<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [X]
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 Section 240.14a-11(c) or Section 240.14a-12
NEWPORT CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
R.R. DONNELLEY FINANCIAL
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] 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):
-------------------------------------------------------------------------
(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:
-------------------------------------------------------------------------
Notes:
<PAGE>
NEWPORT CORPORATION
1791 DEERE AVENUE
IRVINE, CALIFORNIA 92714
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 5, 1996
----------------
To the Stockholders of Newport Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Newport
Corporation will be held at the Corporate Headquarters, 1791 Deere Avenue,
Irvine, California, on June 5, 1996, at 10:00 a.m., for the purpose of
considering and acting upon the following:
1. To elect two Class IV Directors to serve for four years.
2. To approve an amendment to the Company's 1992 Incentive Stock Plan to
limit the number of restricted shares and shares subject to options
which any individual may receive in any calendar year.
3. To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for the year ending December 31, 1996.
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business April 17, 1996, will be
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 as promptly as possible in the post-prepaid
envelope enclosed for that purpose. Any stockholder attending the meeting may
vote in person even if he or she has returned a proxy.
By order of the Board of Directors
[SIGNATURE]
Robert C. Hewitt
Secretary
Irvine, California
May 1, 1996
PLEASE SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY.
<PAGE>
NEWPORT CORPORATION
1791 DEERE AVENUE
IRVINE, CALIFORNIA 92714
----------------
PROXY STATEMENT
----------------
SOLICITATION AND REVOCATION OF PROXIES
The enclosed Proxy is solicited by the Board of Directors of Newport
Corporation (the "Company" or "Newport") for use in connection with the Annual
Meeting of Stockholders to be held at the Corporate Headquarters, 1791 Deere
Avenue, Irvine, California on Wednesday, June 5, 1996, at 10:00 a.m., and at
any and all adjournments thereof for the purposes set forth herein and in the
accompanying Notice of Annual Meeting of Stockholders.
The persons named as proxies were designated by the Board of Directors and
are officers or directors of the Company. Any Proxy may be revoked or
superseded by executing a later Proxy or by giving notice of revocation in
writing prior to, or at, the Annual Meeting, or by attending the Annual Meeting
and voting in person. Attendance at the meeting will not in and of itself
constitute revocation of the Proxy. All Proxies which are properly completed,
signed and returned to the Company prior to the meeting, and not revoked, will
be voted in accordance with the instructions given in the Proxy. If a choice is
not specified in the Proxy, the Proxy will be voted FOR election of the
director nominees listed below (Proposal 1), FOR approval of the amendment to
the 1992 Incentive Stock Plan to limit the number of restricted shares and
shares subject to options which any individual may receive in any calendar year
(Proposal 2) and FOR ratification of the Company's appointment of Ernst & Young
LLP as independent auditors for the year ending December 31, 1996 (Proposal 3).
An automated system administered by the Company's transfer agent will tabulate
votes cast at the Annual Meeting. A majority of shares entitled to vote,
represented in person or by proxy, will constitute a quorum at the Annual
Meeting. Abstentions and broker non-votes are each included in the
determination of the number of shares present and voting for the purpose of
determining whether a quorum is present, and each is tabulated separately. In
determining whether a proposal has been approved, abstentions are counted as
votes against a proposal and broker non-votes are not counted as votes for or
against a proposal or as votes present and voting on a proposal.
If any other matters are properly presented at the Annual Meeting for action,
the persons named in the enclosed form of proxy will have discretion to vote on
such matters in accordance with their best judgment. The Company does not know
of any matters other than those set forth above that will be presented at the
Annual Meeting.
This Proxy Statement and the accompanying Proxy are being mailed to
stockholders on or about May 1, 1996. The entire cost of the solicitation of
Proxies will be borne by the Company. It is contemplated that this solicitation
will be primarily by mail. In addition, some of the officers, directors and
employees of the Company may solicit Proxies personally or by telephone,
telefax, telegraph or cable. The Company has retained D. F. King & Co. to
assist in the solicitation of Proxies for a fee estimated to be $5,000, plus
out-of-pocket expenses. In addition, the Company has agreed to indemnify D.F.
King & Co. against any losses or liabilities arising out of D.F. King & Co.'s
fulfillment of the contract, except for such losses or liabilities arising out
of D.F. King & Co.'s own negligence or willful misconduct.
<PAGE>
VOTING AT THE MEETING
As of April 17, 1996, the record date of the meeting, the Company had
outstanding 8,761,775 shares of Common Stock. Each share of Common Stock is
entitled to one vote.
PROPOSAL ONE
ELECTION OF DIRECTORS
At the 1987 Annual Meeting of Stockholders the Restated Articles of
Incorporation (the "Articles") of the Company were amended to provide that the
members of the Company's Board of Directors be divided into four classes
serving staggered four-year terms. The Articles also provide that the number of
directors shall be not less than five (5) and not more than nine (9) in number,
the exact number to be fixed from time to time by the Board of Directors. The
current authorized number is seven (7). One class of directors is elected each
year for a term extending to the fourth succeeding Annual Meeting after such
election.
At the 1996 Annual Meeting, two directors, constituting the Class IV
directors, will be elected to hold office for a term expiring at the Annual
Meeting in 2000.
