<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
Varian, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(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:
-------------------------------------------------------------------------
(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>
[LOGO OF VARIAN, INC.]
December 29, 1999
Dear Varian, Inc. Stockholder:
It is my pleasure to invite you to your Company's first annual meeting of
stockholders. The meeting will be held on Thursday, February 10, 2000, at 2:00
p.m., at the Sheraton Palo Alto Hotel, 625 El Camino Real, Palo Alto,
California. The formal notice of the meeting and the proxy statement appear on
the following pages and describe the matter to be acted upon at the meeting.
I hope that you will be able to attend the meeting in person. If you
cannot attend, or if you plan to be present but want the proxy holders to vote
your shares, please complete, sign and return the enclosed proxy card at your
earliest convenience. Your vote is important.
Sincerely,
[Signature of Allen J. Lauer]
Allen J. Lauer
President and Chief Executive
Officer
<PAGE>
[LOGO OF VARIAN, INC.]
VARIAN, INC.
3120 Hansen Way
Palo Alto, California 94304-1030
NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 10, 2000
Date, Time and Location
The Annual Meeting of Stockholders of Varian, Inc. will be held on
Thursday, February 10, 2000, at 2:00 p.m., local time, at the Sheraton Palo
Alto Hotel, 625 El Camino Real, Palo Alto, California.
Agenda
The agenda for the Annual Meeting is as follows:
. To elect one Class I director for a three-year term; and
. To transact any other business as that may be properly brought
before the Annual Meeting or any adjournment or postponement of
the Annual Meeting.
Record Date
The record date for the Annual Meeting was December 13, 1999. Only
stockholders of record at the close of business on that date are entitled to
notice of and to vote at the Annual Meeting. A list of these stockholders will
be available at our principal executive offices, 3120 Hansen Way, Palo Alto,
California 94304-1030, for a period of ten days before the Annual Meeting.
Voting
It is important that you vote or grant a proxy to vote at the Annual
Meeting. Therefore, whether or not you expect to attend the Annual Meeting,
please complete, sign and date the enclosed proxy and mail it promptly in the
accompanying return envelope. You may revoke your proxy at any time before it
is voted, and you may vote in person at the Annual Meeting even if you have
returned a proxy. These and other voting procedures are explained in the Proxy
Statement following this notice.
By Order of the Board of Directors
[Signature of A. W. Homan]
A. W. Homan
Secretary
Palo Alto, California
December 29, 1999
<PAGE>
VARIAN, INC.
3120 Hansen Way
Palo Alto, California 94304-1030
(650) 213-8000
----------------
PROXY STATEMENT
----------------
INFORMATION REGARDING VOTING AND SOLICITATION OF PROXIES
General
This Proxy Statement is being furnished to you as a stockholder of
Varian, Inc., a Delaware corporation (the "Company"), in connection the
Company's Annual Meeting of Stockholders to be held on February 10, 2000, at
2:00 p.m., local time, at the Sheraton Palo Alto Hotel, 625 El Camino Real,
Palo Alto, California, and any adjournment or postponement of that meeting
(the "Annual Meeting"). The Board of Directors is soliciting your proxy to
vote your shares at the Annual Meeting. You may grant your proxy by signing,
dating and returning the enclosed proxy form in the pre-addressed, postage-
paid return envelope.
The purpose of the Annual Meeting is to elect one Class I director to
the Board of Directors, as is described in more detail below. The Board of
Directors does not know of any matter to be brought before the Annual Meeting
other than that described in this Proxy Statement. If any other matter does
properly come before the Annual Meeting, the Board intends that the persons
named in the enclosed proxy will vote on such matter in accordance with their
judgment.
This Proxy Statement and the accompanying form of proxy were first sent
or given to stockholders on or about December 29, 1999.
Voting
The Company's common stock is the only type of security issued and
entitled to vote at the Annual Meeting. Each share of common stock is entitled
to one vote. Only stockholders of record at the close of business on December
13, 1999 are entitled to notice of and to vote at the Annual Meeting. As of
that record date, there were 30,976,250 shares of the Company's common stock
outstanding.
The presence, either in person or by proxy, of the holders of a majority
of the outstanding shares of the Company's common stock is necessary to
constitute a quorum permitting action to be taken at the Annual Meeting.
Abstentions and broker non-votes are counted as present at the Annual Meeting
for the purpose of determining the presence of a quorum.
The affirmative vote of a plurality of the shares of the Company's
common stock present or represented by proxy at the Annual Meeting is required
to elect the Class I director. This means that Allen J. Lauer, the Board of
Directors' nominee for Class I director, must receive the highest number of
votes cast in order to be elected as a Class I director. Therefore, any shares
not voted (whether by abstention, broker non-vote or otherwise) will have no
legal effect on the election of director.
Your shares will be voted in accordance with your instructions set forth
on the proxy that you sign and return. If you provide no instructions, your
proxy will be voted for the election of Allen J. Lauer as a Class I director.
<PAGE>
Even if you sign and return your proxy, you may revoke or change your
proxy at any time prior to the Annual Meeting. You may do this by sending to
A. W. Homan, the Company's Secretary (at the Company's address set forth
above), prior to the Annual Meeting, a written notice of revocation or a new
proxy bearing a later date. You may also revoke your proxy by attending the
Annual Meeting and voting in person.
Solicitation of Proxies
The cost of soliciting proxies will be borne by the Company. Copies of
solicitation material will be furnished to brokerage houses, fiduciaries and
custodians to forward to beneficial owners of the Company's common stock held
in their names. The Company will reimburse such persons for their reasonable
out-of-pocket expenses in forwarding solicitation materials. In addition to
solicitations by mail, some of the Company's directors, officers and other
employees, without extra remuneration, might supplement this solicitation by
letter, telephone or personal interview. The Company might also retain
Corporate Investor Communications, Inc., 111 Commerce Road, Carlstadt, New
Jersey 07072-2586, to assist with the solicitation of proxies from brokers,
bank nominees and other holders, for a fixed retainer fee of no more than
$2,500 plus reasonable out-of-pocket expenses, which fees and expenses would
be borne by the Company.
