<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 Section 240.14a-11(c) or Section 240.14a-12
NEWPORT CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(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 92606
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 28, 1997
----------------
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 May 28, 1997, at 10:00 a.m., for the purpose of
considering and acting upon the following:
1. To elect two Class I Directors to serve for four years.
2. To approve an amendment to the Company's Employee Stock Purchase Plan to
increase the number of shares available for issuance under that plan by
400,000 shares, bringing the total number of shares available for
issuance thereunder to 650,000.
3. To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for the year ending December 31, 1997.
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 9, 1997, 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 OF ROBERT C. HEWITT APPEARS HERE]
Robert C. Hewitt
Secretary
Irvine, California
April 24, 1997
PLEASE SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY.
<PAGE>
NEWPORT CORPORATION
1791 DEERE AVENUE
IRVINE, CALIFORNIA 92606
----------------
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, May 28, 1997, 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 Employee Stock Purchase Plan to increase the number of shares which can be
issued by 400,000 shares (Proposal 2) and FOR ratification of the Company's
appointment of Ernst & Young LLP as independent auditors for the year ending
December 31, 1997 (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 April 24, 1997. 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 $4,500, 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.
VOTING AT THE MEETING
As of April 9, 1997, the record date of the meeting, the Company had
outstanding 8,918,483 shares of Common Stock. Each share of Common Stock is
entitled to one vote. A majority of the shares of the Company's Common Stock
present or represented and entitled to vote at the meeting is required to
approve each proposal presented at the meeting.
<PAGE>
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 eight (8). One class of directors is elected each
year for a term extending to the fourth succeeding Annual Meeting after such
election.
At the 1997 Annual Meeting, two directors, constituting the Class I
directors, will be elected to hold office for a term expiring at the Annual
Meeting in 2001.
It is the intention of the persons named in the enclosed Proxy to vote to
elect Robert G. Deuster and John T. Subak as the Class I directors to serve for
a term expiring at the Annual Meeting in 2001. The six remaining directors will
continue in office, in accordance with their previous elections, until the
expirations of the terms of the classes at the 1998, 1999 or 2000 Annual
Meetings, as the case may be.
The holders of a majority of the shares of the Company's Common Stock present
or represented and entitled to vote 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 I
(Directors nominated for office with terms expiring in 2001)
<TABLE>
<CAPTION>
DIRECTOR
NAME PRINCIPAL OCCUPATION AGE SINCE
---- -------------------- --- --------
<S> <C> <C> <C>
Robert G. Deuster............ President and Chief Executive Officer 46 1996
John T. Subak................ Of Counsel, Dechert Price & Rhoads 68 1992
</TABLE>
Mr. Deuster joined the Company as President and Chief Executive Officer in
May 1996. From 1985 to 1996 Mr. Deuster served in various senior management
positions at Applied Power, Inc., an international manufacturer of electrical
and hydraulic products, serving as Senior Vice President of the Distributed
Products Group from 1994 to 1996, President of Barry Controls Division from
1989 to 1994, President of APITECH Division from 1986 to 1989 and Vice
President of Sales and Marketing of the Enerpac Division from 1985 to 1986.
Previously, from 1975 to 1985, he held engineering and marketing management
positions at General Electric Company's Medical Systems Group.
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.
2
<PAGE>
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 1997 Annual Meeting.
CLASS II
(Directors continuing in office with terms expiring in 1998)
<TABLE>
<CAPTION>
DIRECTOR
NAME PRINCIPAL OCCUPATION AGE SINCE
---- -------------------- --- --------
<S> <C> <C> <C>
Dan L. McGurk............... Independent Investor and Consultant 70 1987
Louis B. Horwitz............ Chairman and President, Datum, Inc. 69 1993
</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
---- -------------------- --- --------
<S> <C> <C> <C>
R. Jack Aplin............... Independent Investor 65 1989
Robert L. Guyett............ President and Chief Executive 60 1990
Officer, Crescent Management
Enterprises
</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 April 1996, Mr. Guyett has been President and Chief Executive Officer
of Crescent Management Enterprises, a financial management and investment
advisory services firm. From May 1995 to December 1996, he was a consultant to
Engelhard Corporation, an international specialty chemical and precious metals
company. Between September 1991 and May 1995, Mr. Guyett served as Senior Vice
President and Chief Financial Officer and a member of the Board of Directors of
Engelhard Corporation. 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.