It is the intention of the persons named in the enclosed Proxy to vote to
elect Richard E. Schmidt and C. Kumar N. Patel as the Class IV directors to
serve for a term expiring at the Annual Meeting in 2000. The five remaining
directors will continue in office, in accordance with their previous elections,
until the expirations of the terms of the classes at the 1997, 1998 or 1999
Annual Meetings, as the case may be.
The holders of a plurality of the votes cast at the meeting shall have the
right to elect the directors. The Proxies may not be voted for a greater number
of persons than the number of nominees named.
The nominees have indicated that they are willing and able to serve as
directors if elected. If the nominees should become unable or unwilling to
serve, it is the intention of the persons designated as proxies to vote
instead, in their discretion, for such other persons as may be designated as
nominees by the Board of Directors of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED BELOW.
CLASS IV
(Directors nominated for office with terms expiring in 2000)
<TABLE>
<CAPTION>
DIRECTOR
NAME PRINCIPAL OCCUPATION AGE SINCE
---- -------------------- --- --------
<C> <S> <C> <C>
Richard E. Schmidt.......... Chairman, President and Chief 64 1991
Executive Officer of the
Company
C. Kumar N. Patel........... Vice Chancellor--Research, 57 1986
University of California at
Los Angeles
</TABLE>
Mr. Schmidt joined the Company as Chairman and Chief Executive Officer in
September 1991. From August 1993 until February 1995 and since November 1995,
he has held the additional position as President. In September 1984, he left
Warner-Lambert Company, an international medical and consumer products company,
to become President and Chief Executive Officer of Milton Roy Company, an
international manufacturer of measuring instruments and systems. In 1986, with
the retirement of the founder, he also became Chairman. He held that position
until December 1990 when Milton Roy was acquired by Sundstrand Corporation, an
aerospace and power transmission corporation. Prior to joining the Company he
served as a consultant to Sundstrand Corporation.
2
<PAGE>
Dr. Patel was elected to the Board in January 1986. Dr. Patel has been in his
current position since 1993. Previously he was Executive Director--Research,
Materials Science, Engineering and Academic Affairs Division at AT&T Bell
Laboratories, a telecommunications corporation, since 1987 and for six years
previously was Executive Director, Physics and Academic Affairs Division. He
joined Bell Laboratories in 1961.
BIOGRAPHICAL INFORMATION FOR DIRECTORS CONTINUING IN OFFICE
Biographical information follows for each of the other directors of the
Company whose present terms will continue after the 1996 Annual Meeting.
CLASS I
(Director continuing in office with term expiring in 1997)
<TABLE>
<CAPTION>
DIRECTOR
NAME PRINCIPAL OCCUPATION AGE SINCE
---- -------------------- --- --------
<C> <S> <C> <C>
John T. Subak............... Of Counsel, Dechert Price & Rhoads 67 1992
</TABLE>
Mr. Subak has served as of Counsel for Dechert Price & Rhoads, a national law
firm, since January 1994. Previously, Mr. Subak was Director, Group Vice
President and General Counsel for Rohm and Haas Company, an international
chemical products company, a position he held from 1976 to 1994.
CLASS II
(Directors continuing in office with terms expiring in 1998)
<TABLE>
<CAPTION>
DIRECTOR
NAME PRINCIPAL OCCUPATION AGE SINCE
---- -------------------- --- --------
<C> <S> <C> <C>
Dan L. McGurk............... Independent Investor and 69 1987
Consultant
Louis B. Horwitz............ Chairman and President, 68 1993
Datum, Inc.
</TABLE>
Mr. McGurk has been an independent investor and consultant since 1977 and in
August 1985 became Chairman and Co-founder of Southland Title Corporation, a
title insurance company, where he currently serves as Treasurer.
Mr. Horwitz has served as Chairman and President of Datum, Inc., a precision
instruments manufacturer, since 1976.
CLASS III
(Directors continuing in office with terms expiring in 1999)
<TABLE>
<CAPTION>
DIRECTOR
NAME PRINCIPAL OCCUPATION AGE SINCE
---- -------------------- --- --------
<C> <S> <C> <C>
R. Jack Aplin............... Independent Investor 64 1989
Robert L. Guyett............ Former Senior Vice President, 59 1990
Chief Financial Officer,
Engelhard Corporation
</TABLE>
From 1989 to the present Mr. Aplin has been an independent investor. Mr.
Aplin was Chairman of the Board, President and Chief Executive Officer of
Spectramed, Inc., an international medical products company, from 1986 to 1989.
Since May 1995, Mr. Guyett has been a consultant to Engelhard Corporation.
Between September 1991 and May 1995, Mr. Guyett served as Senior Vice President
and Chief Financial Officer and a
3
<PAGE>
member of the Board of Directors of Engelhard Corporation, an international
specialty chemical and precious metals company. From January 1987 to September
1991 he was the Senior Vice President and Chief Financial Officer and a member
of the Board of Directors of Fluor Corporation, an international engineering
and construction firm.
The following directors presently serve as directors of the following public
corporations:
<TABLE>
<C> <S>
Louis B. Horwitz Datum, Inc.
Dan L. McGurk Bomar Instrument Corporation, an aerospace
company; and Datum, Inc.
Robert L. Guyett Smith Environmental Services Corporation, an
environmental consulting and remediation
company
</TABLE>
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors held eight meetings during 1995. Each of the directors
attended at least 75% of the aggregate number of meetings of the Board and
committees of the Board on which they served during each such period they were
directors.
