<PAGE>
SCHEDULE 14A INFORMATION
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 Section240.14a-11(c) or
Section240.14a-12
COHERENT, 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)(1)
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):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / 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.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
-----------------------------------------------------------------------
<PAGE>
[LOGO]
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MARCH 27, 1998
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of COHERENT,
INC. (the "Company"), a Delaware corporation, will be held on Friday, March 27,
1998 at 5:30 p.m., local time, at the Company's principal offices located at
5100 Patrick Henry Drive, Santa Clara, California, for the following purposes:
1. To elect six directors to serve for the ensuing year and until their
successors are duly elected (Proposal One);
2. To approve the amendment of the Company's Productivity Incentive Plan to
remove the 90-day eligibility period under the plan (Proposal Two);
3. To ratify the appointment of Deloitte & Touche LLP as independent public
accountants to the Company for the fiscal year ending September 26, 1998
(Proposal Three); and
To transact such other business as may properly be brought before the
meeting and any adjournment(s) thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Stockholders of record at the close of business on February 9, 1998 are
entitled to notice of and to vote at the meeting.
All stockholders are cordially invited to attend the meeting. However, to
assure your representation at the meeting, you are urged to mark, sign, date and
return the enclosed proxy card as promptly as possible in the postage-prepaid
envelope enclosed for that purpose. Any stockholder attending the meeting may
vote in person even if he or she has returned a proxy.
Sincerely,
Larry W. Sonsini
SECRETARY
Santa Clara, California
February 12, 1998
YOUR VOTE IS IMPORTANT
IN ORDER TO ASSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE REQUESTED TO
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE AND
RETURN IT IN THE ENCLOSED ENVELOPE.
<PAGE>
COHERENT, INC.
5100 PATRICK HENRY DRIVE
SANTA CLARA, CALIFORNIA 95054
------------------------
PROXY STATEMENT
------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of the Board of Directors of
COHERENT, INC. (the "Company") for use at the Annual Meeting of Stockholders to
be held at the Company's principal offices located at 5100 Patrick Henry Drive,
Santa Clara, California 95054, on March 27, 1998 at 5:30 p.m., local time, and
at any adjournment(s) thereof, for the purposes set forth herein and in the
accompanying Notice of Annual Meeting of Stockholders. The Company's telephone
number at the address above is (408) 764-4000. These proxy solicitation
materials were mailed on or about February 16, 1998 to all stockholders entitled
to vote at the meeting.
RECORD DATE AND SHARE OWNERSHIP
Stockholders of record at the close of business on February 9, 1998 (the
"Record Date") are entitled to notice of and to vote at the meeting and at any
adjournment(s) thereof. At the Record Date, 11,590,963 shares of the Company's
Common Stock, $0.01 par value, were issued and outstanding.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Company (Attention:
Scott H. Miller, Senior Vice President and General Counsel) a written notice of
revocation or a duly executed proxy bearing a later date or by attending the
meeting and voting in person.
VOTING AND SOLICITATION
On all matters other than the election of directors, each share has one
vote. See "Election of Directors -- Vote Required."
The cost of this solicitation will be borne by the Company. The Company has
retained the services of D.F. King & Co., Inc. (the "Solicitor") to aid in the
solicitation of proxies from brokers, bank nominees and other institutional
owners. The Company estimates that it will pay the Solicitor a fee not to exceed
$3,500 for its services and will reimburse the Solicitor for certain
out-of-pocket expenses estimated to be $5,000. In addition, the Company may
reimburse brokerage firms and other persons representing beneficial owners of
shares for their expenses in forwarding solicitation material to such beneficial
owners. Proxies may also be solicited by certain of the Company's directors,
officers and regular employees, without additional compensation, personally or
by telephone or telegram.
1
<PAGE>
QUORUM; ABSTENTIONS; BROKER NON-VOTES
The Company's Bylaws provide that stockholders holding a majority of the
shares of Common Stock issued and outstanding and entitled to vote on the Record
Date shall constitute a quorum at meetings of stockholders. Shares that are
voted "FOR," "AGAINST" or "WITHHELD" on a matter are treated as being present at
the meeting for purposes of establishing a quorum and are also treated as
"entitled to vote on the subject matter" (the "Votes Cast") at the Annual
Meeting and with respect to such matter.
While there is no definitive statutory or case law authority in Delaware as
to the proper treatment of abstentions, the Company believes that abstentions
should be counted for purposes of determining the presence or absence of a
quorum for the transaction of business and the total number of Votes Cast with
respect to a particular matter (other than the election of directors).
Accordingly, with the exception of the proposal for the election of directors,
abstentions will have the same effect as a vote against the proposal. Because
directors are elected by a plurality vote, abstentions in the election of
directors have no impact once a quorum exists.
In a 1988 Delaware case, BERLIN V. EMERALD PARTNERS, the Delaware Supreme
Court held that, while broker non-votes may be counted for purposes of
determining the presence or absence of a quorum for the transaction of business,
broker non-votes should not be counted for purposes of determining the number of
Votes Cast with respect to the particular proposal on which the broker has
expressly not voted. Broker non-votes with respect to proposals set forth in
this Proxy Statement will therefore not be considered "Votes Cast" and,
accordingly, will not affect the determination as to whether the requisite
majority of Votes Cast has been obtained with respect to a particular matter.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
The Company currently intends to hold its 1999 Annual Meeting of
Stockholders in March 1999 and to mail proxy statements relating to such meeting
in February 1999. Proposals of stockholders of the Company that are intended to
be presented by such stockholders at that meeting must be received by the
Company no later than October 5, 1998 and must otherwise be in compliance with
applicable laws and regulations in order to be considered for inclusion in the
proxy statement and form of proxy relating to that meeting.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "SEC") and the National Association of Securities Dealers. Such officers,
directors and ten-percent stockholders are also required by SEC rules to furnish
the Company with copies of all forms that they file pursuant to Section 16(a).