CLASS IV
(Directors continuing in office with terms expiring in 2000)
<TABLE>
<CAPTION>
DIRECTOR
NAME PRINCIPAL OCCUPATION AGE SINCE
---- -------------------- --- --------
<S> <C> <C> <C>
Richard E. Schmidt.......... Chairman of the Board of Directors of 65 1991
the Company
C. Kumar N. Patel........... Vice Chancellor--Research, University 58 1986
of California at Los Angeles
</TABLE>
3
<PAGE>
Mr. Schmidt joined the Company as Chairman and Chief Executive Officer in
September 1991. From August 1993 until February 1995 and from November 1995
until May 1996, he held the additional position as President. In May 1996, Mr.
Schmidt retired from the positions of President and Chief Executive Officer. 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.
Dr. Patel was elected to the Board in January 1986. Dr. Patel has been in his
current position since 1993. From 1961 to 1993, Dr. Patel was employed by AT&T
Bell Laboratories, a telecommunications corporation, in various positions,
including Executive Director--Research, Materials Science, Engineering and
Academic Affairs Division from 1987 to 1993 and Executive Director, Physics and
Academic Affairs Division from 1981 to 1987.
The following directors presently serve as directors of the following public
corporations:
<TABLE>
<C> <S>
Robert L. Guyett PureTec Corporation, a provider of medical tubing and
lawn and garden products; and
Smith Technology Corporation, an environmental consulting
and remediation company
Louis B. Horwitz Datum, Inc.
Dan L. McGurk Bomar Instrument Corporation, an aerospace company; and
Datum, Inc.
Richard E. Schmidt Hycor Biomedical Inc., a manufacturer of medical
diagnostic products
</TABLE>
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors held four meetings during 1996. 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 1996 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
discuss with management and the independent auditors the content of financial
statements presented to stockholders; to review significant changes in
accounting policies; investigating reports of illegal acts (if any) involving
the Company; and to provide sufficient opportunity for the 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 1996 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.
4
<PAGE>
EXECUTIVE OFFICERS
As of April 9, 1997, the Company has five Executive Officers elected on an
annual basis to serve at the pleasure of the Board of Directors:
<TABLE>
<C> <S>
Robert G. Deuster President and Chief Executive Officer
Jeffrey L. Cannon Vice President and General Manager, Precision Motion
Systems Division
Alain Danielo Vice President, Europe Operations
Robert C. Hewitt Vice President, Secretary and Chief Financial
Officer
Robert J. Phillippy Vice President and General Manager, Science and
Laboratory Products Division
</TABLE>
A biographical summary regarding Mr. Deuster has been presented earlier.
Biographical information on other Executive Officers follows:
<TABLE>
<CAPTION>
NAMES AND PRINCIPAL OCCUPATION AGE
------------------------------ ---
<S> <C>
JEFFREY L. CANNON 38
Vice President and General Manager, Precision Motion Systems Division. Mr.
Cannon joined the Company in April 1995 as Director, Klinger Systems
Group. In January 1996 Mr. Cannon was promoted to the position of General
Manager, Precision Motion Systems Division. In November 1996 Mr. Cannon
was elected Vice President and General Manager with additional
responsibility for MikroPrecision Instruments, Inc., the Company's
subsidiary acquired in 1996. Prior to joining the Company, Mr. Cannon was,
from 1990 to 1995, Senior Marketing Manager at Coherent, Incorporated, a
laser systems manufacturer. He joined Coherent, Incorporated, in 1979 and
held various positions in operations, engineering, and marketing
management.