During 1995 the Audit Committee met three times. The committee, comprised of
Messrs. Guyett (Chairman), McGurk, Patel and Subak, has the responsibility to
review and approve the scope and results of the annual audit; to recommend to
the Board the appointment of the independent auditors; to review with the
independent auditors the Company's financial staff and the adequacy and
effectiveness of the Company's systems and internal financial controls; to
review the internal audit plan and findings for completed internal audits; to
discuss with management and the independent auditors the content of financial
statements presented to stockholders; to review significant changes in
accounting policies; and to provide sufficient opportunity for the internal
auditor and independent auditors to meet with the committee without management
present.
The Compensation Committee, comprised of Messrs. Aplin, Horwitz, McGurk
(Chairman) and Subak, held two meetings during 1995 and has the responsibility
for administering the Company's various stock option plans, reviewing and
evaluating the Company's compensation programs and plans, and making
recommendations concerning compensation for key personnel and amendments to the
stock option and certain compensation plans.
Stockholders may recommend nominees for election as directors by writing to
the Chief Executive Officer of the Company.
EXECUTIVE OFFICERS
As of April 17, 1996, the Company has five Executive Officers elected on an
annual basis to serve at the pleasure of the Board of Directors:
<TABLE>
<C> <S>
Richard E. Schmidt Chairman, President and Chief Executive Officer
Alain Danielo Vice President, European Operations
Robert C. Hewitt Vice President, Secretary, Treasurer and Chief
Financial Officer
Linda L. Kirkbride Vice President
Robert J. Phillippy Vice President and General Manager, Science and
Laboratory Products
</TABLE>
4
<PAGE>
A biographical summary regarding Mr. Schmidt has been presented earlier.
Biographical information on other Executive Officers follows:
<TABLE>
<CAPTION>
NAMES AND PRINCIPAL OCCUPATION AGE
------------------------------ ---
<S> <C>
ALAIN DANIELO 49
Vice President, European Operations. Mr. Danielo joined the Company in
January 1995 as President and General Manager of the Company's French
subsidiary Micro-Controle S.A. In November 1995 he was elected Vice
President with responsibility for the Company's European Operations. Prior
to joining the Company, Mr. Danielo was Managing Director of the
Electronics Division of Valeo S.A., an automobile parts company, from 1989
to 1995. From 1985 to 1989 he was General Manager of Molex France
S.A.R.L., a manufacturer of electronic components.
ROBERT C. HEWITT 50
Vice President, Secretary, Treasurer and Chief Financial Officer. Mr.
Hewitt joined the Company in January 1987 as Vice President with
responsibility for finance. In February 1987, he was elected to the
additional positions of Secretary and Treasurer and in January 1989 he was
elected Senior Vice President. In February 1995 he was elected to the
position of Vice President and Chief Financial Officer. Prior to joining
the Company, Mr. Hewitt held various financial management positions with
General Electric Company, an international industrial and consumer
products company.
LINDA L. KIRKBRIDE 48
Vice President. Ms. Kirkbride joined the Company in June 1991 as Vice
President with responsibility for human and administrative resources.
Prior to joining the Company, Ms. Kirkbride was Vice President of Human
Resources at Long Beach Bank, a savings and loan and mortgage bank, from
1988 to 1991. From 1978 through 1988 she was Director of Human Resource
Planning at Avery Dennison Corporation, a manufacturer of pressure
sensitive products and base materials.
ROBERT J. PHILLIPPY 35
Vice President and General Manager, Science and Laboratory Products. Mr.
Phillippy joined the Company in April 1996 as Vice President and General
Manager of the Company's Science and Laboratory Products unit. Prior to
joining the Company, Mr. Phillippy was Vice President at Square D Company,
an electrical equipment manufacturer, from 1994 to 1996. He joined Square
D Company in 1984 as a sales engineer and held various sales and marketing
management positions with that company prior to his election as Vice
President in 1994.
</TABLE>
5
<PAGE>
PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information as of April 17, 1996, with
respect to all those known by the Company to be the beneficial owners of more
than 5% of its outstanding common stock, each director, each executive officer
named on the Summary Compensation Table and other current executive officers
who own shares of common stock, and all directors and current executive
officers of the Company as a group:
<TABLE>
<CAPTION>
PERCENT
AMOUNT AND NATURE OF OF
NAME AND ADDRESS OF BENEFICIAL OWNERS BENEFICIAL OWNERSHIP(1) CLASS
------------------------------------- ---------------------- -------
<S> <C> <C>
Prudential Insurance Company of America
Gateway Center Three, 100 Mulberry Street,
Newark, NJ 07102.............................. 661,600(2) 7.55
Brinson Partners, Inc.