Based solely on its review of the copies of such forms received by the Company,
or on written representations from certain reporting persons that no other
reports were required for such persons, the Company believes that, during fiscal
1997, all Section 16(a) filing requirements applicable to its officers,
directors and ten-percent stockholders were complied with.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of the Record Date certain information
with respect to the beneficial ownership of the Company's Common Stock by (i)
any person (including any "group" as that term is used
2
<PAGE>
in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) known by the Company to be the beneficial owner of more than 5%
of the Company's voting securities, (ii) each director and each nominee for
director to the Company, (iii) each of the executive officers named in the
Summary Compensation Table appearing herein, and (iv) all executive officers and
directors of the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF PERCENT
NAME AND ADDRESS SHARES (1) OF TOTAL
- ----------------------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
Franklin Advisers, Inc. (2)........................................................ 902,000 7.78%
Henry E. Gauthier.................................................................. 42,590 *
Robert J. Quillinan (3)............................................................ 26,447 *
Bernard J. Couillaud (4)........................................................... 25,468 *
Gerald C. Barker (5)............................................................... 22,143 *
Scott H. Miller (6)................................................................ 19,096 *
Frank P. Carrubba (7).............................................................. 10,000 *
Kevin P. Connors (8)............................................................... 8,730 *
Jerry E. Robertson................................................................. 7,500 *
Thomas Sloan Nelsen (9)............................................................ 6,000 *
John Ambroseo (10)................................................................. 2,969 *
Charles W. Cantoni (11)............................................................ 5,000 *
All directors and executive officers as a group (13 persons) (12).................. 190,836 1.63%
</TABLE>
- ------------------------
* Represents less than 1%.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission (the "SEC") and generally includes voting
or investment power with respect to the securities. In computing the number
of shares beneficially owned by a person and the percentage ownership of
that person, shares of Coherent Common Stock subject to options held by that
person will be exercisable on or before February 9, 1998, are deemed
outstanding. Such shares, however, are not deemed outstanding for the
purpose of computing the percentage ownership of any other person.
(2) Represents shares reported by Carson Group as being held by Franklin
Advisers, Inc. as of September 30, 1997.
(3) Includes 18,000 shares issuable upon exercise of options held by Mr.
Quillinan which are currently exercisable or will become exercisable within
60 days of the Record Date.
(4) Includes 15,000 shares issuable upon exercise of options held by Mr.
Couillaud which are currently exercisable or will become exercisable within
60 days of the Record Date.
(5) Includes 13,250 shares issuable upon exercise of options held by Mr. Barker
which are currently exercisable or will become exercisable within 60 days of
the Record Date.
(6) Includes 7,500 shares issuable upon exercise of options held by Mr. Miller
which are currently exercisable or will become exercisable within 60 days of
the Record Date.
(7) Includes 5,000 shares issuable upon exercise of options held by Mr. Carrubba
which are currently exercisable or will become exercisable within 60 days of
the Record Date.
3
<PAGE>
(8) Includes 8,250 shares issuable upon exercise of options held by Mr. Connors
which are currently exercisable or will become exercisable within 60 days of
the Record Date.
(9) Includes 5,000 shares issuable upon exercise of options held by Dr. Nelsen
which are currently exercisable or will become exercisable within 60 days of
the Record Date.
(10) Includes 1,500 shares issuable upon exercise of options held by Mr.
Ambroseo which are currently exercisable or will become exercisable within
60 days of the Record Date.
(11) Includes 5,000 shares issuable upon exercise of options held by Mr. Cantoni
which are currently exercisable or will become exercisable within 60 days of
the Record Date.
(12) Includes an aggregate of 86,250 options which are currently exercisable or
will become exercisable within 60 days of the Record Date.
4
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
NOMINEES
A board of six (6) directors is to be elected at the Annual Meeting of
Stockholders. Unless otherwise instructed, the proxy holders will vote the
proxies received by them for the Company's nominees named below. Each nominee
has consented to be named a nominee in the proxy statement and to continue to
serve as a director if elected. In the event that any nominee becomes unable or
declines to serve as a director or should additional persons be nominated at the
meeting, the proxy holders intend to vote all proxies received by them in such a
manner (in accordance with cumulative voting) as will assure the election of as
many of the nominees listed below as possible (or, if new nominees have been
designated by the Board of Directors, in such a manner as to elect such
nominees), and the specific nominees to be voted for will be determined by the
proxy holders. The Company is not aware of any reason that any nominee will be
unable or will decline to serve as a director. The term of office of each person
elected as a director will continue until the next Annual Meeting of
Stockholders or until a successor has been elected and qualified. There are no
arrangements or understandings between any director or executive officer and any
other person pursuant to which he is or was to be selected as a director or
officer of the Company.
The names of the nominees, all of whom are currently directors of the
Company, and certain information about them as of the Record Date, are set forth
below.