ALAIN DANIELO 50
Vice President, Europe 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 Europe 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 51
Vice President, Secretary 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. From February 1987 to November 1991
and from February 1994 to November 1995 he served as Treasurer. Prior to
joining the Company, Mr. Hewitt held various financial management
positions with General Electric Company, an international industrial and
consumer products company.
ROBERT J. PHILLIPPY 36
Vice President and General Manager, Science and Laboratory Products
Division. Mr. Phillippy joined the Company in April 1996 as Vice President
and General Manager of the Company's Science and Laboratory Products
Division. 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 9, 1997, 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>
AMOUNT AND NATURE OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNERS BENEFICIAL OWNERSHIP(1) OF CLASS
------------------------------------- ----------------------- --------
<S> <C> <C>
Prudential Insurance Company of America...... 653,300(2) 7.32
Gateway Center Three, 100 Mulberry Street,
Newark, NJ 07102
Brinson Partners, Inc........................ 638,285(2) 7.16
70 West Madison, Chicago, IL 60602
Dimensional Fund Advisors, Inc............... 496,000(2)(3) 5.56
1299 Ocean Avenue, 11th Floor, Santa Monica,
CA 90401
Michael W. Cook Asset Management, Inc........ 472,950(2) 5.30
d/b/a Cook Mayer Taylor, Investment Advisor
1613 Winchester Road, Ste 210, Memphis, TN
38116
R. Jack Aplin................................ 31,000(4) *
Jeffrey L. Cannon............................ 4,500(5) *
Alain Danielo................................ 24,375(6) *
Robert G. Deuster............................ 55,000(7) *
Robert L. Guyett............................. 37,000(8) *
Robert C. Hewitt............................. 114,907(9) 1.28
Louis B. Horwitz............................. 27,000(10) *
Dan L. McGurk................................ 36,000(8) *
C. Kumar N. Patel............................ 31,000(4) *
Robert J. Phillippy.......................... 5,500(11) *
Richard E. Schmidt........................... 250,669(12) 2.75
John T. Subak................................ 35,000(13) *
All 12 directors and current executive
officers of the Company as a group.......... 651,951(14) 6.93
</TABLE>
- --------
* Less than one percent.
(1) This column lists voting securities, including restricted stock held by
executive officers over which the officers have voting power but no
investment power. Otherwise, each 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 data provided to the Company including
filings made with the Securities and Exchange Commission on Schedules 13D
or 13G.
(3) Dimensional Fund Advisors, Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of the shares of Newport
Corporation all of which shares are held in portfolios of DFA Investment
Dimensions Group Inc., a registered open-end investment company, or in
series of the DFA Investment Trust Company, a Delaware business trust, or
the DFA Group Trust and DFA Participation Group Trust, investment vehicles
for qualified employee benefit plans, all of which Dimensional serves as
investment manager. Dimensional disclaims beneficial ownership of all such
shares.
(4) Consists of 31,000 shares for options exercisable within 60 days.
(5) Consists of 4,500 shares for options exercisable within 60 days.
(6) Includes 14,375 shares for options exercisable within 60 days.
(7) Includes 25,000 shares for options exercisable within 60 days.
(8) Includes 31,000 shares for options exercisable within 60 days.
(9) Includes 73,000 shares for options exercisable within 60 days.
(10) Includes 24,000 shares for options exercisable within 60 days.
(11) Includes 2,500 shares for options exercisable within 60 days.
(12) Includes 195,000 shares for options exercisable within 60 days.
(13) Includes 32,000 shares for options exercisable within 60 days.