2
<PAGE>
ELECTION OF DIRECTOR
Board Structure and Nominee
The Board of Directors consists of five members. Pursuant to the
Company's Restated Certificate of Incorporation, the Board is divided into
three classes. The sole Class I director is Allen J. Lauer. The Class II
directors are John G. McDonald and Wayne R. Moon. The Class III directors are
D. E. Mundell and Elizabeth E. Tallett.
Members of each class are elected for three-year terms. However, because
all directors were initially elected in 1999 as part of the formation of the
Company, the Company's Restated Certificate of Incorporation provides that the
term of office of the initial Class I director shall expire at the annual
meeting of stockholders in 2000, the terms of office of the initial Class II
directors shall expire at the annual meeting of stockholders in 2001, and the
terms of office of the initial Class III directors shall expire at the annual
meeting of stockholders in 2002, or in each case until his or her successor is
duly elected and qualified, unless such director dies, resigns, retires or is
disqualified or removed.
Mr. Lauer's initial term expires at the Annual Meeting. The Board of
Directors has nominated Mr. Lauer for re-election at the Annual Meeting for a
term expiring at the annual meeting of stockholders in 2003 and when his
successor is elected and qualified. Mr. Lauer has stated his willingness to
serve if elected, and the Company does not contemplate that he will be unable
to serve. However, in the event that Mr. Lauer subsequently declines or
becomes unable to serve, proxies will be voted for such substitute nominee as
shall be designated by the proxy holders in their discretion.
The Board of Directors recommends that stockholders vote FOR the
election of Mr. Lauer as a Class I director.
Business Experience of Directors
D. E. Mundell is Chairman of the Company's Board of Directors, a
position he has held since 1999. He is also Chairman of the Board of ORIX USA
Corporation (a financial services company), a position he has held since 1991.
He is a director of Beazer Homes USA, Inc. and Stockton Holdings, Ltd. Mr.
Mundell has been a director of the Company since 1999. Age: 68
Allen J. Lauer is the Company's President and Chief Executive Officer, a
position he has held since 1999. From 1990 to 1999, he was Executive Vice
President of Varian Associates, Inc. and responsible for its Instruments
business. Mr. Lauer has been a director of the Company since 1999. Age: 62
John G. McDonald is The IBJ Professor of Finance at Stanford
University's Graduate School of Business, where he has served on the faculty
since 1968. He is a director of Scholastic Corp., Plum Creek Timber Company,
Inc. and Starwood Financial, Inc., and is an independent trustee of eight
mutual funds managed by Capital Research & Management Co. He has been a
director of the Company since 1999. Age: 62
Wayne R. Moon is the Chairman of the Board and Chief Executive Officer
of Blue Shield of California (a health care company), a position he has held
since 1993. He has been a director of the Company since 1999. Age: 59
Elizabeth E. Tallett is President and Chief Executive Officer of
Dioscor, Inc. (a biopharmaceutical company), a position she has held since
1996. She is also President and Chief Executive Officer of Galenor Inc. and
President and Chief Executive Officer of Ellard Pharmaceuticals, Inc. (both
biopharmaceutical companies), positions she has held since 1997 and 1999,
respectively. From 1992 to 1996, Ms. Tallett was President and Chief Executive
Officer of Transcell Technologies, Inc. (a biotechnology company). She is a
director of Coventry Health Care, Inc., IntegraMed America, Inc. and The
Principal and Mutual Life Insurance Company. Ms. Tallett has been a director
of the Company since 1999. Age: 50
3
<PAGE>
Committees and Meetings
The Board of Directors has three standing committees: The Audit
Committee; the Compensation Committee; and the Stock Committee. The Board of
Directors does not have a nominating committee or a committee serving a
similar function.
The Audit Committee is comprised of directors McDonald (Chairman), Moon,
Mundell and Tallett, all of whom are non-employee, outside directors. This
Committee is responsible for recommending to the Board of Directors selection
of the Company's independent auditors, and for reviewing the auditors'
independence, approving their audit scope and reviewing the results of their
annual audit. The Committee also reviews internal audit programs, significant
accounting and reporting issues, annual financial statements and programs for
promoting and monitoring compliance with laws and ethical conduct. The Audit
Committee held two meetings during fiscal year 1999.
The Compensation Committee is comprised of directors Mundell (Chairman),
McDonald, Moon and Tallett, all of whom are non-employee, outside directors.
This Committee approves all officer compensation, and is responsible for
administration of the Company's Omnibus Stock Plan, Management Incentive Plan
and Supplemental Retirement Plan. The Compensation Committee held four
meetings during fiscal year 1999.
The Stock Committee is comprised of director Lauer. This Committee
approves grants of non-qualified stock options under the Company's Omnibus
Stock Plan, pursuant to delegations permitting the Committee to make such
grants, within certain guidelines, to eligible participants who are not
Company officers. The Stock Committee held no meetings during fiscal year
1999, but took various actions by written consent.
The Board of Directors held four meetings during fiscal year 1999.
During fiscal year 1999, each director attended all meetings of the
Board and committees of the Board of which the director was a member.
Director Compensation
Each director who is not a Company employee receives an annual retainer
fee of $20,000, plus $1,000 for each Board and committee meeting attended. The
Chairman of the Board receives a retainer fee of $90,000 (in lieu of any other
annual retainer, committee chair or attendance fees), and directors chairing
standing committees of the Board each receive an additional annual retainer
fee of $5,000. Directors may elect to receive, in lieu of all or a portion of
the foregoing fees, shares of the Company's common stock based on the fair
market value of the stock on the date the fees would have been paid.
Under the Company's Omnibus Stock Plan, each director who is not a
Company employee also receives (a) upon initial appointment or election to the
Board, a non-qualified stock option to acquire 10,000 shares of the Company's
common stock, and (b) annually thereafter a non-qualified stock option to
acquire 5,000 shares of the Company's common stock. In lieu of these grants,
the non-employee Chairman of the Board receives upon initial appointment a
non-qualified stock option to acquire 50,000 shares of the Company's common
stock. All such stock options are granted with an exercise price equal to the
fair market value of the Company's common stock on the date of grant, are
exercisable on the date of grant and have a ten-year term.
Each director is also reimbursed for all reasonable out-of-pocket
expenses that such director and his or her spouse incurs attending Board
meetings and functions.
Directors who are Company employees receive no compensation for their
services as directors.
4
<PAGE>
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information as of December 1,
1999 regarding beneficial ownership of the Company's common stock by (a) each
person who, to the Company's knowledge, beneficially owned more than five
percent of the outstanding shares of the Company's common stock as of that
date, (b) each of the executive officers named in the Summary Compensation
Table on page 6, (c) each of the Company's directors and nominee for director,
and (d) all executive officers and directors as a group.