<TABLE>
<CAPTION>
DIRECTOR
NAME OF NOMINEE AGE SINCE PRINCIPAL OCCUPATION
- --------------------------------------------- --- --------- ---------------------------------------------------
<S> <C> <C> <C>
Bernard J. Couillaud (3)..................... 53 1996 President and Chief Executive Officer of the
Company
Henry E. Gauthier............................ 57 1983 Chairman of the Board of Directors of the Company
Charles W. Cantoni (1)(2)(3)................. 62 1983 Vice President, Quinton Instruments, Inc.
Frank P. Carrubba (1)(2)(3).................. 60 1989 Retired Chief Technical Officer, Phillips
Electronics N.V.
Thomas Sloan Nelsen (1)(2)................... 71 1983 Retired Professor of Surgery, Stanford University
School of Medicine
Jerry E. Robertson (1)(2).................... 65 1994 Retired Executive Vice President, 3M Life Sciences
Sector and Corporate Services
</TABLE>
- ------------------------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
(3) Member of the Nominating Committee
Except as set forth below, each of the nominees has been engaged in his
principal occupation set forth above during the past five years. There is no
family relationship between any director or executive officer of the Company.
Mr. Cantoni is Vice President, Quinton Instruments, Inc., a manufacturer of
medical instrumentation products, a position he has held since October 1994.
From August 1988 until September 1994 he was President of ImageComm Systems,
Inc., a value added reseller of medical image processing systems.
5
<PAGE>
Mr. Robertson retired from 3M in 1994. He is a member of the board of
directors of Manor Care, Inc., Cardinal Health, Inc., Haemonetics Corporation,
Steris Corporation, Life Technologies, Inc., Allianz Life Insurance Company of
North America, Choice Hotels International, Medwave, Inc. and Project HOPE.
Mr. Couillaud is President and Chief Executive Officer as well as a member
of the Board of Directors since July 1996. He served as Vice President and
General Manager of Coherent Laser Group from March 1992 to July 1996. From 1990
to March 30, 1992, he served as Manager of the Advanced Systems Business Unit,
and from 1987 to 1990 served as Director of R&D for the Coherent Laser Group.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of four (4) meetings
during the fiscal year ended September 27, 1997. No director serving during such
fiscal year attended fewer than 75% of the aggregate of all meetings of the
Board of Directors and the committees of the Board upon which such director
served. The Board of Directors has three committees, the Audit Committee, the
Compensation Committee and the Nominating Committee.
The Audit Committee of the Board of Directors, which consists of directors
Carrubba, Cantoni, Nelsen and Robertson, held two (2) meeting during the last
fiscal year. The Audit Committee recommends engagement of the Company's
independent public accountants and is primarily responsible for approving the
services performed by the Company's independent public accountants and for
reviewing and evaluating the Company's accounting principles and its system of
internal accounting controls.
The Compensation Committee of the Board of Directors consists of directors
Carrubba, Cantoni, Nelsen and Robertson, and held one (1) meeting during the
last fiscal year. The Compensation Committee reviews and approves the Company's
executive compensation policy and grants stock options to employees of the
Company, including officers pursuant to the Company's stock option plans.
The Nominating Committee of the Board of Directors consists of directors
Couillaud, Cantoni and Carrubba. The Nominating Committee was established in
January 1998 and has yet to meet.
DIRECTOR COMPENSATION
In fiscal year 1997, members of the Board of Directors who were not
employees of the Company received $8,000 plus $500 per meeting attended and were
reimbursed for their expenses incurred in attending such meetings. Beginning in
fiscal year 1998, members of the Board of Directors who are not employees of the
Company will receive $16,000 plus $1,500 per meeting attended and will be
reimbursed for their expenses incurred in attending such meetings.
The Company's 1990 Directors' Stock Option Plan (the "Directors' Option
Plan") was adopted by the Board of Directors on December 8, 1989 and was
approved by the stockholders on March 29, 1990. The Directors' Option Plan was
amended by the Board of Directors on January 25, 1996 and was approved by the
stockholders on March 20, 1996. The Directors' Option Plan provides for the
automatic and nondiscretionary grant of a non-statutory stock option to purchase
10,000 shares of the Company's Common Stock to each non-employee director on the
later of the effective date of the Directors' Option Plan or the date on which
such person becomes a director. Thereafter, each non-employee director will be
automatically granted a nonstatutory stock option to purchase 2,500 shares of
Common Stock on the date of and immediately following each Annual Meeting of
Stockholders at which such non-employee director
6
<PAGE>
is re-elected to serve on the Board of Directors, if, on such date, he or she
has served on the Board for at least three months. Such plan provides that the
exercise price shall be equal to the fair market value of the Common Stock on
the date of grant of the options.