(14) Includes 494,375 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, 1996, 1995 and 1994 to the Company's current and
former Chief Executive Officer and the Company's four other most highly
compensated executive officers whose salary and bonus exceeded $100,000 for the
year ended December 31, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
---------------------------- ---------------------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND YEAR SALARY BONUS COMPENSATION AWARDS OPTIONS COMPENSATION
PRINCIPAL POSITION (1) ($) ($) ($) (2) ($) (3) (#) ($) (4)
------------------ ---- ------- ------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard E. Schmidt (5) 1996 309,614 71,250 11,607 120,000 15,000 26,308
- ----------------------
Chairman of the Board
and former President 1995 276,635 277,500 18,020 112,500 15,000 9,000
and Chief Executive 1994 251,186 279,675 18,020 84,375 15,000 9,000
Officer
Robert G. Deuster (5) 1996 162,404 125,876 7,050 192,500 100,000 142,497
- ---------------------
President and Chief 1995 0 0 0 0 0 0
Executive Officer 1994 0 0 0 0 0 0
Jeffrey L. Cannon (6) 1996 119,643 36,860 1,200 0 4,000 15,274
- ---------------------
Vice President 1995 0 0 0 0 0 0
and General Manager 1994 0 0 0 0 0 0
Alain Danielo (7) 1996 183,766 40,566 17,615 60,000 7,500 0
- -----------------
Vice President 1995 169,255 66,551 15,830 0 25,000 0
1994 0 0 0 0 0 0
Robert C. Hewitt
- ----------------
Vice President,
Secretary and 1996 163,546 44,840 15,213 40,000 5,000 9,000
Chief Financial 1995 155,785 75,249 17,636 52,500 7,000 9,000
Officer 1994 143,442 78,043 18,503 28,125 5,000 9,000
Robert J. Phillippy 1996 103,077 45,771 4,800 0 10,000 98,782
- -------------------
Vice President and 1995 0 0 0 0 0 0
General Manager 1994 0 0 0 0 0 0
</TABLE>
- --------
(1) The fiscal years represent the twelve months ended December 31, 1996, 1995
and 1994.
(2) Other annual compensation for 1996 consists of the following:
<TABLE>
<CAPTION>
DISABILITY
INSURANCE AUTOMOBILE
PREMIUMS ALLOWANCE TOTAL
---------- ---------- -------
<S> <C> <C> <C>
Richard E. Schmidt............................. $3,207 $ 8,400 $11,607
Robert G. Deuster.............................. 1,450 5,600 7,050
Jeffrey L. Cannon.............................. 0 1,200 1,200
Alain Danielo.................................. 0 17,615 17,615
Robert C. Hewitt............................... 8,013 7,200 15,213
Robert J. Phillippy............................ 0 4,800 4,800
</TABLE>
7
<PAGE>
(3) Restricted stock was granted on January 2, 1996, January 3, 1995 and
February 9, 1994 and vests at 25% per year beginning January 2, 1998,
January 3, 1997 and February 9, 1996, respectively. Amounts represent fair
market value on grant dates. Mr. Deuster was granted 20,000 shares on May
1, 1996, which vest at 25% per year beginning May 1, 1998. Dividends
totaling $0.04 per share were paid on the restricted stock during 1996, the
same rate as on the common stock. The number of shares and value of
restricted stock holdings at December 31, 1996, are as shown below:
<TABLE>
<CAPTION>
NUMBER OF SHARE VALUE AT
SHARES OUTSTANDING DECEMBER 31, 1996
------------------ -----------------
<S> <C> <C>
Richard E. Schmidt...................... 43,250 $383,844
Robert G. Deuster....................... 20,000 177,500
Jeffrey L. Cannon....................... 0 0
Alain Danielo........................... 7,500 66,562
Robert C. Hewitt........................ 19,000 168,625
Robert J. Phillippy..................... 0 0
</TABLE>
(4) All other compensation for 1996 consists of the following:
<TABLE>
<CAPTION>
401(K) 401(K)
MATCHING PROFIT SHARING UNUSED
CONTRIBUTION CONTRIBUTION RELOCATION VACATION TOTAL
------------ -------------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
Richard E. Schmidt...... $4,500 $4,500 $ 0 $17,308 $ 26,308
Robert G. Deuster....... 0 0 142,497 0 142,497
Jeffrey L. Cannon....... 4,500 4,500 6,274 0 15,274
Alain Danielo........... 0 0 0 0 0
Robert C. Hewitt........ 4,500 4,500 0 0 9,000
Robert J. Phillippy..... 0 0 98,782 0 98,782
</TABLE>
(5) Mr. Deuster joined the Company on May 1, 1996, as President and Chief
Executive Officer upon the retirement of Mr. Schmidt from those positions.