70 West Madison, Chicago, IL 60602............ 645,285(2) 7.36
Michael W. Cook Asset Management, Inc.
d/b/a Cook Mayer Taylor, Investment Advisor
1613 Winchester Road, Ste 210, Memphis, TN
38116......................................... 447,450(2) 5.11
College Retirement Equities Fund
730 Third Avenue, New York, NY 10017.......... 442,600(2) 5.05
R. Jack Aplin.................................. 27,000(3) *
Alain Danielo.................................. 13,750(4) *
Robert L. Guyett............................... 28,000(5) *
Robert C. Hewitt............................... 105,123(6) 1.19
Louis B. Horwitz............................... 19,000(7) *
Linda L. Kirkbride............................. 38,174(8) *
Edmund K. Langley.............................. 28,208(9) *
Dan L. McGurk.................................. 32,000(5) *
C. Kumar N. Patel.............................. 27,000(3) *
Robert J. Phillippy............................ 0 *
Richard E. Schmidt............................. 211,179(10) 2.37
John T. Subak.................................. 27,000(11) *
All 12 directors and current executive officers
of the Company as a group..................... 556,434(12) 6.05
</TABLE>
- --------
* Less than one percent.
(1) In all cases, the beneficial owner has sole voting and investment power
with respect to the shares shown as beneficially owned by them, subject to
community property laws, where applicable, the information contained in the
footnotes to this table or otherwise as noted herein.
(2) The information is based upon a filing made with the Securities and
Exchange Commission on Schedule 13G.
(3) Consists of 27,000 shares for options exercisable within 60 days.
(4) Includes 6,250 shares for options exercisable within 60 days.
(5) Includes 27,000 shares for options exercisable within 60 days.
(6) Includes 70,875 shares for options exercisable within 60 days.
(7) Includes 16,000 shares for options exercisable within 60 days.
(8) Includes 22,875 shares for options exercisable within 60 days.
(9) Includes 27,500 shares for options exercisable within 60 days.
(10) Includes 155,000 shares for options exercisable within 60 days.
(11) Includes 24,000 shares for options exercisable within 60 days.
(12) Includes 430,500 shares for options exercisable within 60 days.
6
<PAGE>
EXECUTIVE COMPENSATION AND OTHER
TRANSACTIONS WITH MANAGEMENT AND OTHERS
REMUNERATION OF OFFICERS AND OTHERS
The following table and narrative text discusses compensation paid in the
years ended December 31, 1995, 1994 and 1993 to the Company's Chief Executive
Officer and the Company's other most highly compensated executive officers
whose salary and bonus exceeded $100,000 for the year ended December 31, 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
----------------------------- ---------------------
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND YEAR SALARY BONUS COMPENSATION AWARDS OPTIONS COMPENSATION
PRINCIPAL POSITION (1) ($) ($) ($) (2) ($) (3) (#) ($) (4)
- ------------------ ---- ------- ------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard E. Schmidt 1995 276,635 277,500 18,020 112,500 15,000 9,000
- ------------------
Chairman of the 1994 251,186 279,675 18,020 84,375 15,000 9,000
Board, President 1993 232,868 125,000 18,019 0 0 21,006
President and
Chief
Executive Officer
Alain Danielo 1995 169,255 66,551 15,830 0 25,000 0
- -------------
Vice President 1994 0 0 0 0 0 0
1993 0 0 0 0 0 0
Edmund K. Langley (5) 1995 227,628 82,012 20,321 75,000 10,000 302,500
- --------------------
Former President 1994 156,923 93,750 6,300 0 50,000 8,538
and Chief 1993 0 0 0 0 0 0
Operating Officer
Robert C. Hewitt 1995 155,785 75,249 17,636 52,500 7,000 9,000
- ----------------
Vice President, 1994 143,442 78,043 18,503 28,125 5,000 9,000
Secretary, 1993 136,620 36,000 17,578 0 0 10,712
Treasurer and
Chief Financial
Officer
Linda L. Kirkbride 1995 132,392 42,735 13,387 22,500 3,000 9,000
- ------------------
Vice President 1994 126,368 47,447 13,118 16,875 3,000 8,720
1993 118,194 15,000 3,029 0 0 6,654
</TABLE>
- --------
(1) The fiscal years represent the twelve months ended December 31, 1995, 1994
and 1993.
(2) Other annual compensation for 1995 consists of the following:
<TABLE>
<CAPTION>
DISABILITY
INSURANCE AUTOMOBILE
PREMIUMS ALLOWANCE TOTAL
---------- ---------- -------
<S> <C> <C> <C>
Richard E. Schmidt............................. $ 9,620 $ 8,400 $18,020
Alain Danielo.................................. 0 15,830 15,830
Edmund K. Langley.............................. 11,921 8,400 20,321
Robert C. Hewitt............................... 11,013 6,623 17,636
Linda L. Kirkbride............................. 6,187 7,200 13,387
</TABLE>
7
<PAGE>
(3) Restricted stock was granted on January 3, 1995, February 9, 1994 and
December 1, 1992 and vests at 25% per year beginning January 3, 1997,
February 9, 1996 and December 1, 1994, respectively. Amounts represent fair
market value on grant dates. Dividends totaling $0.04 per share were paid
on the restricted stock during the year 1995, the same rate as on the
common stock. The number of shares and value of restricted stock holdings
at December 31, 1995, are as shown below:
<TABLE>
<CAPTION>
NUMBER OF SHARE VALUE AT
SHARES OUTSTANDING DECEMBER 31, 1995
------------------ -----------------
<S> <C> <C>
Richard E. Schmidt...................... 34,000 $276,250
Alain Danielo........................... 0 0
Edmund K. Langley....................... 0 0
Robert C. Hewitt........................ 14,500 117,812
Linda L. Kirkbride...................... 7,500 60,938
</TABLE>
(4) All other compensation for 1995 consists of the following:
<TABLE>
<CAPTION>
401(K) 401(K)
MATCHING PROFIT SHARING
CONTRIBUTION CONTRIBUTION SEVERANCE TOTAL
------------ -------------- --------- --------
<S> <C> <C> <C> <C>
Richard E. Schmidt............ $4,500 $4,500 $ 0 $ 9,000
Alain Danielo................. 0 0 0 0
Edmund K. Langley............. 4,500 0 298,000 302,500
Robert C. Hewitt.............. 4,500 4,500 0 9,000
Linda L. Kirkbride............ 4,500 4,500 0 9,000
</TABLE>
(5) Mr. Langley resigned as President and Chief Operating Officer of the
Company on November 15, 1995.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning grants of
options to Executive Officers named in the Summary Compensation Table during
the year ended December 31, 1995. The amounts shown as potential realizable
values on these options are based on arbitrarily assumed annualized rates of
appreciation in the price of Newport Common Stock of five percent and ten
percent over the term of the options, as set forth in Securities and Exchange
Commission ("SEC") rules. The Executive Officers will realize no gain on these
options without an increase in the price of Newport Common Stock which will
benefit all stockholders proportionately. No stock appreciation rights were
granted during 1995.