Three non-employee directors have each been granted options to purchase
27,500 shares of the Company's Common Stock under such plan at a weighted
average exercise price of $20.55. One non-employee director has been granted
options to purchase 17,500 shares of the Company's Common Stock under such plan
at a weighted average exercise price of $24.45 per share. One non-employee
director has been granted options to purchase 10,000 shares of the Company's
Common Stock under such plan at a weighted average exercise price of $45.00 per
share. As of the Record Date, 50,000 shares had been issued on exercise of such
options. The following table shows, as to each non-employee director,
information concerning options exercised under the Directors' Option Plan during
the last fiscal year:
OPTION EXERCISES IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
SHARES ACQUIRED VALUE
NAME ON EXERCISE REALIZED (1)
- -------------------------------------------------------------------------- ----------------- -----------
<S> <C> <C>
Frank P. Carrubba......................................................... 2,500 $ 83,750
Thomas Sloan Nelsen....................................................... 2,500 90,000
Jerry E. Robertson........................................................ 2,500 50,625
</TABLE>
- ------------------------
(1) The market value of underlying securities is based on the closing price of
the Company's Common Stock on the date of exercise.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is composed of Directors Carrubba, Cantoni,
Nelsen and Robertson. During the last fiscal year, the Company paid Dr. Thomas
Nelsen $63,000 in consulting fees. Dr. Nelsen has more than 40 years of
experience as a physician and, before his retirement, was a Professor of Surgery
at Stanford University School of Medicine. Utilizing this experience, Dr. Nelsen
has worked closely with the Company in developing and refining new laser
products for the medical field. Management believes that this arrangement is at
least as favorable as could be negotiated with an outside consultant.
Mr. Gauthier and the Company have entered into a Management Transition
Agreement pursuant to which Mr. Gauthier has agreed to provide employment and
consulting services to the Company through June 30, 1999. In consideration for
these services, the Company has agreed to pay Mr. Gauthier his base salary
through June 30, 1997, an hourly consulting fee equal to $175.00 for services
rendered through June 30, 1999, and to provide him with benefits under the
Company's medical, dental and life insurance plans.
VOTE REQUIRED
Every stockholder voting for the election of directors may cumulate such
stockholder's votes and give one candidate a number of votes equal to the number
of directors to be elected multiplied by the number of votes to which the
stockholder's shares are entitled. Alternatively, a stockholder may distribute
his or her votes on the same principle among as many candidates as the
stockholder thinks fit, provided that votes cannot be cast for more than six
candidates. However, no stockholder shall be entitled to cumulate votes for a
candidate unless such candidate's name has been placed in nomination prior to
the voting and
7
<PAGE>
the stockholder, or any other stockholder, has given notice at the meeting prior
to the voting of the intention to cumulate the stockholder's votes.
If a quorum is present and voting, the six nominees receiving the highest
number of votes will be elected to the Board of Directors. See "Information
Concerning Solicitation and Voting -- Quorum; Abstentions; Broker Non-Votes."
MANAGEMENT RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE NOMINEES LISTED ABOVE.
8
<PAGE>
PROPOSAL TWO
AMENDMENT OF THE PRODUCTIVITY INCENTIVE PLAN
In January, 1998 the Company's Board of Directors authorized the amendment
of the Company's Productivity Incentive Plan (the "Plan"), subject to
stockholder approval, to remove the requirement that employees work 90 days
before they are eligible to participate in the Plan.
Management believes that many employees make immediate contributions to the
success of the Company. Accordingly, they would like to enable employees to
participate in the first three-month period of the Plan which commences
following an employee's hire date.
The materials features of the Plan are outlined below:
SUMMARY OF THE PRODUCTIVITY INCENTIVE PLAN
PURPOSE. The purpose of this Plan is to afford an incentive to employees of
the Company and its subsidiaries and to enable the Company and its subsidiaries
to retain and attract personnel of the highest caliber who by their position,
ability and diligence are able to make important contributions to the Company's
success.
ADMINISTRATION. The Plan is administered by management of the Company under
the direction of the Board of Directors. The administration, interpretation or
application of the Plan by the Board or management shall be final, conclusive
and binding upon all participants. Members of the Board of Directors and
management are permitted to participate in the Plan provided such persons are
eligible Employees.
DISTRIBUTION OF CASH OR COMMON STOCK. At the end of each three month period
of the Plan, the Company distributes cash or shares of Common Stock, at the
election of the participating employee; provided, however, that only cash is
distributed when the amount of incentive compensation is less than one day's
base earnings. The amount distributed is equal to the quarterly base earnings of
a participating employee multiplied by 50% of the quarterly pre-tax profit
percentage of the Company. The Company distributes cash to each participating
employee unless he or she notifies the Company in writing that he or she elects
to receive Common Stock. The number of shares of Common Stock to be distributed
to a participating employee is determined by dividing the amount of incentive
compensation by the fair market value of a share of the Company's Common Stock.
No fractional shares are distributed, but the dollar amount of any fractional
share is carried forward to the next three month period (if the employee is
still participating at that time).
DELIVERY OF CASH OR SHARE CERTIFICATES. As so as practicable after each
three month period of the Plan, the Company delivers stock certificates to each
participating employee who elected to receive shares of Common Stock and a check
to each participating employee who elected to receive cash.
TERMINATION OF EMPLOYMENT; DEATH. Upon termination of a participating
employee's employment for any reason, including retirement or death, his
participation in the Plan is automatically terminated. If such termination
occurs during a three month period of the Plan, the participating employee is
not entitled to any cash or stock distribution for that period (unless the
termination is caused by the employee's death, in which case his designated
beneficiary shall receive a cash or Common Stock distribution at the election of
the designated beneficiary).
9
<PAGE>
STOCK. The number of shares of Common Stock which are reserved for
distribution under the Plan is 450,000 shares, subject to adjustment upon
changes in capitalization of the Company. The shares of Common Stock to be
distributed to participating employees may, at the election of the Company, be
either treasury shares or shares authorized but unissued.