(6) Mr. Cannon became an Executive Officer upon his appointment as General
Manager, Precision Motion Systems Division. Prior to that he was Director,
Klinger Systems Group.
(7) Mr. Danielo is paid in French francs. The U.S. dollar amounts have been
calculated using the average rates for the respective years.
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, 1996. 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 1996.
8
<PAGE>
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF % OF ANNUAL RATES OF STOCK
SECURITIES TOTAL EXERCISE PRICE APPRECIATION FOR
UNDERLYING OPTIONS PRICE TEN-YEAR OPTION TERM (2)
OPTIONS GRANTED TO PER EXPIRATION -------------------------
NAME GRANTED (1) ALL EMPLOYEES SHARE DATE 5% 10%
- ---- ----------- ------------- -------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard E. Schmidt...... 15,000 4.68 $8.00 01/02/06 $ 75,468 $ 191,244
Robert G. Deuster....... 100,000 31.20 9.625 05/01/06 605,316 1,533,936
Jeffrey L. Cannon....... 4,000 1.25 8.00 01/02/06 117,918 298,827
Alain Danielo........... 7,500 2.34 8.00 01/02/06 37,734 95,622
Robert C. Hewitt........ 5,000 1.56 8.00 01/02/06 25,156 63,748
Robert J. Phillippy..... 10,000 3.12 9.75 04/08/06 61,318 155,386
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Increase in market value of Newport Common 5% 10%
Stock for all stockholders at assumed (to $13.03/share) (to $20.75/share)
rates of stock price appreciation (as $44,700,000 $113,300,000
used in the table above) from $8.00 per
share, over the ten-year period, based on
8,890,000 shares outstanding at December
31, 1996(2).
</TABLE>
- --------
(1) Options granted in 1996 are exercisable starting 12 months after the grant
date, with 25% of the shares covered thereby becoming exercisable at that
time and with an additional 25% of the option shares becoming exercisable
on each successive anniversary date, with full vesting occurring on the
fourth anniversary date. All options become exercisable on a change-in-
control as defined in their Employment Agreements (described below). The
options were granted for a term of 10 years, subject to earlier termination
in certain events related to termination of employment.
(2) The dollar amounts in these columns are the result of calculations at the
five percent and ten percent rates set by the SEC and are not intended to
forecast future appreciation of Newport Common Stock, which will depend on
market conditions and the Company's future performance and prospects.
AGGREGATED OPTIONS EXERCISED IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUE
The following table sets forth certain information concerning the exercise of
options by each of the Company's Executive Officers named in the Summary
Compensation Table during the year ended December 31, 1996, including the
aggregate value of gains on the date of exercise. In addition, the table
includes the number of shares covered by both exercisable and unexercisable
stock options as of December 31, 1996. Also reported are the values for "in-
the-money" options that represent the positive spread between the exercise
price of any of such existing stock options and the closing price of the
Company's common stock as of December 31, 1996.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
SHARES VALUE NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED ON REALIZED OPTIONS AT FY-END AT FY-END ($)(1)
NAME EXERCISE (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ------------ -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Richard E. Schmidt...... 0 0 161,250 / 33,750 $251,406 / $52,968
Robert G. Deuster....... 0 0 0 / 100,000 0 / 0
Jeffrey L. Cannon....... 0 0 1,750 / 9,250 875 / 6,125
Alain Danielo........... 0 0 6,250 / 26,250 8,593 / 32,343
Robert C. Hewitt........ 0 0 72,750 / 12,750 83,156 / 19,718
Robert J. Phillippy..... 0 0 0 / 10,000 0 / 0
</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,
1996, on the Nasdaq National Market was $8.875.