<TABLE>
<CAPTION>
Amount and
Nature of Percent of
Name and Address (if applicable) of Beneficial Beneficial Outstanding
Owner Ownership(/1/) Shares(/2/)
- ---------------------------------------------- -------------- -----------
<S> <C> <C>
Investors Group Inc., 447 Portage Ave.,
Winnipeg, Manitoba R3C 3B6, Canada 1,857,000(/3/) 6.00%
Allen J. Lauer, President and Chief Executive
Officer, Director 739,146(/4/) 2.34%
G. Edward McClammy, Vice President and Chief
Financial Officer 0 --
A. W. Homan, Vice President, General Counsel
and Secretary 70,396(/5/) --
Garry W. Rogerson, Vice President, Analytical
Instruments 78,622(/6/) --
Raymond J. Shaw, Vice President, NMR Systems 137,399(/7/) --
D. E. Mundell, Chairman of the Board 78,566(/8/) --
John G. McDonald, Director 38,442(/9/) --
Wayne R. Moon, Director 21,752(/10/) --
Elizabeth E. Tallett, Director 19,314(/11/) --
All Executive Officers and Directors as a Group
(10 persons) 1,198,589(/12/) 3.75%
</TABLE>
- --------
(1) For purposes of this table, a person or group of persons is deemed to
have beneficial ownership of shares of the Company's common stock which
such person or group has the right to acquire on or within 60 days after
December 1, 1999. Unless otherwise indicated, to the Company's knowledge
the person named has sole voting and investment power, or shares voting
and/or investment power with such person's spouse, with respect to all
shares beneficially owned by them.
(2) The percentage of outstanding shares is based on the 30,923,955 shares
outstanding on December 1, 1999. However, for purposes of computing the
percentage of outstanding shares of common stock beneficially owned by
each person or group of persons, any stock which such person or group of
persons has a right to acquire on or within 60 days of December 1, 1999
is deemed to be outstanding, but is not deemed to be outstanding for the
purpose of computing the percentage of beneficial ownership of any other
person. The percent of outstanding shares of the Company's common stock
is only reported to the extent it exceeds one percent of the shares of
the Company's common stock outstanding on December 1, 1999.
(3) As reported in a Schedule 13G/A filed with the Securities and Exchange
Commission on October 1, 1999, which Schedule 13G/A states that Investors
Group Inc. shares voting and dispositive power with various subsidiary
entities ultimately controlled by Investors Group Inc.
(4) Includes (a) 640,536 shares which may be acquired on or within 60 days of
December 1, 1999 by exercise of stock options granted pursuant to the
Omnibus Stock Plan, and (b) 98,610 shares held in a trust of which Mr.
Lauer is co-trustee with his wife.
(5) Includes 67,064 shares which may be acquired on or within 60 days of
December 1, 1999 by exercise of stock options granted pursuant to the
Omnibus Stock Plan.
(6) Includes 76,311 shares which may be acquired on or within 60 days of
December 1, 1999 by exercise of stock options granted pursuant to the
Omnibus Stock Plan.
(7) Includes 128,930 shares which may be acquired on or within 60 days of
December 1, 1999 by exercise of stock options granted pursuant to the
Omnibus Stock Plan.
(8) Includes (a) 69,166 shares which may be acquired on or within 60 days of
December 1, 1999 by exercise of stock options granted pursuant to the
Omnibus Stock Plan, and (b) 8,400 shares held in a trust of which Mr.
Mundell is co-trustee with his wife.
(9) Includes 34,642 shares which may be acquired on or within 60 days of
December 1, 1999 by exercise of stock options granted pursuant to the
Omnibus Stock Plan.
(10) Includes 20,952 shares which may be acquired on or within 60 days of
December 1, 1999 by exercise of stock options granted pursuant to the
Omnibus Stock Plan.
(11) Includes 18,214 shares which may be acquired on or within 60 days of
December 1, 1999 by exercise of stock options granted pursuant to the
Omnibus Stock Plan.
(12) Includes (a) 1,069,367 shares which may be acquired on or within 60 days
of December 1, 1999 by exercise of stock options granted pursuant to the
Omnibus Stock Plan, and (b) 107,010 shares as to which voting and/or
investment power is shared (see certain of the foregoing footnotes).
5
<PAGE>
EXECUTIVE COMPENSATION INFORMATION
The following tables set forth certain information with respect to
compensation paid by the Company to its chief executive officer and four other
most highly compensated executive officers for services rendered to the
Company in fiscal year 1999. The Company first became a separate, public
company effective as of April 2, 1999, the date of its "spin-off" from Varian
Associates, Inc. ("VAI"). Accordingly, the compensation reported below covers
only the six month period of fiscal year 1999 following the spin-off, from
April 3, 1999 to October 1, 1999. The named executive officers did not earn
any compensation from the Company or for services to the Company prior to
April 3, 1999, and the table does not include compensation paid by VAI prior
to April 3, 1999.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
-------------
Annual Compensation Awards
------------------------- -------------
Securities
Underlying All Other
Name and Options/ Compensation
Principal Position Year Salary ($) Bonus ($)(/1/) SARs (#)(/2/) ($)(/3/)
------------------ ---- ---------- -------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Allen J. Lauer.......... 1999 $275,002 $400,125 1,089,808 $5,006
President and
Chief Executive Officer
G. Edward McClammy...... 1999 116,347 236,406 150,000 844
Vice President and
Chief Financial Officer
A. W. Homan............. 1999 100,000 109,125 198,014 2,653
Vice President, General
Counsel and Secretary
Garry W. Rogerson....... 1999 100,000 118,500 207,945 4,491
Vice President,
Analytical Instruments
Raymond J. Shaw......... 1999 92,508 102,675 259,195 0
Vice President,
NMR Systems
</TABLE>
- --------
(1) Consists of Management Incentive Plan awards paid in fiscal year 2000 for
fiscal year 1999 (six-month) performance. The amount reported for
Mr. McClammy includes a $100,000 hiring bonus paid when he commenced
employment on April 16, 1999.
(2) Consists of non-qualified stock options granted pursuant to the Omnibus
Stock Plan. Includes non-qualified stock options that were granted in
replacement of non-qualified stock options granted by VAI prior to the
Company's "spin-off" from VAI on April 2, 1999. See the table "Option/SAR
Grants in Last Fiscal Year" on the following page.
(3) Consists of (a) Company matching contributions to Retirement Plan accounts
and contribution credits (including interest credits) to Supplemental
Retirement Plan accounts (Mr. Lauer, $2,500; Mr. Homan, $2,308; and Mr.