AMENDMENT OR TERMINATION. The Board of Directors of the Company may at any
time terminate, modify, or amend the Plan; provided, however, that approval of
the holders of a majority of the outstanding shares of the Company entitled to
vote is required for any modification or amendment which materially increases
the benefits accruing to participating employees or the number of shares
issuable under the Plan, or materially changes the standards of eligibility for
participation in the Plan.
VOTE REQUIRED
The amendment of the Plan requires the affirmative vote of a majority of the
shares of the Company's Common Stock present or represented and entitled to vote
on this proposal at the meeting. An abstention is not an affirmative vote, and
therefore, will have the same effect as a vote against the proposal. See
"Information Concerning Solicitation and Voting -- Quorum; Abstentions; Broker
Non-Votes."
MANAGEMENT RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE APPROVAL OF THE AMENDMENT
OF THE PRODUCTIVITY INCENTIVE PLAN.
10
<PAGE>
PROPOSAL THREE
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Deloitte & Touche LLP, independent
public accountants, to audit the financial statements of the Company for the
fiscal year ending September 26, 1998, and recommends that stockholders vote for
ratification of such appointment. In the event of a negative vote or
ratification, the Board of Directors will reconsider its selection. Deloitte &
Touche LLP has audited the Company's financial statements since the fiscal year
ended September 25, 1976. Representatives of Deloitte & Touche LLP are expected
to be present at the meeting with the opportunity to make a statement if they
desire to do so, and are expected to be available to respond to appropriate
questions.
MANAGEMENT RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP
AS INDEPENDENT ACCOUNTANTS.
11
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION
The following table shows, as to the Chief Executive Officer and each of the
other four most highly compensated executive officers whose salary plus bonus
exceeded $100,000, information concerning compensation awarded to, earned by or
paid for services to the Company in all capacities during the last three fiscal
years (to the extent that such person was the Chief Executive Officer and/or
executive officer, as the case may be, during any part of such fiscal year):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
AWARDS
NAME YEAR SALARY ($) BONUS ($) OPTIONS (#) ALL OTHER
- ------------------------------------------------------- ---- ------------ --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Bernard J. Couillaud 1997 $ 273,229 $ 341,797 12,000 $14,834(1)
President and Chief Executive Officer 1996 185,353 258,595 15,000 12,937
1995 166,156 140,898 6,000 11,791
Robert J. Quillinan 1997 194,964 $ 192,491 7,000 $15,267(2)
Executive Vice President and Chief Financial Officer 1996 182,361 268,251 6,000 9,527
1995 173,218 159,461 6,000 11,643
John Ambroseo (3) 1997 304,897(4) $ 80,605 10,500 $ 9,266(5)
Executive Vice President and President, 1996 119,900 98,408 2,500 6,803
Coherent Medical Group 1995 133,503 14,271 1,000 8,075
Kevin P. Connors 1997 191,540 $ 142,389 6,000 $10,859(6)
Executive Vice President and President, 1996 116,917 91,215 10,750 9,890
Coherent Medical Group 1995 96,601 35,042 1,500 5,463
Gerald C. Barker (7) 1997 159,243 $ 166,925 4,500 $11,647(8)
Former Vice President and General Manager, Coherent 1996 133,260 138,618 9,000 9,224
Laser Group 1995 123,888 69,149 2,250 10,660
Scott H. Miller 1997 153,877 $ 132,780 3,500 $12,154(9)
Senior Vice President and General Counsel 1996 146,308 154,521 2,500 14,362
1995 139,562 81,971 2,500 12,831
</TABLE>
- ------------------------
* Perquisites are not included since the aggregate amount is less than the
lesser of $50,000 or 10% of salary and bonus, in accordance with regulations
promulgated by the SEC. Therefore, the Other Annual Compensation column has
not been included in this table.
(1) Includes $12,344 contributed by the Company under defined contribution plans
and $2,490 in life insurance benefits.
(2) Includes $13,462 contributed by the Company under defined contribution plans
and $1,805 in life insurance benefits.
(3) Mr. Ambroseo became Executive Vice President and President, Coherent Laser
Group on July 25, 1997.
(4) Includes $186,162 compensation related to European assignment.
(5) Includes $9,026 contributed by the Company under defined contribution plans
and $240 in life insurance benefits.
12
<PAGE>
(6) Includes $10,506 contributed by the Company under defined contribution plans
and $353 in life insurance benefits.
(7) Mr. Barker resigned from his position as Vice President and General Manager,
Coherent Laser Group on July 25, 1997.
(8) Includes $9,554 contributed by the Company under defined contribution plans
and $2,093 in life insurance benefits.
(9) Includes $11,638 contributed by the Company under defined contribution plans
and $516 in life insurance benefits.