9
<PAGE>
PERFORMANCE GRAPH FOR FIVE YEARS ENDED DECEMBER 31, 1996
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.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Newport Corporation 100.00 68.79 67.67 100.52 105.91 116.18
Scientific Instruments Group Index 100.00 94.12 104.05 100.97 157.02 173.79
Nasdaq National Market Index 100.00 100.98 121.13 127.17 164.96 204.98
</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,
1996, 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, 1991 and the reinvestment
of all dividends.
COMPENSATION OF DIRECTORS
Each of the outside directors is paid an annual fee of $12,000 and is
reimbursed for expenses incurred in connection with attending 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
1st, 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,
Deuster, Cannon, Danielo, Hewitt and Phillippy 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
10
<PAGE>
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 acceleration of vesting of all stock
options, 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.
RETIREMENT AGREEMENT
Effective January 1, 1997, the Company has provided Mr. Schmidt with a
retirement package in recognition of his service to the Company. It entered
into a twelve-month consulting agreement with Mr. Schmidt pursuant to which
Mr. Schmidt shall provide advice and consultation regarding strategic
planning, management, financial analysis, product planning or other corporate
matters. The agreement provides for the payment of $100,000 for the twelve-
month term, payable quarterly, which agreement is renewable annually at the
option of the Board of Directors for a period not to exceed five years. In
addition the Company has agreed to pay for supplemental health care insurance
for life. The Board also accelerated the vesting of a total of 33,750 unvested
options.
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.
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, 1996 and 1995, all Section
16(a) filing requirements applicable to the Company's officers, directors and
greater than ten percent stockholders were complied with.
11
<PAGE>
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 November
1996, the Committee approved increases averaging 6.5% and ranging from 4% to 9%
effective December 1, 1996. The CEO's salary increase is separately determined
and approved by the Committee based upon the factors described below.
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,
12
<PAGE>
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 1996, 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 83% of
planned earnings per share, 0% of the asset management goal and 100% of the
total sales goal, the Compensation Committee awarded incentive payments ranging
from 43% to 113% 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 seventy 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 35,500 shares were
granted on January 2, 1996, to five officers and executive officers. 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
35,500 shares and were granted on January 2, 1996, to five officers and
executive officers. In addition, Mr. Phillippy was granted options on 10,000
shares upon commencement of his employment.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
In May 1996, Mr. Deuster was hired as President and Chief Executive Officer.
As a result the Compensation Committee decided to pay an incentive bonus to Mr.
Schmidt for the period through April 30, 1996 and to Mr. Deuster for the period
May 1, 1996 to December 31, 1996. The incentive for Mr. Deuster was based on
the same factors as determined at the beginning of the year for Mr. Schmidt and
the Compensation Committee determined that the incentive for each would be
prorated for the period of time they were President and Chief Executive
Officer. The Compensation Committee also determined the starting base salary
for Mr. Deuster would be $250,000 and awarded him 100,000 options and 20,000
shares of Restricted Stock upon commencement of his employment.
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. Mr. Deuster's base salary
was raised 6% effective December 1, 1996.
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 performance against the objectives for 1996 on asset
management, strengthening the management team, enhancing the profitability of
the Company operations, improving Newport quality and reaching 83% of planned
earnings Mr. Schmidt was awarded $71,250 for the period from January 1, 1996 to
April 30, 1996 and Mr. Deuster was awarded a bonus of $126,876 for the period
May 1, 1996 to December 31, 1996. These payments represented 71.25% of their
respective target incentives.
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
APPROVAL OF AMENDMENT TO THE
EMPLOYEE STOCK PURCHASE PLAN
The Company Employee Stock Purchase Plan (the "Purchase Plan") was adopted by
the Board of Directors on November 15, 1994 and approved by the Company's
shareholders on June 7, 1995. The purposes of the Purchase Plan are to provide
to employees an incentive to join and remain in the service of the Company and
its subsidiaries, to promote employee morale and to encourage employee
ownership of the Company's Common Stock by permitting them to purchase shares
at a discount through payroll deductions. The Purchase Plan is intended to
qualify as an "employee stock purchase plan" under Section 423 of the Internal
Revenue Code. At the time of its adoption, the Purchase Plan authorized the
sale of up to 250,000 shares of Common Stock. As of March 31, 1997, a total of
174,728 shares had been sold, leaving only 75,272 shares available for sale
under the Purchase Plan. Subject to approval by the Company's shareholders, the
Board of Directors amended the Purchase Plan on February 27, 1997 to allow the
Company to sell up to an additional 400,000 shares of Common Stock pursuant to
the Purchase Plan, which would increase the total number of shares available to
650,000.
