under this program in fiscal 1998.
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 Ms. Langdon is established using the same criteria as
described above for all executive officers. The Committee approved a salary
increase for Ms. Langdon 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 Ms. Langdon's performance-based incentive compensation for fiscal
1998, the Committee considered the financial performance of the Corporation and,
to a lesser extent, its parent company, Thermo Instrument, using the measures
described above for all executive officers under "Components of Executive
Compensation - Annual Cash Compensation - Performance-based Incentive
Compensation." The Committee's subjective evaluation of Ms. Langdon's
performance considered, among other things, her effectiveness in furthering the
Corporation's business and financial objectives.
Awards to Ms. Langdon 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 stock options to purchase 100,000 shares of Common Stock was made by the
Committee to Ms. Langdon in fiscal 1998 based on the Committee's assessment of
Ms. Langdon's total compensation. The awards to Ms. Langdon 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 Metrika Systems Corporation and 7,500 shares of the common stock of
ONIX Systems Inc. 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 Ms. Langdon's position as a chief executive officer of a majority-
owned subsidiary of Thermo Electron, from time to time she may receive awards to
purchase shares of the common stock of majority-owned subsidiaries of Thermo
Electron as part of Thermo Electron's stock option program. Awards of stock
options to purchase 4,000 shares of the common stock of The Randers Killam Group
Inc., 2,000 shares of the common stock of Thermedics Detection Inc., 1,000
shares of the common stock of Thermo Information Solutions Inc., 2,000 shares of
13
<PAGE>
the common stock of Thermo Trilogy Corporation and 2,000 shares of the common
stock of Trex Communications Corporation, were made to Ms. Langdon under this
program in fiscal 1998.
Dr. Elias P. Gyftopoulos (Chairman)
Dr. D. Allan Bromley
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 December 10, 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 Thermo Vision Corporation,
the American Stock Exchange Market Value Index and the
Dow Jones Total Return Index for the Diversified Technology
Industry Group from December 10, 1997 to December 31, 1998
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
12/10/97 01/02/98 12/31/98
----------------------------------------------------
<S> <C> <C> <C>
VIZ 100 107 42
----------------------------------------------------
AMEX 100 102 104
----------------------------------------------------
DJ DTC 100 96 97
----------------------------------------------------
</TABLE>
The total return for the Corporation's Common Stock (VIZ), 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
14
<PAGE>
companies listed on the American Stock Exchange. The Corporation's Common Stock
is traded on the American Stock Exchange under the ticker symbol "VIZ."
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 certain legal advice and services, risk management, employee
benefit
15
<PAGE>
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 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 $304,000 in fees
under the Services Agreement. Management believes that the charges under the
Services Agreement are reasonable and that the terms of the Services Agreement
are fair to the Corporation. During fiscal 1998, the Corporation was billed an
additional $29,028 by Thermo Electron 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.
In February 1997, in connection with its acquisition of Laser Science, Inc.
("LSI"), the Corporation borrowed $3.6 million from Thermo Optek Corporation
("Thermo Optek") pursuant to a promissory note. In June 1997, the Corporation
borrowed an additional $347,000 from Thermo Optek pursuant to a promissory note
in order to finance the renovation of its Franklin, Massachusetts facility in
connection with the LSI acquisition. In July 1997, in connection with its
acquisition of Centro Vision, Inc. the Corporation borrowed $3.8 million from
Thermo Electron pursuant to a promissory note. Each of these notes bears
interest at the 90-day Commercial Paper Composite Rate plus 25 basis points, set
at the beginning of each quarter and has a term of approximately three years.
The interest rate for these notes as of the end of fiscal 1998 was 5.36%.
As of January 2, 1999, the Corporation owed Thermo Electron and its other
subsidiaries an aggregate of $308,000 for amounts due under the Services
Agreement and related administrative charges, for other products and services
and for miscellaneous items, excluding loans described above and net of amounts
owed to the Corporation by Thermo Electron and its other subsidiaries for
products, services and miscellaneous items. The largest amount of such net
indebtedness owed by the Corporation to Thermo Electron and its other
subsidiaries since January 3, 1998 was $653,000. These amounts do not bear
interest and are expected to be paid in the normal course of business.
The Corporation and Thermo Optek are parties to a Supply Agreement (the
"CID Supply Agreement") pursuant to which the Corporation has agreed to supply
Thermo Optek with, and Thermo Optek has agreed to purchase from the Corporation,
all of Thermo Optek's requirements for CID sensors for use in Thermo Optek's
optical spectrometers. Under the CID Supply Agreement, the Corporation is not
permitted to sell CID sensors to any other manufacturer of optical
spectrometers. The CID Supply Agreement expires in 2007. In fiscal 1998, the
Corporation sold approximately $775,000 of products under the CID Supply
Agreement.
The Corporation has leased its office and manufacturing space in Franklin,
Massachusetts from Thermo Instrument since March 1996. The Corporation's rent
expense under this lease is determined on the basis of its allocated share of
total occupancy expenses. The Corporation made lease payments to Thermo
Instrument in fiscal 1998 of $211,000. This lease expires in 2006.
The Corporation's Hilger Crystal Ltd. ("Hilger") subsidiary leases its
office and manufacturing space in Margate, England, from Thermo Optek. Through
August 1997, the Corporation's rent expense under this lease was determined on
the basis of its allocated share of total occupancy expenses. Effective in
fiscal 1998, Hilger leased this space from Thermo Optek for an annual rental fee
of $45,000, plus its pro rata share of certain related expenses. In 1999 Hilger
plans to purchase the building from Thermo Optek for approximately $167,000 in
cash. The
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purchase price is based on the book value of the building as it appears on
Thermo Optek's books. The Corporation made lease payments to Thermo Optek in
fiscal 1998 of $51,000 under this arrangement.
In fiscal 1998, the Corporation sold an additional $1,689,000 of products
to Thermo Electron subsidiaries and purchased a total of $162,000 of products
from such companies.
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 $1,671,000 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 $1,039,000, based on an exchange rate of $1.6708/GBP 1.00. 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, $9,231,000 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.
Stock Holding Assistance Plan
The human resources committee of the board of directors (the "Committee"),
established a stock holding policy that requires the chief executive officer to
acquire and hold a minimum number of shares of Common Stock. In order to assist
the chief executive officer in complying with the policy, the Committee also
adopted a stock holding assistance plan under which the Corporation may make
interest-free loans to the chief executive officer, to enable her to purchase
the Common Stock in the open market. The loans are repayable upon the earlier
of demand or the fifth anniversary of the date of the loan, unless otherwise
determined by the Committee. No such loans are currently outstanding under the
plan.
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 1995.
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
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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 this solicitation of proxies will be borne by the Corporation.
Solicitation will be made primarily by mail, but regular employees of the
Corporation may solicit proxies personally or by telephone, 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.
Franklin, Massachusetts
April 12, 1999
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FORM OF PROXY
THERMO VISION 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 Earl R. Lewis, Kristine Stotz Langdon 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 Thermo Vision 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: D. Allan Bromley, Elias P. Gyftopoulos, Kristine Stotz Langdon,
Earl R. Lewis and Melissa F. Riordan.
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.