Rogerson, $3,480); and (b) Company-paid premiums for group term life
insurance (Mr. Lauer, $2,506; Mr. McClammy, $844; Mr. Homan, $345; and Mr.
Rogerson, $1,011).
6
<PAGE>
Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term(/1/)
----------------------------------------------- -----------------------------
Number of
Securities
Underlying % of Total
Options/ Options/SARs Exercise
SARs Granted to or Base
Granted Employees in Price Expiration
Name (#) Fiscal Year ($/Sh) Date 0%($) 5% ($) 10% ($)
- ---- ---------- ------------ -------- ---------- ------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Allen J. Lauer.......... 400,000(/2/) 9.05% $ 9.5000 4/16/09 0 $2,389,800 $6,056,221
147,816(/3/) 3.34 14.1637 11/20/2007 0 726,034 1,769,748
147,816(/3/) 3.34 11.8424 11/14/2006 0 625,032 1,482,042
147,816(/3/) 3.34 11.7663 11/16/2005 0 528,839 1,220,492
123,180(/3/) 2.79 8.7677 11/17/2001 82,506 238,960 408,683
123,180(/3/) 2.79 6.1727 11/18/2000 402,158 495,804 593,999
G. Edward McClammy...... 150,000(/2/) 3.39 9.5000 4/16/09 0 896,175 2,271,083
A. W. Homan............. 120,000(/2/) 2.72 9.5000 4/16/09 0 716,940 1,816,866
32,848(/3/) 0.74 14.1637 11/20/2007 0 161,341 393,277
24,636(/3/) 0.56 11.8424 11/14/2006 0 104,172 247,007
20,530(/3/) 0.46 11.7663 11/16/2005 0 73,450 169,513
Garry W. Rogerson....... 120,000(/2/) 2.72 9.5000 4/16/09 0 716,940 1,816,866
34,901(/3/) 0.79 14.1637 11/20/2007 0 171,425 417,857
29,564(/3/) 0.67 11.8424 11/14/2006 0 125,010 296,417
15,057(/3/) 0.34 11.7663 11/16/2005 0 53,869 124,323
5,478(/3/) 0.12 9.2852 2/2/2005 834 17,866 39,307
2,945(/3/) 0.07 8.7677 11/17/2001 1,973 5,714 9,771
Raymond J. Shaw......... 120,000(/2/) 2.72 9.5000 4/16/09 0 716,940 1,816,866
30,795(/3/) 0.70 14.1637 11/20/2007 0 151,257 368,698
29,564(/3/) 0.67 11.8424 11/14/2006 0 125,010 296,417
24,636(/3/) 0.56 11.7663 11/16/2005 0 88,140 203,415
24,636(/3/) 0.56 8.7677 11/17/2001 16,501 47,792 81,736
29,564(/3/) 0.67 6.1727 11/18/2000 96,521 118,997 142,324
</TABLE>
- --------
(1) These assumed rates are not intended to represent a forecast of possible
future appreciation of the Company's stock.
(2) Consists of non-qualified stock options to acquire the Company's common
stock, which options were granted at an exercise price equal to the
closing market price of the Company's stock on the grant date, become
exercisable over three years at the rate of approximately one-third each
year and expire ten years from the grant date. Payment of the exercise
price may be made by delivery of already-owned shares.
(3) Consists of non-qualified options to acquire the Company's common stock
that were granted in replacement of non-qualified stock options granted
by VAI (to acquire VAI common stock) prior to the Company's "spin-off"
from VAI on April 2, 1999. Effective as of that date, all of the named
executive officers' VAI stock options were terminated, and the Company
granted replacement stock options with the same economic value, vesting
schedule, expiration date and other essential terms as existed under the
VAI stock options at the time of the spin-off on April 2, 1999. The VAI
stock options were granted at an exercise price equal to the closing
market price of VAI's stock on the grant date, became or were to become
exercisable over three years at the rate of approximately one-third each
year, expire seven or ten years from the grant date (depending on the
grant), and included the right to pay the exercise price by delivery of
already-owned shares.
7
<PAGE>
Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option/SAR Values
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options/SARs
Shares Options/SARs at at
Acquired on Fiscal Year-End (#) Fiscal Year-End ($)(/1/)
Exercise Value ------------------------- -------------------------
Name (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Allen J. Lauer.......... 0 $ 0 541,992 547,816 $4,074,257 $3,841,772
G. Edward McClammy...... 0 0 0 150,000 0 1,209,375
A. W. Homan............. 0 0 47,903 150,111 250,156 1,088,904
Garry W. Rogerson....... 0 0 54,823 153,122 310,799 1,102,949
Raymond J. Shaw......... 0 0 108,811 150,384 843,824 1,093,643
</TABLE>
- --------
(1) Based on the closing market price of the underlying shares of the
Company's common stock on October 1, 1999 ($17.5625 per share).
Pension Plan Table
<TABLE>
<S> <C> <C> <C>
Remuneration Years of Service
------------ ----------------------------------------------------------------------------
18 23 28
-------- -------- --------
$200,000 $ 70,714 $ 88,912 $107,992
225,000 79,553 100,026 121,491
250,000 88,392 111,140 134,990
275,000 97,231 122,254 148,489
300,000 106,070 133,368 161,988
325,000 114,909 144,482 175,487
350,000 123,749 155,595 188,986
375,000 132,588 166,709 202,485
400,000 141,427 177,823 215,984
425,000 150,266 188,937 229,483
</TABLE>
The foregoing table illustrates the approximate annual pension that
Raymond J. Shaw could receive under the Varian Australia Superannuation Plan
(the "Plan"), a defined benefit plan. Mr. Shaw began participation in the Plan
in 1986, and continues to participate in the Plan pursuant to the terms of his
relocation from Australia to the United States in 1987 and in lieu of
participation in any U.S.-based retirement plans. None of the other named
executive officers participates in the Plan or any other defined benefit or
actuarial plan.
Under the current terms of the Plan, senior managerial and technical
employees of Varian Australia Pty. Ltd. ("VAPL") may be invited to participate
in the Plan. Participants become fully vested in their pension benefits upon
reaching age 55. Pension benefits are determined on the basis of years of
credited service and final average compensation. Final average compensation is
calculated using the annual average of the highest three years of eligible
compensation (base salary plus targeted cash incentive compensation) paid in
the five years preceding retirement. Pension benefits are computed using a
straight-life annuity method, and are then increased by at least 3% each year
that they are paid; benefits are not subject to deductions or other offsets
other than withholdings for income taxes. Participants may elect a lump-sum
payment in lieu of a lifetime pension. The Plan provides for normal retirement
at age 65. Participants may request early retirement with the VAPL's consent
at age 55, and may elect early retirement without VAPL's consent at age 60, in
each case with reduced benefits. If a participant resigns prior to becoming
fully vested at age 55, a significantly reduced lump-sum benefit may be
payable. The Plan provides life insurance and disability benefits to
participants.