STOCK OPTION GRANTS AND EXERCISES
The following table shows, as to the individuals named in the Summary
Compensation Table above, information concerning stock options granted during
the fiscal year ended September 27, 1997
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
---------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF STOCK
SECURITIES % OF TOTAL PRICE APPRECIATION FOR
UNDERLYING OPTIONS GRANTED EXERCISE OPTION TERM (3)
OPTIONS TO EMPLOYEES IN PRICE EXPIRATION ----------------------
NAME GRANTED (#)(1) FISCAL YEAR (2) ($/SH) DATE 5% ($) 10% ($)
- ------------------------------------ --------------- --------------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Bernard J. Couillaud................ 2,547 0.60 $ 39.25 4/28/03 $ 33,999 $ 77,133
9,453 2.24 $ 39.25 4/28/03 126,186 286,272
Robert J. Quillinan................. 2,547 0.60 $ 39.25 4/28/03 $ 33,999 $ 77,133
4,453 1.05 $ 39.25 4/28/03 59,442 134,854
John Ambroseo....................... 2,000 0.47 $ 39.25 4/28/03 $ 26,698 $ 60,568
2,385 0.56 $ 48.50 7/25/03 39,340 89,248
6,115 1.45 $ 48.50 7/25/03 100,865 228,828
Kevin P. Connors.................... 2,547 0.60 $ 39.25 4/28/03 $ 33,999 $ 77,133
3,453 0.82 $ 39.25 4/28/03 46,093 104,570
Gerald C. Barker.................... 2,503 0.59 $ 39.25 4/28/03 $ 33,412 $ 75,800
1,997 0.47 $ 39.25 4/28/03 26,657 60,477
Scott H. Miller..................... 2,547 0.60 $ 39.25 4/28/03 $ 33,999 $ 77,133
953 0.23 $ 39.25 4/28/03 12,721 28,860
</TABLE>
- ------------------------
(1) The Company's 1987 Stock Option Plan and 1995 Stock Plan (collectively the
"Option Plans") provide for the grant of options and stock purchase rights
to officers, employees and consultants of the Company. Options granted under
the Option Plans may be either "nonstatutory options" or "incentive stock
options." The exercise price is determined by the Board of Directors or its
Compensation Committee and in the case of incentive stock options may not be
less than 100% of the fair market value of the Common Stock on the date of
grant (110% in the case of grants to 10% shareholders). The options expire
not more than ten years from the date of grant, and may be exercised only
while the optionee is employed by the Company or within such period of time
after termination of employment as is determined by the Board or its
Committee at the time of grant. The Board of Directors may determine when
options granted may be exercisable.
13
<PAGE>
(2) The Company granted options to purchase an aggregate of 363,600 to all
employees other than executive officers and granted options to purchase an
aggregate of 59,250 shares to all executive officers as a group (8 persons),
during fiscal 1997.
(3) This column sets forth hypothetical gains or "option spreads" for the
options at the end of their respective ten-year terms, as calculated in
accordance with the rules of the Securities and Exchange Commission. Each
gain is based on an arbitrarily assumed annualized rate of compound
appreciation of the market price at the date of grant of 5% and 10% from the
date the option was granted to the end of the option term. The 5% and 10%
rates of appreciation are specified by the rules of the Securities and
Exchange Commission and do not represent the Company's estimate or
projection of future Common Stock prices. The Company does not necessarily
agree that this method properly values an option. Actual gains, if any, on
option exercises are dependent on the future performance of the Company's
Common Stock and overall market conditions.
The following table shows, as to the individuals named in the Summary
Compensation Table above, information concerning stock options exercised during
the fiscal year ended September 27, 1997 and the value of unexercised options at
such date.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY OPTIONS AT
SHARES SEPTEMBER 27, 1997 (#)(2) SEPTEMBER 27, 1997 ($)(3)
ACQUIRED ON VALUE -------------------------- --------------------------
NAME EXERCISE (#) REALIZED ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------- ----------- ------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Bernard J. Couillaud......... 0 $ 0 15,000 30,000 $ 481,500 $ 407,250
Robert J. Quillinan.......... 0 $ 0 18,000 19,000 $ 750,750 $ 336,000
John Ambroseo................ 2,200 $ 64,413 0 13,500 $ 0 $ 125,750
Kevin P. Connors............. 0 $ 0 5,250 15,000 $ 115,844 $ 202,313
Gerald C. Barker............. 0 $ 0 11,000 13,500 $ 380,281 $ 172,156
Scott H. Miller.............. 0 $ 0 7,500 8,500 $ 312,813 $ 148,313
</TABLE>
- ------------------------
(1) The value realized is calculated based on the closing price of the Company's
Common Stock as reported by the Nasdaq National Market on the date of
exercise minus the exercise price of the option, and does not necessarily
indicate that the optionee sold such stock.
(2) The Company has not granted any stock appreciation rights and its stock
plans do not provide for the granting of such rights.
(3) The market value of underlying securities is based on the difference between
the closing price of the Company's Common Stock on September 27, 1997 of
$53.50 (as reported by Nasdaq National Market) and the exercise price.
OTHER EMPLOYEE BENEFIT PLANS
EMPLOYEE RETIREMENT AND INVESTMENT PLAN AND SUPPLEMENTARY RETIREMENT PLAN
Effective January 1, 1979, the Company adopted the Coherent Employee
Retirement and Investment Plan. Employees become eligible to participate after
completing one year of service. Under this plan, the Company will match employee
contributions to the plan up to a maximum of 6% of the employee's
14
<PAGE>
individual earnings. An employee is not entitled to any part of the Company's
contribution until the completion of his or her third year of employment. After
the end of the third year of employment, 20% of the Company's contribution
vests. Thereafter, an additional 20% of the Company's contribution vests at the
end of each year of completed service until the end of the seventh year of
employment when such contributions become 100% vested. Effective as of 1985, the
plan was amended and restated to conform the plan to new regulations and to
qualify under Section 401(k) of the Internal Revenue Code of 1986, as amended to
permit employees to make contributions to the plan from their pre-tax earnings.