<TABLE>
<CAPTION>
STOCK OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION
FOR
TEN-YEAR OPTION
TERM (2)
----------------------
% OF TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO EXERCISE
UNDERLYING EMPLOYEES PRICE
OPTIONS IN FISCAL PER EXPIRATION
NAME GRANTED (1) YEAR SHARE DATE 5% 10%
- ---- ---------- ---------- -------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Richard E. Schmidt...... 15,000 4.76% $7.50 01/03/05 $ 70,751 $ 179,296
Alain Danielo........... 25,000 7.94 7.50 01/03/05 117,918 298,827
Edmund K. Langley....... 10,000 3.17 7.50 01/03/05 47,167 119,531
Robert C. Hewitt........ 7,000 2.22 7.50 01/03/05 33,017 83,671
Linda L. Kirkbride...... 3,000 0.95 7.50 01/03/05 14,150 35,859
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<C> <S> <C>
Increase in market value of Newport Common 5% (to $12.217/share) 10% (to $19.453/share)
Stock for all stockholders at assumed
rates of stock price appreciation (as used $41.0 million $104.0 million
in the table above) from $7.50 per share,
over the ten-year period, based on
8,699,000 shares outstanding at December
31, 1995(2).
</TABLE>
8
<PAGE>
- --------
(1) Options granted in 1995 are exercisable starting 12 months after the grant
date, with 25% of the shares covered thereby becoming exercisable at that
time and with an additional 25% of the option shares becoming exercisable
on each successive anniversary date, with full vesting occurring on the
fourth anniversary date. All options become exercisable on a change-in-
control as defined in their Employment Agreements (described below). The
options were granted for a term of 10 years, subject to earlier termination
in certain events related to termination of employment.
(2) The dollar amounts in these columns are the result of calculations at the
five percent and ten percent rates set by the SEC and are not intended to
forecast future appreciation of Newport Common Stock.
AGGREGATED OPTIONS EXERCISED IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUE
The following table sets forth certain information concerning the exercise of
options by each of the Company's Executive Officers named in the Summary
Compensation Table during the year ended December 31, 1995, including the
aggregate value of gains on the date of exercise. In addition, the table
includes the number of shares covered by both exercisable and unexercisable
stock options as of December 31, 1995. Also reported are the values for "in-
the-money" options that represent the positive spread between the exercise
price of any of such existing stock options and the closing price of the
Company's common stock as of December 31, 1995.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
SHARES VALUE NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS AT
ACQUIRED ON REALIZED OPTIONS AT FY-END FY-END ($) (1)
NAME EXERCISE (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ----------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Richard E. Schmidt...... 0 0 147,500 / 32,500 99,218 / 57,031
Alain Danielo........... 0 0 0 / 25,000 0 / 15,625
Edmund K. Langley....... 0 0 12,500 / 47,500 35,937 / 114,062
Robert C. Hewitt........ 0 0 67,875 / 12,625 44,515 / 19,609
Linda L. Kirkbride...... 0 0 21,375 / 7,125 19,453 / 13,359
</TABLE>
- --------
(1) Market value of underlying securities at exercise date or year end, as
the case may be, minus the exercise or base price on "in-the-money" options.
The closing sale price for the Company's Common Stock as of December 31, 1995,
on the Nasdaq National Market was $8.125.
9
<PAGE>
PERFORMANCE GRAPH FOR FIVE YEARS
ENDED DECEMBER 31, 1995
Comparison of Five Year Cumulative Total Return Among the
Newport Corporation, Nasdaq National Market Index
and the Scientific Instruments Group Index published by
Media General Financial Services, Inc.
<TABLE>
<CAPTION>
Measurement Period NEWPORT SCIENTIFIC NASDAQ
(Fiscal Year Covered) CORPORATION INSTRUMENTS NATIONAL
STOCK GROUP INDEX MARKET INDEX
- --------------------- ----------- ------------ ------------
<S> <C> <C> <C>
1990 $100 $100 $100
1991 $108.64 $132.66 $128.38
1992 $ 74.73 $124.87 $129.64
1993 $ 73.52 $138.03 $155.50
1994 $109.21 $133.95 $163.26
1995 $115.06 $208.30 $211.77
</TABLE>
The graph compares the cumulative total shareholder return on a $100
investment in the Company's common stock for the five years ended December 31,
1995, with the cumulative total return on $100 invested in each of (i) the
Nasdaq National Market Index and (ii) the Scientific Instruments Group Index
published by Media General Financial Services, Inc. (A listing of the companies
comprising this index is available from the Company.). The graph assumes all
investments were made at market value on December 31, 1990 and the reinvestment
of all dividends.