Under the terms of Mr. Shaw's continued participation in the Plan, his
pension benefits will be calculated on the basis of final average compensation
using "notional" eligible compensation. Notional eligible compensation is
determined annually and reflects what eligible compensation Mr. Shaw would
have earned (based on competitive market data, his actual compensation and
what is paid to other Company executives) were he holding the same position
but in Australia. Mr. Shaw's current notional eligible compensation is
equivalent to approximately $213,000 (which is approximately 55% of Mr. Shaw's
current annualized salary and cash bonus for fiscal year 1999, as reported in
the Summary Compensation Table on page 6). Mr. Shaw currently has 13 years of
credited service under the Plan, and would have 18, 23 and 28 years of service
at ages 55, 60 and 65, respectively. The table therefore reflects pension
benefits that would be provided, under the current terms of the Plan, if Mr.
Shaw remains an employee until he reaches each of those ages and elects a life
pension.
8
<PAGE>
Pension benefits under the Plan are paid in Australian dollars. The
amounts set forth in table are in U.S. dollars, and have been calculated using
an exchange rate equal to a published exchange rate as of the last day of
fiscal year 1999. Changes in tax laws or Plan provisions could cause actual
pension benefits to differ significantly from the amounts set forth in the
table.
Change in Control Agreements
The Board of Directors has approved Change in Control Agreements
("Agreements") between the Company and the five executive officers named in
the Summary Compensation Table on page 6 which provide for the payment of
specified compensation and benefits upon certain terminations of their
employment following a change in control of the Company. A change in control
of the Company is defined in each Agreement to occur if (a) any individual or
group becomes the beneficial owner of 30% or more of the combined voting power
of the Company's outstanding securities, (b) "continuing directors" (defined
as the directors of the Company as of the date of the Agreement and any
successor to any such directors who was nominated by a majority of the
directors in office at the time of his nomination or selection and who is not
associated in any way with an individual or group who is a beneficial owner of
more than 10% of the combined voting power of the Company's outstanding
securities) cease to constitute at least a majority of the Board of Directors,
(c) there occurs a reorganization, merger, consolidation or other corporate
transaction involving the Company in which the Company's stockholders do not
own more than 50% of the combined voting power of the Company or other
corporation resulting from such transaction, or (d) all or substantially all
of the Company's assets are sold, liquidated or distributed. In their
respective Agreements, the named executive officers agreed to not voluntarily
leave the Company's employ during a tender or exchange offer, proxy
solicitation in opposition to the Board of Directors or other effort by any
party to effect a change in control of the Company. This is intended to assure
that management will continue to act in the interest of the stockholders
rather than be affected by personal uncertainties during any attempt to effect
a change in control of the Company, and to enhance the Company's ability to
attract and retain executives.
Each Agreement provides that if within 18 months after a change in
control the Company terminates the executive's employment other than by reason
of his death, disability, retirement or for cause, or the executive officer
terminates his employment for any "good reason," the executive will receive a
lump sum severance payment equal to 2.99 (in the case of Mr. Lauer) or 2.50
(in the case of Messrs. McClammy, Homan, Rogerson and Shaw) times the
executive's annual base salary and highest annual and multi-year bonuses paid
to him in any of the three years ending prior to the date of termination.
"Good reason" is defined in each Agreement as any of the following that occurs
after a change in control of the Company: certain reductions in compensation;
certain material changes in employee benefits and perquisites; a change in the
site of employment; the Company's failure to obtain the written assumption by
its successor of the obligations contained in the Agreement; attempted
termination of employment for cause on grounds insufficient to constitute a
basis of termination for cause under the terms of the Agreement; or the
Company's failure to promptly make any payment required under the terms of the
Agreement in the event of a dispute relating to employment termination. In the
case of Mr. Lauer, "good reason" as defined also to exist if he is not
appointed as Chief Executive Officer of the combined or acquiring entity. In
the case of Messrs. McClammy and Homan, "good reason" is defined also to exist
if they are not given an "equivalent position" as defined in their Agreements.
In the case of Messrs. Rogerson and Shaw, "good reason" is defined also to
exist if there is a material change in duties and a material reduction in
authority and responsibility.
Each Agreement provides that upon termination or resignation occurring
under the circumstances described above, the executive officer will receive a
continuation of all insurance and other benefits on the same terms as if he
remained an employee (or equivalent benefits will be provided) until the
earlier to occur of commencement of substantially equivalent full-time
employment with a new employer or 24 months after the date of termination of
employment with the Company. Each Agreement also provides that all stock
options granted by the Company become exercisable in full according to their
terms, and that restricted stock (if any) be released from all restrictions.
Each Agreement further provides that in the event any payments and benefits
received by the executive officer from the Company subject that person to an
excise tax pursuant to Section 4999 of the Internal Revenue Code of 1986, as
amended, the executive officer will be entitled to receive an additional
payment so as to place the executive officer in the same after-tax economic
position as if such excise tax had not been imposed.
9
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee")
is responsible for determining compensation of the Company's executive
officers. The Committee is comprised of directors D. E. Mundell (Chairman),
John G. McDonald, Wayne R. Moon and Elizabeth E. Tallett. Each of these non-
employee directors qualifies as an outside director under Section 162(m) of
the Internal Revenue Code.
Philosophy and Overview. The Committee's general philosophy is that
executive officer compensation should
. promote stockholder returns by linking compensation with an
appropriate balance of near- and long-term objectives and
strategies;
. be competitive within the Company's industry and community; and
. attract, retain, motivate and reward individuals with the
experience and skills necessary to promote the Company's success.
Consistent with these objectives, the Committee developed its current
executive compensation programs in the context of the Company becoming a
separate, publicly-traded company in April 1999. The Committee was
particularly sensitive to the need to attract and retain experienced and
skilled executives during and beyond the Company's "spin-off" from Varian
Associates, Inc.
The Committee was assisted by an executive compensation consultant
retained by the Committee. The consultant prepared a report that included a
comprehensive analysis of total direct compensation and its individual
components relative to competitive market data for each of the Company's new
executive officer positions. Market data was derived from six published
surveys of electronics, technology and/or general industrial companies, as
well as a more focused survey of eleven companies in related industries, of
similar size or in the same geographic area. The report included competitive
market data on incentive compensation practices, such as plan types, plan
features and performance measures.