Approval of the amendment to the Purchase Plan will require the affirmative
vote of a majority of the shares of the Company's Common Stock present or
represented and entitled to vote at the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE AMENDMENT TO
THE PURCHASE PLAN.
The following description of the Purchase Plan is qualified in all respects
by reference to the Purchase Plan itself, the full text of which may be
obtained from the Company upon written request to the Secretary of the Company.
DESCRIPTION OF THE PURCHASE PLAN
Every employee of the Company who customarily works more than 30 hours per
week will be eligible to participate in offerings made under the Purchase Plan
if on the offering date such employee has been employed by the Company for at
least one year. Employees of any present or future subsidiary of the Company
may also participate in the Purchase Plan. An employee may not participate in
an offering under the Purchase Plan if immediately after the purchase the
employee would own shares or options to purchase shares of stock possessing 5%
or more of the total combined voting power or value of all classes of stock of
the Company. The approximate number of persons who currently are eligible to
participate in the Purchase Plan is 700. The Company believes that the benefits
or amounts that have been received or will be received by any participant under
the Purchase Plan cannot be determined.
The Purchase Plan may be administered by either the Board of Directors or a
committee appointed by the Board (the "Committee"). The Board has delegated
administration of the Purchase Plan to the Compensation Committee, which is
comprised of four non-employee directors who are not eligible to participate in
the Purchase Plan. Subject to the provisions of the Purchase Plan, the
Committee has full authority to implement, administer and make all
determinations necessary under the Purchase Plan.
14
<PAGE>
Each offering under the Purchase Plan will commence on the first day of each
calendar quarter (the "Grant Date") and shall continue until the end of the
three-month period (the "Offering Period") ending on the last day of such
calendar quarter.
Eligible employees who elect to participate in an offering will purchase
shares of Common Stock through regular payroll deductions in an amount
designated by the employee not to exceed 15% of such employee's compensation.
For this purpose, "compensation" means the amount indicated on the Form W-2
issued to the employee by the Company, including any elective deferrals with
respect to a plan of the Company qualified under either Section 125 or Section
401(a) of the Internal Revenue Code of 1986, as amended. Shares of Common Stock
will be purchased automatically on the last day of the Offering Period (the
"Purchase Date") at a price equal to 85% of the fair market value of the shares
on the Grant Date or 85% of the fair market value of the shares as of the
Purchase Date, whichever is lower. A participant may withdraw from an offering
at any time prior to the Purchase Date and receive a refund of his payroll
deductions, without interest. A participant's rights in the Purchase Plan are
nontransferable other than on the death of the participant. The Purchase Plan
is administered in a manner designed to ensure that any affiliate participant's
commencement or discontinuation of participation in the Purchase Plan or
increase or decrease of payroll deductions will be effected in compliance with
the exemptions from liability under Section 16(b) of the Securities Exchange
Act of 1934 as set forth in Rule 16b-3 promulgated thereunder.
No employee may purchase stock in an amount which would permit his rights
under the Purchase Plan (and any similar purchase plans of the Company and any
parent and subsidiaries of the Company) to accrue at rate which exceeds $25,000
in fair market value, determined as of the Grant Date, for each calendar year.
The Board of Directors may at any time amend, suspend or terminate the
Purchase Plan; provided that any amendment that would (i) increase the
aggregate number of shares authorized for sale under the Purchase Plan (except
pursuant to adjustments provided for in the Purchase Plan), (ii) change the
standards of eligibility for participation, or (iii) materially increase the
benefits which accrue to participants under the Purchase Plan, shall not be
effective unless approved by the shareholders within 12 months of the adoption
of such amendment by the Board. Unless previously terminated by the Board, the
Purchase Plan will terminate on December 31, 2004 or when all shares authorized
for sale thereunder have been sold, whichever is earlier.
SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES OF PURCHASE PLAN
No taxable income is recognized by a participant either at the time of
election to participate in an offering under the Purchase Plan or at the time
shares are purchased thereunder.
If shares are disposed of at least two years after the offering date and at
least one year after the date of purchase, then the lesser of (i) the excess of
the fair market value of the shares at the time of such disposition over the
purchase price of the shares or (ii) the excess of the fair market value of the
shares on the offering date over the purchase price will be treated as ordinary
income to the participant. Any further gain upon such disposition will be taxed
as long-term capital gain. Any long-term capital gain will be taxed as capital
gain at the rates then in effect. If the shares are sold and the sale price is
less than the purchase price, there is no ordinary income and the participant
will have a capital loss equal to the difference between the sale price and the
purchase price. The ability of a participant to utilize such a capital loss
will depend on the participant's other tax attributes and the statutory
limitation on capital loss deductions not discussed herein.
If a participant disposes of the shares before the expiration of the one-year
and two-year holding periods described above (a "disqualifying disposition"),
then upon such disposition the federal income tax consequences will be as
follows: (1) the difference between the purchase price and the fair market
value of the shares on the date of purchase will be taxed to the participant as
ordinary income, and (2) the
15
<PAGE>
excess, if any, of the fair market value of the shares on the date of
disposition over their fair market value on the date of purchase will be taxed
as capital gain. If the shares are sold for less than their fair market value
on the purchase date, the same amount of ordinary income will be attributed to
the participant and a capital loss recognized equal to the difference between
the sale price and the value of the shares on such purchase date. As indicated
above, the ability of the participant to utilize such a capital loss will
depend on the participant's other tax attributes and the statutory limitation
on capital losses not discussed herein. The amount of ordinary income
recognized by the participant will be deductible by the Company for federal
income tax purposes.
PROPOSAL THREE
APPOINTMENT OF INDEPENDENT AUDITORS
Ernst & Young LLP was selected to audit the financial statements of the
Company as of December 31, 1996, and for the year then ended, and has been
selected by the Board of Directors to audit the financial statements of the
Company for 1997. 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, 1997, 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 1998.
OTHER MATTERS
The Company has enclosed with this Proxy Statement a copy of the Annual
Report to Stockholders for the year ended December 31, 1996.
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 OF ROBERT C. HEWITT APPEARS HERE]
Robert C. Hewitt
Secretary
Irvine, California
April 24, 1997
16
<PAGE>
PROXY
NEWPORT CORPORATION
1791 DEERE AVENUE, IRVINE, CALIFORNIA 92606
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS - MAY 28, 1997
(THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS)
The undersigned hereby appoints ROBERT G. DEUSTER 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 9, 1996, at the Annual Meeting of
Stockholders of the Company to be held on Wednesday, May 28, 1997, at 10:00 a.m.
at the Company's Corporate Headquarters, 1791 Deere Avenue, Irvine, California
92606, and any adjournment thereof. In their discretion, the proxies are
authorized to vote upon such other business as may properly come before the
meeting.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
<PAGE>
PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE
THE BOARD OF DIRECTORS RECCOMMENDS A VOTE FOR ITEMS 1, 2 AND 3
WITHHELD
FOR FOR ALL
ITEM 1- ELECTION OF DIRECTORS [_] [_]
Nominees: Class I:
Robert G. Deuster
John T. Subak
WITHHELD FOR: (Write that nominee's name in the space provided below).
____________________________________________________________________________
FOR AGAINST ABSTAIN
ITEM 2- APPROVAL OF AMENDMENT TO THE [_] [_] [_]
EMPLOYEE STOCK PURCHASE PLAN
FOR AGAINST ABSTAIN
ITEM 3- APPOINTMENT OF INDEPENDENT [_] [_] [_]
AUDITORS
Signature(s)___________________________________________ Date________________
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.