10
<PAGE>
COMPENSATION OF DIRECTORS
Each of the outside directors is paid an annual fee of $12,000 and is
reimbursed for expenses in connection with Board meetings. In addition, each
outside director is paid $1,000 for each Board meeting attended and $400 for
each committee meeting attended, or $600 for the Committee Chairman.
Also, each outside director receives annually, on January 1, options for
4,000 shares of common stock which vest on the anniversary of the grant. Each
new outside director receives options on 16,000 shares upon commencement of
service as a director.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with Messrs. Schmidt,
Danielo, Hewitt and Phillippy and Ms. Kirkbride providing for certain payments
and benefits in the event their employment with the Company is terminated
within two years of a change of control of the Company, unless such termination
is as a result of death, disability or retirement of such officer or is a
termination for cause. In such event, each of these officers may be entitled to
a severance payment equal to twelve months of such officer's highest salary
within the one-year period preceding termination plus a bonus payment equal to
such officer's incentive compensation bonus paid under the Company's Incentive
Plan, or other bonus plans, assuming 100% satisfaction of all performance
goals. In addition, the officer would be entitled to the continuation of
benefits under the Company's medical, dental and vision plans, and long-term
disability insurance for two years, the removal of all restrictions on
restricted stock held by the officer, the payment of an amount equal to the
difference between the exercise price and fair market price of stock options
held by the officer and certain other benefits, including payment of an amount
sufficient to offset any "excess parachute payment" excise tax payable by the
officer pursuant to the provisions of the Internal Revenue Code or any
comparable provision of state or foreign law. In addition, upon such a change
in control all stock options held by such officers would become immediately
exercisable.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Company has entered into agreements (the "Indemnification Agreements")
with each officer and director of the Company providing for contractual
protection of certain rights of indemnification by the Company.
The Indemnification Agreements provide for indemnification of officers and
directors to the fullest extent permitted by its Articles of Incorporation, By-
Laws and applicable law. They cover all fees, expenses, liabilities and losses
(including attorney's fees, judgments, fines, and amounts paid in any
settlement approved by the Company) actually and reasonably incurred in
connection with any investigation, claim, action, suit or proceeding to which
the officer or director is a party by reason of any action or inaction in the
officer's or director's capacity as an officer or director of the Company or by
reason of the fact that the officer or director is or was serving as a
director, officer, employee, agent or fiduciary of the Company, or of any
subsidiary or division, or is or was serving at the request of the Company as
the Company's representative with respect to another entity. Indemnification
would not be available, however, for expenses and the payment of profits
arising from the purchase and sale by the officer or director of securities in
violation of Section 16(b) of the Securities Exchange Act of 1934, as amended.
11
<PAGE>
COMPLIANCE WITH SECTION 16(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers and persons who own more than ten percent of a
registered class of the Company's equity securities to file with the SEC
initial reports of ownership and reports of changes in ownership of Common
Stock and other equity securities of the Company. Officers, directors and
greater than ten percent stockholders are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file. To the
Company's knowledge, based solely on the review of copies of such reports
furnished to the Company and written representations that no other reports were
required, during the years ended December 31, 1995 and 1994, all Section 16(a)
filing requirements applicable to the Company's officers, directors and greater
than ten percent stockholders were complied with.
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
COMMITTEE
The Compensation Committee of the Board of Directors is comprised entirely of
non-employee, independent directors, none of whom have served as an executive
officer of any entity for which any executive officer of the Company serves as
a director or a member of its compensation committee. The Committee is
responsible for reviewing, recommending and approving changes to the Company's
compensation policies and programs, as applicable to the Company's officers and
senior personnel.
COMPENSATION POLICY AND OBJECTIVES
Our primary goal as members of the Compensation Committee is to assure that
the compensation provided to executives is linked to the Company's business
strategies and objectives, thereby aligning the financial interest of senior
management with that of the stockholders. Beyond that, our priorities are to
assure that the executive compensation programs enable the Company to attract,
retain and motivate the high caliber executives required for the success of the
business. These objectives are achieved through a variety of compensation
programs, summarized below, which support the current and long-term performance
of the business. The Company has not paid, and does not expect to pay any
qualifying compensation under Section 162(m) of the Internal Revenue Code, but
is considering a policy with regard to such compensation in response to enacted
regulations.
BASE SALARY
Base salaries for executive officers are determined by evaluating the
responsibilities of the position and comparing it with other similar executive
positions in other companies in the Company's industry which are similar in
size and profitability to the Company. These companies may be, but are not
necessarily, included in the Scientific Instruments Group Index. From time to
time the Company's compensation consultant surveys senior executive salaries
from a representative sampling of such similar companies and compares this data
with published surveys of national scope encompassing electronics and other
high technology organizations. The Company's pay grade levels are set at
approximately the competitive mid- to 75th percentile range. Individual
salaries may then vary somewhat below or above this range, based upon the
individual's performance and contributions to Company success, time on the job
and internal equity. Annual salary adjustments are determined by individual
performance within an annual budget approved by the Committee. During December
1995, the Committee approved increases averaging 5.8% and ranging from 0% to
10% effective December 1, 1995. The CEO's salary increase is separately
determined and approved by the Committee based upon the factors described
below.