After considering all of the foregoing, the Committee developed an
executive compensation program consisting of three basic elements: base
salary; near-term incentives in the form of annual cash bonuses; and long-term
incentives in the form of non-qualified stock options.
Base Salaries. Annual base salaries are designed primarily to attract
and retain executives, and are intended to contribute less to total
compensation than incentive-based compensation. Starting salaries for the
Company's executive officer salaries were determined by the Committee after
consideration of the consultant's report described above. Salaries were
determined on the basis of job responsibilities, internal equity and market
competitiveness. The Committee did not use any particular formula in setting
salaries, although the salaries set by the Committee generally fell between
the 50th and 75th percentiles of the consultant's survey data.
Cash Bonuses. Cash bonuses are intended to motivate executive officers
to achieve pre-determined near-term financial objectives consistent with the
Company's overall business strategies. These bonuses were structured as
potential cash awards under the Company's Management Incentive Plan (the
"MIP") for the six-month performance period of the Company's first fiscal year
(i.e., the first six months after the Company became a separate, publicly-
traded company). The Committee determined that executive officer awards for
that period should be based on Company or business unit performance against
pre-determined objectives for earnings before interest and taxes ("EBIT"),
return on sales ("ROS") and operating cash flow ("Cash Flow"), the targets for
which were determined by the Committee after consideration of historical (pro
forma) and budgeted EBIT, ROS and Cash Flow.
Under the MIP payout formula for the six-month performance period of
fiscal year 1999, the bonus to the CEO could have ranged from zero to 100% of
his annual base salary, depending on the EBIT, ROS and Cash Flow achieved. In
the case of other executive officers, the bonus could have ranged from zero to
75% of annual
10
<PAGE>
base salary, depending on the EBIT, ROS and Cash Flow achieved and the pre-
determined participation level for that executive officer. Each executive
officer's participation level was determined by the Committee after
consideration of the executive officer's relative position and
responsibilities and base salary, and the competitive market data included in
the report prepared by the Committee's executive compensation consultant
(although the Committee did not place any particular weight on any particular
factor or data).
Stock Options. Stock options are intended to provide longer-term
incentives for executive officers to promote stockholder value. Non-qualified
stock options granted under the Company's Omnibus Stock Plan have an exercise
price equal to the market price of the Company's stock on the grant date, vest
in equal installments over three years assuming continued employment and
expire at the end of ten years. Stock options therefore compensate executive
officers only if the Company's stock price increases after the date of grant
and the executive officer remains employed for the periods required for the
stock option to become exercisable. Accordingly, the Committee believes that
stock options are the best method of linking executive compensation to
stockholder returns.
Executive officer grants in fiscal year 1999 were determined by the
Committee after consideration of each executive officer's relative position
and responsibilities and total cash compensation, and the competitive market
data included in the report prepared by the Committee's executive compensation
consultant (although the Committee did not place any particular weight on any
particular factor or data).
Other Compensation. In order to attract and retain talented executive
officers, the Committee has also approved arrangements providing executive
officers with certain perquisites, such as use of a Company-leased automobile,
reimbursement for taxes on income imputed for their personal use of that
automobile, reimbursement for tax planning and tax return preparation and
financial counseling services, and reimbursement for an annual medical
examination. In addition, in order to compensate for retirement contributions
that could not be made to executive officers' qualified retirement plan
accounts due to Internal Revenue Code limitations, the Committee approved the
Supplemental Retirement Plan under which the Company makes unfunded
supplemental retirement contributions. Executive officers are also eligible to
participate in compensation and benefit programs generally available to other
employees. The Committee also determined it necessary and appropriate to pay a
hiring bonus to Mr. McClammy, who was hired as the Company's Vice President
and Chief Financial Officer.
Tax Deductibility of Executive Compensation. Section 162(m) of the
Internal Revenue Code generally provides that publicly-held corporations may
not deduct in any taxable year certain compensation in excess of $1,000,000
paid to the chief executive officer and the next four most highly compensated
executive officers. In February 2000, the Company's Omnibus Stock Plan and
Management Incentive Plan were approved by the stockholders of Varian
Associates, Inc. in order for awards under those Plans to be eligible for
continued tax deductibility. Awards under those Plans for fiscal year 1999
were made in accordance with the requirements of Section 162(m) so as to be
tax deductible. However, the Committee considers one of its primary
responsibilities to be structuring a compensation program that will attract,
retain and reward executives with the experience, skills and proven ability to
maximize stockholder returns. Accordingly, the Committee believes that the
Company's interests are best served in some circumstances by providing
compensation (such as salary and perquisites) which might be subject to the
tax deductibility limitation of Section 162(m).
CEO Compensation. The Committee followed the same philosophy and
programs described above in determining fiscal year 1999 compensation for Mr.
Lauer, the Company's President and Chief Executive Officer. The Committee set
Mr. Lauer's starting base salary in accordance with the considerations and
consultant's report described above. Mr. Lauer's salary fell between the 50th
and 75th percentiles of the market data, and put his fixed compensation below
25% of his targeted total direct compensation.
Mr. Lauer participated in the MIP as described above for the six-month
period of fiscal year 1999. Mr. Lauer's targeted cash bonus for that period
was determined by the Committee after consideration of the consultant's report
and other factors described above. Fiscal year 1999 EBIT, ROS and Cash Flow
relative to the
11
<PAGE>
pre-determined targets and payout formula resulted in a cash award to Mr.
Lauer of $400,125, which was 72.75% of his annualized base salary.
The Committee also approved granting to Mr. Lauer a 400,000-share non-
qualified stock option in fiscal year 1999. That option was granted with an
exercise price equal to the closing market price of the Company's stock on the
grant date, will vest in equal installments over three years and has a term of
ten years. The number of option shares granted was determined in accordance
with the considerations and consultant's report described above.