Effective January 1, 1990, the Company adopted the Supplementary Retirement Plan
which provides that certain senior management may contribute income to a trust
fund. The Company will match such contributions up to 6% of the participant's
income. Such contributions are subject to the same vesting requirements as
contributions made under the Employment Retirement and Investment Plan.
MANAGEMENT BONUS PLAN
The Company's Management Bonus Plan provides for the payment of quarterly
cash bonuses to members of management designated by the Board of Directors
determined by a formula based on improvements of pre-tax profits, cash flow and
asset management over preset threshold levels for each operating group or
business unit. Those employees who participate in the Bonus Plan who are not
assigned to an operating group or business unit receive an average of such
amounts.
PRODUCTIVITY INCENTIVE PLAN
Under the Company's Productivity Incentive Plan (the "Incentive Plan")
450,000 shares of Common Stock were initially reserved and as of the fiscal year
ended September 27, 1997, 32,490 shares of Common Stock were available for
issuance to employees of the Company and its designated subsidiaries who are
customarily employed for at least twenty hours per week. The purpose of the
Incentive Plan is to enhance an employee's proprietary interest in the Company
and to create an incentive for the Company's success.
The Incentive Plan provides for the quarterly distribution of cash or Common
Stock, at the election of each participant, based upon the quarterly
profitability of the Company. The amount of cash or number of shares of Common
Stock distributed to each participant is determined by dividing a participant's
"incentive compensation" by the fair market value of the Company's Common Stock
at the end of each three-month period.
EMPLOYEE STOCK PURCHASE PLAN
The Company's Employee Stock Purchase Plan (the "Purchase Plan") was adopted
by the Board of Directors and approved by the stockholders in 1980. A total of
2,287,500 shares of Common Stock were initially reserved and as of the end of
the fiscal year 430,647 shares of Common Stock remained available for issuance
thereunder. The Purchase Plan permits employees who are employed for at least
twenty hours per week and more than five months in a calendar year to purchase
Common Stock of the Company, through payroll deductions, which may not exceed
10% of an employee's compensation, at the lower of 85% of the fair market value
of the Common Stock at the beginning or at the end of each twelve-month period.
The Purchase Plan provides for two offerings during each fiscal year, each
having a duration of twelve months.
15
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
ACT OF 1934, AS AMENDED, THAT MIGHT INCORPORATE FUTURE FILINGS, INCLUDING THIS
PROXY STATEMENT, IN WHOLE OR IN PART, THE FOLLOWING REPORT AND THE PERFORMANCE
GRAPH INCLUDED HEREIN SHALL NOT BE INCORPORATED BY REFERENCE INTO ANY SUCH
FILINGS.
INTRODUCTION
The Compensation Committee of the Board of Directors establishes the general
compensation policies of the Company, and establishes the compensation plans and
specific compensation levels for executive officers. The Committee strives to
ensure that the Company's executive compensation programs will enable the
Company to attract and retain key people and motivate them to achieve or exceed
certain key objectives of the Company by making individual compensation directly
dependent on the Company's achievement of certain financial goals, such as
profitability and asset management and by providing rewards for exceeding those
goals.
COMPENSATION PROGRAMS
BASE SALARY. The Committee establishes base salaries for executive officers,
normally within ten percent of the average paid for comparable positions at
other similarly sized companies as set forth in national and local compensation
surveys. Base pay increases vary according to individual contributions to the
Company's success and comparisons to similar positions within the Company and at
other comparable companies.
BONUS PLANS. Each executive officer participates in the Management Bonus
Plan which provides for the payment of a quarterly bonus determined by a formula
based on improvements of pre-tax profits and asset management over preset
threshold levels for each operating group or business unit.
STOCK OPTIONS. The Committee believes that stock options provide additional
incentive to officers to work towards maximizing stockholder value. The
Committee views stock options as one of the more important components of the
Company's long-term, performance-based compensation philosophy. These options
are provided through initial grants at or near the date of hire and through
subsequent periodic grants. Options granted by the Company to its executive
officers and other employees have exercise prices equal to the fair market value
at the time of grant. Options vest and become exercisable at such time as
determined by the Board. The initial option grant is designed to be competitive
with those of comparable companies for the level of the job that the executive
holds and is designed to motivate the officer to make the kind of decisions and
implement strategies and programs that will contribute to an increase in the
Company's stock price over time. Periodic additional stock options within the
comparable range for the job are granted to reflect the executives ongoing
contributions to the Company, to create an incentive to remain at the Company
and to provide a long-term incentive to achieve or exceed the Company's
financial goals.
OTHER. In addition to the foregoing, officers participate in compensation
plans available to all employees, such as a quarterly profit sharing plan and
participation in both the Company's 401(k) retirement plan and employee stock
purchase plan. See "Executive Compensation -- Other Employee Benefit Plans."
16
<PAGE>
COMPENSATION OF CHIEF EXECUTIVE OFFICER
The factors considered by the Compensation Committee in determining the
compensation of the Chief Executive Officer, in addition to survey data, include
the Company's operating and financial performance, as well as his leadership and
establishment and implementation of strategic direction for the Company.
The Compensation Committee considers stock options to be an important
component of the Chief Executive Officer's compensation as a way to reward
performance and motivate leadership for long term growth and profitability. In
1997, Mr. Couillaud was granted an option to purchase 12,000 shares with an
exercise price equal to the fair market value at date of grant ($39.25 per
share). This option becomes exercisable at the end of three years. The Committee
believes that the quantity of shares granted to Mr. Couillaud is consistent with
its philosophy of granting options to many management personnel rather than
concentrating grants on a few senior executives.