12
<PAGE>
ANNUAL INCENTIVES
Officers have an opportunity to earn annual incentives ("Incentive Plan")
based on performance targets. The Compensation Committee may also award bonuses
in cases where such performance targets are not met if it determines that the
circumstances warrant such action. Since 1987, the Company has generally used
corporate operating income as its primary measure of corporate performance.
Individual officers may have other measures of performance for the annual
incentive such as sales, inventory turns and earnings per share, the identity
and relative importance of which generally vary depending upon the position of
the officer in question, so that the officer's incentives are based as closely
as possible upon those areas of corporate performance which are most directly
affected by the officer. Additionally, each officer has a discretionary portion
of the annual incentive linked to achievement of non-financial goals, which
differ depending upon the responsibilities of the officer in question. The
target incentives for each officer range from 25% to 100% of such officer's
annual salary. For overachievement of goals, officers can earn up to 150% of
the target incentive. For 1995, the Compensation Committee awarded incentive
payments based upon performance to specific goals established at the beginning
of the year. Specifically, based upon the fact that the Company reached 87.5%
of planned earnings per share, 100% of the asset management goal and 95.9% of
the total sales goal, the Compensation Committee awarded incentive payments
ranging from 86% to 97% of the target incentive amount to executive officers.
LONG-TERM INCENTIVES
To further align the interests of stockholders and managers, the Company
grants stock options and restricted stock generally on an annual basis. Stock
options were granted to approximately thirty employees during the past year.
The number of shares awarded is established based upon a recommendation by the
employee's supervisor and approved by the Compensation Committee. The exercise
price for stock options is the fair market value of the stock on the date of
the grant. Options generally vest at a rate of 25% per year starting on the
anniversary date of the option grant. Options on a total of 50,000 shares were
granted on January 3, 1995, to eight officers and executive officers. In
addition, on January 3, 1995, options on 25,000 shares were granted to Mr.
Danielo as part of his employment offer. Restricted stock grants generally vest
at a rate of 25% per year starting on the second anniversary of the restricted
stock grant. Restricted stock grants totaled 41,000 shares and were granted on
January 3, 1995, to six officers and executive officers.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The Chief Executive Officer participates in the compensation program
discussed above. His base salary is set, in the same way as other executive
officers, as determined by comparable positions in companies of similar size
and profitability to the Company in the marketplace. His base salary was raised
9% effective December 1, 1995.
Each year the Compensation Committee approves a performance based bonus plan
for the Chief Executive Officer linked to operating income and various non-
financial objectives including improving the management team and product
quality. Based on his performance against his objectives for 1995 on asset
management, strengthening the management team, enhancing the profitability of
the Company operations, improving Newport quality and reaching 87.5% of planned
earnings he was awarded a bonus of $277,500, which represents 92.5% of his
target incentive.
Respectfully submitted,
Dan L. McGurk, Chairman
R. Jack Aplin
Louis B. Horwitz
John T. Subak
13
<PAGE>
Notwithstanding anything to the contrary set forth in any of the Company's
previous or future filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate by
reference previous or future filings, including the Proxy Statement, in whole
or in part, the preceding report and the Performance Graph on page 10 shall not
be incorporated by reference into any such filings.
PROPOSAL TWO
AMENDMENT OF THE 1992 INCENTIVE STOCK PLAN
The Board of Directors approved the amendment described below to the Newport
Corporation 1992 Incentive Stock Plan (the "1992 Plan") on February 21, 1996.
The Company's stockholders originally approved the 1992 Plan December 1, 1992,
effective September 29, 1992, the date on which the Board of Directors adopted
the 1992 Plan. The purpose of the 1992 Plan, and the Amendments, is to enhance
the Company's ability to attract and retain qualified persons as key employees
and to motivate such persons by providing them with an equity participation in
the Company.
The Revenue Reconciliation Act of 1993 (the "1993 Tax Act") added Section
162(m) to the Internal Revenue Code of 1986, as amended (the "Code"). Section
162 of the Code generally relates to income tax deductions for business
expenses. Section 162(m) of the Code limits the corporate income tax deduction
to $1,000,000 in any tax year attributable to compensation paid to the then
Chief Executive Officer or any of the four highest paid among the other
executive officers of the Company and its subsidiaries. This rule generally
applies to all deductible compensation paid to such an individual. Exercise of
nonqualified stock options, disqualifying dispositions of stock received on
exercise of an incentive stock option, and the lapsing of restrictions on
restricted stock generally result in an income tax deduction.
However, the Code Section 162(m) deduction limitation does not apply to
compensation plans which meet certain requirements, including being
stockholder-approved. In December 1995 the Internal Revenue Service adopted
final regulations with respect to Section 162(m).
Based on the final regulations, the Company's compensation deductions in
connection with the 1992 Plan should not be limited under Section 162(m) of the
Code if, among other things, prior to payment of the compensation the
stockholders approve (i) the specific terms of the 1992 Plan, (ii) the class of
executives to which the 1992 Plan applies, (iii) the option or purchase price
(or formula under which the price is determined) under the 1992 Plan, and (iv)
the maximum number of options or restricted shares that can be awarded under
the 1992 Plan to any one person during a specific period of time.