<TABLE>
<S> <C>
D. E. Mundell (Chairman) Wayne R. Moon
John G. McDonald Elizabeth E. Tallett
</TABLE>
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG THE COMPANY,
THE DOW JONES TECHNOLOGY SECTOR INDEX AND
THE STANDARD & POOR'S 500 COMPOSITE INDEX
The following graph compares the cumulative total return of the
Company's common stock with the Dow Jones Technology Sector Index and the
Standard & Poor's 500 Composite Index. The comparison covers the period from
the commencement of trading in the Company's stock on March 24, 1999 through
the end of the Company's fiscal year 1999 on October 1, 1999. The graph
assumes that the value of the investment in the Company's common stock and in
each index on March 24, 1999 was $100, and assumes reinvestment of dividends
(although the Company has paid no dividends).(/1/)
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
March 24, 1999 October 1, 1999
-------------- ---------------
<S> <C> <C>
Varian, Inc. $100 $152
Dow Jones Technology Sector Index 100 121
Standard & Poor's 500 Composite Index 100 102
</TABLE>
- --------
(1) Research Data Group, Inc. is the source of the data on the indices. The
comparisons in this graph are not intended to represent a forecast of
possible future performance of the Company's common stock or stockholder
returns.
12
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company became a separate, publicly traded company on April 2, 1999.
Until that date, the Company's business was operated as the Instruments
business of Varian Associates, Inc. ("VAI"), which designed, manufactured,
sold and serviced scientific instruments and vacuum technologies, and provided
contract electronics manufacturing (the "Instruments Business"). VAI formed
the Company on January 7, 1999 as a wholly-owned subsidiary, contributed the
assets and liabilities of the Instruments Business to the Company, then on
April 2, 1999 distributed to the holders of record of VAI common stock on
March 24, 1999 one share of common stock of the Company for each share of VAI
common stock outstanding on April 2, 1999. At the same time, VAI contributed
its Semiconductor Equipment business to Varian Semiconductor Equipment
Associates, Inc. ("VSEA") and distributed to the holders of record of VAI
common stock on March 24, 1999 one share of common stock of VSEA for each
share of VAI common stock outstanding on April 2, 1999. VAI retained its
Health Care Systems business and changed its name to Varian Medical Systems ,
Inc. ("VMS") effective as of April 3, 1999. These transactions (collectively
referred to as the "Distribution") were accomplished under the terms of an
Amended and Restated Distribution Agreement dated as of January 14, 1999 by
and among the Company, VAI and VSEA (the "Distribution Agreement"). For
purposes of providing an orderly transition and to define certain ongoing
relationship between and among the Company, VMS and VSEA after the
Distribution, they each also entered into certain other agreements which
include an Employee Benefits Allocation Agreement, an Intellectual Property
Agreement, a Tax Sharing Agreement and a Transition Services Agreement, each
of which is described below.
Under the terms of the Distribution Agreement, the Company assumed
approximately 50% of VAI's term loans and received an amount of cash from VAI
such that the Company had net debt (defined in the Distribution Agreement as
the amount outstanding under the term loans and notes payable, less cash and
cash equivalents) equal to 50% of the net debt of the Company and VMS (after
giving effect to the Distribution), which was then adjusted to give VMS a net
worth of 50% of the aggregate net worth of the Company and VMS. The
Distribution Agreement also required the Company to reimburse VMS for 50% of
certain costs and expenses incurred in connection with the Distribution,
including incentive and termination payments made to VAI employees whose
employment was terminated in connection with the Distribution. The Agreement
also required VMS to dispose of certain assets, the net proceeds of which were
to be shared equally with the Company. The sharing of these Distribution-
related expenses and proceeds were included in the final determination of debt
to be assumed by the Company under the terms of the Distribution Agreement.
The net effect of these transactions and arrangements was the Company's
assumption of $71,465,000 in debt from VAI during fiscal year 1999. Additional
adjustments for these transactions and arrangements could result in cash
payments by the Company to VMS or by VMS to the Company.
Under the terms of the Distribution Agreement, the Company also agreed
to indemnify VMS and VSEA for one-third of certain costs and expenses (after
adjusting for any insurance proceeds and tax benefits recognized or realized
by VMS or VSEA for such costs and expenses) of certain other liabilities not
related to the Instruments Business or VAI's Semiconductor Equipment or Health
Care Systems businesses, including liabilities associated with certain
discontinued operations and environmental liabilities. In fiscal year 1999,
the Company made payments to VMS of approximately $257,000 under these
indemnity arrangements.
The Employee Benefits Allocation Agreement provides for the allocation
of certain liabilities and responsibilities with respect to employee
compensation, benefits and labor matters. Under this Agreement, the Company
assumed all liabilities related to the Instruments Business' current and
former employees, and agreed to indemnify VMS and VSEA for one-third of
certain costs and expenses of liabilities not related to current or former
employees of the Instruments Business or VAI's Semiconductor Equipment or
Health Care Systems businesses. The Company and VSEA also agreed to grant
certain stock options to their respective employees and to certain former VAI
employees and directors in full or partial replacement of VAI stock options
granted prior to the Distribution. In fiscal year 1999, the Company made no
payments to VMS under the terms of the Employee Benefits Allocation Agreement,
but granted options to purchase an aggregate of approximately 4,281,541 shares
of the Company's common stock.
13
<PAGE>
The Intellectual Property Agreement provides for the allocation and
licensing among the Company, VMS and VSEA of the Intellectual Property (as
defined in the Distribution Agreement), including patents, trademarks,
software and trade secrets, owned or held by VAI as of the Distribution. Under
the terms of the Intellectual Property Agreement, each company received
ownership of or rights in all intellectual property created for or used
primarily in its business, and received non-exclusive, perpetual, royalty-free
cross-licenses to the intellectual property of the other two companies (except
for trademarks, trade names and the like) for use in their respective fields.
In addition, VMS retained ownership of the "VARIAN" name and the "VA" logo,
with the Company and VSEA receiving exclusive, perpetual, royalty-free
licenses to the name and logo for use in their respective fields. No payments
were made by or to the Company in fiscal year 1999 with respect to the
Intellectual Property Agreement.
The Tax Sharing Agreement defines the respective rights and obligations
of the Company, VMS and VSEA with respect to federal, state, foreign and other
taxes relating to VAI's businesses for tax periods prior to, including and
following the Distribution date and with respect to certain other tax matters.
In general, VMS is responsible for U.S. federal and state income taxes for
operations through the Distribution date. Liability for foreign income taxes
and non-income taxes is generally allocated to the legal entity on which such
taxes are imposed, except for taxes transferred on the Company's, VMS' and
VSEA's respective closing balance sheets as of the Distribution date.
Adjustments to the reported tax liability for tax periods through the
Distribution date will be shared equally by the three companies. The Company,
VMS and VSEA also agreed not to take or to permit certain actions inconsistent
or potentially inconsistent with the tax ruling issued by the Internal Revenue
Service with respect to the Distribution. No payments were made by or to the
Company in fiscal year 1999 with respect to the Tax Sharing Agreement.