COMPENSATION LIMITATIONS
Under Section 162(m) of the Internal Revenue Code, adopted in August 1993,
and regulations adopted thereunder by the Internal Revenue Service,
publicly-held companies may be precluded from deducting certain compensation
paid to an executive officer in excess of $1.0 million in a year. The
regulations exclude from this limit performance-based compensation and stock
options provided certain requirements, such as stockholder approval, are
satisfied. The Company is studying these regulations and currently intends to
take the necessary actions to cause its stock option plans to qualify for the
exclusions. The Company does not currently anticipate taking actions necessary
to qualify the Company's executive annual cash bonus plans for the exclusions.
COMPENSATION COMMITTEE
Frank P. Carrubba
Charles W. Cantoni
Thomas Sloan Nelsen
Jerry E. Robertson
Dated: January 28, 1998
17
<PAGE>
COMPANY STOCK PRICE PERFORMANCE
The following graph shows a five-year comparison of cumulative total
stockholder return, calculated on a dividend reinvestment basis and based on a
$100 investment, from September 28, 1992 through September 28, 1997 comparing
the return on the Company's Common Stock with the Standard & Poors 500 Stock
Index and High Technology Composite Index. No dividends have been declared or
paid on the Company's Common Stock during such period. The stock price
performance shown on the graph following is not necessarily indicative of future
price performance.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
COHERENT INC. S&P 500 INDEX TECHNOLOGY-500
<S> <C> <C> <C>
9/1/92 $100.00 $100.00 $100.00
9/1/93 $167.75 $113.00 $120.62
9/1/94 $164.71 $117.17 $140.42
9/1/95 $429.41 $152.02 $221.52
9/1/96 $414.71 $182.93 $272.15
9/1/97 $651.47 $256.92 $441.98
</TABLE>
18
<PAGE>
CERTAIN TRANSACTIONS
The following table sets forth information with respect to all executive
officers of the Company who had indebtedness outstanding during the past fiscal
year. This indebtedness arose as a result of the delivery of promissory notes in
connection with the exercise of stock options.
<TABLE>
<CAPTION>
LARGEST
AMOUNT BALANCE AT
NEW LOANS INTEREST MATURITY OUTSTANDING SEPTEMBER 27,
NAME DURING 1997 RATE(S) DATE(S) DURING 1997 1997
- -------------------------------------------------- ----------------- ------------- --------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Scott H. Miller................................... $ 0 7.1% 10/04/99 $ 111,680 $ 111,680
</TABLE>
All promissory notes are full recourse and are secured by the shares of
Common Stock of the Company issued upon exercise of the options. Interest is
paid annually.
See "Election of Directors -- Compensation Committee Interlocks and Insider
Participation" for a description of Dr. Nelsen's consulting arrangement with the
Company.
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting. If any
other matters properly come before the meeting, it is the intention of the
persons named in the enclosed form Proxy to vote the shares they represent as
the Board of Directors may recommend.
THE BOARD OF DIRECTORS
Dated: February 12, 1998
19
<PAGE>
DETACH HERE
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
COHERENT, INC.
ANNUAL MEETING OF STOCKHOLDERS
March 27, 1998
The undersigned stockholder of COHERENT, INC., a Delaware corporation,
hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders
and Proxy Statement, each dated February 12, 1998, and hereby appoints
Bernard J. Couillaud and Robert J. Quillinan, and each of them, proxies and
attorneys-in-fact, with full power to each of substitution, on behalf and in
the name of the undersigned, to represent the undersigned at the Annual
Meeting of Stockholders of COHERENT, INC. to be held on March 27, 1998 at
5:30 p.m., local time, at the Company's principal offices located at 5100
Patrick Henry Drive, Santa Clara, California 95054 and at any adjournment(s)
thereof and to vote all shares of Common Stock which the undersigned would be
entitled to vote if then and there personally present, on the matters set
forth on the reverse side.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR THE AMENDMENT OF
THE COMPANY'S PRODUCTIVITY INCENTIVE PLAN, FOR THE RATIFICATION OF THE
APPOINTMENT OF THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS, AND AS SAID
PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY COME BEFORE THE MEETING
AND ANY ADJOURNMENTS THEREOF.
-----------
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE
-----------
/X/ Please mark
votes as in
this example.
1. Election of Directors
Nominees: Bernard J. Couillaud; Henry E. Gauthier; Charles W. Cantoni;
Frank P. Carrubba; Thomas Sloan Nelsen, Jerry E. Robertson
FOR WITHHELD
/ / / /
/ /
-----------------------------------------------
For all nominees accept as noted above
FOR AGAINST ABSTAIN
2. To approve the amendment of the Company's Productivity / / / / / /
Incentive Plan to remove the 90-day eligibility
period under the plan;
3. To ratify the appointment of Deloitte & Touche LLP / / / / / /
as independent public accountants to the Company
for the fiscal year ending September 26, 1998; and
4. To transact such other business as may properly be brought before the
meeting and any adjournment(s) thereof.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT / /
(This Proxy should be marked, dated, signed by the stockholder(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.)
Signature: ____________________________________ Date: ________________
Signature: ____________________________________ Date: ________________