The Company believes that each of the stockholder approval requirements have
been met with respect to the 1992 Plan other than the requirement of approval
of maximum numbers of options or restricted shares that can be awarded to any
one person during a specified period of time. The 1992 Plan was amended by the
Board of Directors, subject to stockholder approval, effective as of February
21, 1996, to provide that no one person will receive more than 150,000 options
or restricted shares under the 1992 Plan in any one (1) calendar year.
Upon approval by the stockholders of the foregoing amendment of the 1992
Plan, the Company believes that the stockholder approval requirements of
Section 162(m) of the Code as provided in the final regulations will be
satisfied.
The Board of Directors believes that the proposed amendment to the 1992 Plan
are in the best interests of the Company because it will further the purposes
of the 1992 Plan of enhancing the ability of the Company to attract, motivate
and retain key executives and directors of the Company while
14
<PAGE>
avoiding the potential loss of tax benefits to the Company for the deductions,
if any, associated with options and restricted shares issued under the 1992
Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
Proxies solicited by management will be voted in favor of the amendments to
the 1992 Plan unless a vote against the proposal or abstention is specifically
indicated.
PROPOSAL THREE
INDEPENDENT AUDITORS
Ernst & Young LLP was selected to audit the financial statements of the
Company as of December 31, 1995, and for the year then ended, and has been
selected by the Board of Directors to audit the financial statements of the
Company for 1996. Nevada General Corporation Law does not require the approval
of the selection of the independent auditors by the Company's stockholders, but
in view of the importance of the financial statements to stockholders, the
Board of Directors deems it desirable that stockholders pass upon the selection
of auditors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
Proxies received in response to this solicitation will be voted in favor of
the approval of such firm unless otherwise specified in the Proxy. A
representative of Ernst & Young LLP will be present at the Annual Meeting and
will be given the opportunity to make a statement if he so desires and will be
available to respond to appropriate questions. If this proposal is not
approved, the Audit Committee shall reconsider the proposal and submit its
recommendation to the Board of Directors.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be submitted at the next annual meeting of
stockholders must be submitted in writing to the Company on or before December
15, 1996, in order for them to be included in the Company's Proxy Statement and
Proxy relating to such meeting. The Company anticipates that its next annual
meeting will be held in May 1997.
OTHER MATTERS
The Company has enclosed with this Proxy Statement a copy of the Annual
Report to Stockholders for the year ended December 31, 1995.
Management knows of no other matters to come before the meeting. If, however,
any other matter properly comes before the meeting, the persons named in the
enclosed Proxy form will vote in accordance with their judgment upon such
matter.
Stockholders who do not expect to attend in person are urged to promptly
execute and return the enclosed Proxy.
By order of the Board of Directors
[SIGNATURE]
Robert C. Hewitt
Secretary
Irvine, California
May 1, 1996
15
<PAGE>
NEWPORT CORPORATION
PROXY 1791 DEERE AVENUE, IRVINE, CALIFORNIA 92714 PROXY
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS--JUNE 5, 1996
(THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS)
The undersigned hereby appoint RICHARD E. SCHMIDT and ROBERT C. HEWITT, and
each of them, as proxy or proxies for the undersigned, with full power of
substitution, who may act by unanimous vote of said proxies or their
substitutes as shall be present at the meeting, or, if only one be present,
then the one shall have all the powers hereunder, to represent and to vote, as
designated on the other side (If no direction is made, this Proxy will be
voted FOR Proposals 1, 2 and 3), all of the shares of Newport Corporation (the
"Company") standing in the name of the undersigned on April 17, 1996, at the
Annual Meeting of Stockholders of the Company to be held on Wednesday, June 5,
1996, at 10:00 a.m. at the Company's Corporate Headquarters, 1791 Deere
Avenue, Irvine, California 92714, and any adjournment thereof. In their
discretion, the proxies are authorized to vote upon such other business as may
properly come before the meeting.
- -------------------------------------------------------------------------------
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS BOX ON REVERSE SIDE
(Continued and to be marked, dated
and signed, on other side)
FOLD AND DETACH HERE
<PAGE>
[X] Please mark
your votes
as indicated
in this
example
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3.
WITHHELD
FOR FOR ALL
ITEM 1. ELECTION OF DIRECTORS [_] [_]
Nominees:
Class IV: Richard E. Schmidt
C. Kumar N. Patel
WITHHELD FOR: (Write that nominee's name in the
space provided below).
- -----------------------------------------------
FOR AGAINST ABSTAIN
ITEM 2. APPROVAL OF [_] [_] [_]
AN AMENDMENT TO THE
1992 INCENTIVE STOCK
PLAN
FOR AGAINST ABSTAIN
ITEM 3. APPOINTMENT [_] [_] [_]
OF INDEPENDENT
ACCOUNTANTS
I PLAN TO ATTEND MEETING [_]
COMMENTS/ADDRESS CHANGE [_]
Please mark this box if you have
written comments/address change on
THE reverse side.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
Signature(s) ___________________________ Dated _______________________ , 1996
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such. If a corporation, please sign in full corporate name by
president or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
FOLD AND DETACH HERE