The Transition Services Agreement provides for (a) the sharing among the
Company, VMS and VSEA of certain facilities and equipment for a temporary
period not to exceed one year following the Distribution date, (b) the
provision of employees and sharing of certain third party services in order to
provide treasury, tax, accounting, payroll, human resources and similar and
related functions for a temporary period not to exceed one year, and (c) the
provision of information services personnel, equipment and support for a
period not to extend beyond June 30, 2000. Compensation for these services and
facilities is on a fully-burdened cost reimbursement basis. In fiscal year
1999, the Company made net payments to VMS of approximately $3,378,000 under
the terms of the Transition Services Agreement.
Following the Distribution, the Company has supplied products to VMS
under various supply agreements and purchase orders negotiated between the
Company and VMS. In fiscal year 1999, the Company received approximately
$5,575,000 in payments from VMS for products supplied to VMS by the Company.
Prior to the Distribution, the Company's Chairman of the Board, D. E.
Mundell, and Company directors John G. McDonald, Wayne R. Moon and Elizabeth
E. Tallett served on VAI's Board of Directors. The Company's President and
Chief Executive Officer, Allen J. Lauer (also a Company director) served as
VAI's Executive Vice President responsible for the Instruments Business. As
part of the Distribution, each of these Company directors resigned their
positions with VAI effective as of the Distribution. In the case of Messrs.
Mundell, McDonald and Moon and Ms. Tallett, their VAI stock options were then
replaced with stock options of aggregate equivalent value, divided equally
among the Company, VMS and VSEA. Mr. Lauer's VAI stock options were replaced
with Company stock options of equivalent value. These replacement option
shares are included in the aggregate option shares reported above.
14
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires that the Company's directors and executive officers, and persons who
own more than ten percent of the Company's securities, file reports of
ownership and changes in ownership of Company securities with the Securities
and Exchange Commission. Based solely on the Company's review of the reporting
forms and written representations received by it from such directors and
executive officers, the Company believes that through October 1, 1999, all
reporting requirements applicable to directors, executive officers and ten
percent stockholders were timely satisfied.
INDEPENDENT PUBLIC ACCOUNTANTS
PricewaterhouseCoopers LLP served as the Company's independent public
accountants for fiscal year 1999, and is currently serving as the Company's
independent public accountants. A representative of PricewaterhouseCoopers LLP
is expected to attend the Annual Meeting, and will have an opportunity to make
a statement if he or she so desires and to respond to appropriate questions.
STOCKHOLDER PROPOSALS
Any stockholder who wishes to present a proposal for action at the
Company's Annual Meeting of Stockholders in 2001, and who wishes to have it
set forth in the proxy statement and identified in the form of proxy prepared
by the Company for that meeting, must notify the Company's Secretary not later
than August 28, 2000 at the Company's address set forth on the first page of
this Proxy Statement. Such a proposal must be in the form required under the
rules and regulations of the Securities and Exchange Commission.
The Company's Bylaws contain specific procedural requirements regarding
a stockholder's ability to nominate a director or submit a proposal to be
considered at a meeting of stockholders. If you would like a copy of the
procedures contained in the Bylaws, you should contact the Company's
Secretary, A.W. Homan, at Varian, Inc., 3120 Hansen Way, Palo Alto, California
94304-1030.
By Order of the Board of Directors
[Signature of A. W. Homan]
A.W. Homan
Secretary
December 29, 1999
Palo Alto, California
15
<PAGE>
PROXY
VARIAN, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS--FEBRUARY 10, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Varian, Inc. hereby constitutes and
appoints Allen J. Lauer and Arthur W. Homan, and each of them, proxies and
attorneys-in-fact of the undersigned, with full power of substitution, to vote
all of the shares of Common Stock of Varian, Inc. standing in the name of the
undersigned, at the Annual Meeting of Stockholders of Varian, Inc. to be held
at the Sheraton Palo Alto Hotel, 625 El Camino Real, Palo Alto, California, on
February 10, 2000, at 2:00 p.m., local time, and at any adjournment or
postponement thereof.
Unless a contrary instruction is provided, this Proxy will be voted
FOR the nominee for director listed in Proposal 1 and in accordance with the
judgment of the proxies as to the best interests of the Company on such other
business as may properly come before the Annual Meeting or any adjournment or
postponement thereof. If specific instructions are provided below, this Proxy
will be voted in accordance therewith.
________________________________________________________________________________
________________________________________________________________________________
(If you have written in the above space, please mark the corresponding box on
the reverse side of this card)
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY IN THE ENCLOSED
POSTAGE-PAID RETURN ENVELOPE
-----------
(Continued and to be Signed on Reverse Side) SEE REVERSE
SIDE
-----------
- --------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
[LOGO OF SHERATON PALO ALTO HOTEL]
Sheraton Palo Alto
------------------
H O T E L
Locater Map
The Sheraton Palo Alto Hotel is
easily accessible from Highway 101
and from Interstate 280.
. From Highway 101 in either
[MAP APPEARS HERE] direction, exit Embarcadero Rd.
WEST to El Camino Real. Turn
right on El Camino Real. The
hotel is located 3 blocks down
on the right.
. From Interstate 280 in either
direction, exit Page Mill Rd.
EAST to El Camino Real. Turn
left on El Camino Real. Travel
approximately 2 miles on El
Camino Real. The hotel is
located on the right.
625 EL CAMINO REAL . PALO ALTO, CA 94301
PHONE: (650) 328-2800 . FAX: (650) 327-7362
<PAGE>
[X] Please mark your 3855
vote with an X.
The Board of Directors Recommends a Vote "FOR" Proposal 1.
________________________________________________________________________________
FOR WITHHELD
1. Election of
Director [ ] [ ]
Nominee: Allen J. Lauer Instructions/Change of Address [ ]
________________________________________________________________________________
Please sign exactly as name appears on
your stock certificate. If the stock is
registered in the names of two or more
persons, each should sign. Executors,
administrators, trustees, guardians,
attorneys and corporate officers should
so indicate and insert their titles.
________________________________________
________________________________________
SIGNATURE(S) DATE
- -----------------------------------------------------------------------------
DETACH AND RETURN PROXY CARD
VARIAN, INC.
Annual Meeting of Stockholders
February 10, 2000
2:00 p.m.
Sheraton Palo Alto Hotel
625 El Camino Real
Palo Alto, California
(Map on Reverse Side)
