<PAGE>
ROBOTIC VISION SYSTEMS, INC.
425 RABRO DRIVE
[RVSI] HAUPPAUGE, NEW YORK 11788
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 10, 1997
----------------
To the Stockholders of
ROBOTIC VISION SYSTEMS, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of ROBOTIC VISION SYSTEMS, INC., a Delaware corporation (the
"Company"), will be held at The Bank of New York, One Wall Street, New York,
New York, on Thursday, April 10, 1997 at the hour of 10:00 a.m., for the
following purposes:
1) To elect eight directors of the Company for the ensuing year.
2) To amend the Company's 1996 Stock Plan to increase the number of shares
of Common Stock available thereunder from 1,000,000 to 1,500,000.
3) To ratify the selection of Deloitte & Touche LLP as the Company's
independent auditors for the fiscal year ending September 30, 1997.
4) To transact such other business as may properly come before the Meeting.
Only stockholders of record at the close of business on February 27, 1997
are entitled to notice of and to vote at the Meeting or any adjournment
thereof.
Robert H. Walker,
Secretary
New York, New York
March 13, 1997
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND DATE THE
ENCLOSED PROXY, WHICH IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY,
AND PROMPTLY RETURN IT IN THE PRE-ADDRESSED ENVELOPE PROVIDED FOR THAT
PURPOSE. ANY STOCKHOLDER MAY REVOKE HIS PROXY AT ANY TIME BEFORE THE MEETING
BY GIVING WRITTEN NOTICE TO SUCH EFFECT, BY SUBMITTING A SUBSEQUENTLY DATED
PROXY OR BY ATTENDING THE MEETING AND VOTING IN PERSON.
<PAGE>
ROBOTIC VISION SYSTEMS, INC.
425 RABRO DRIVE
HAUPPAUGE, NEW YORK 11788
----------------
PROXY STATEMENT
----------------
This Proxy Statement is being mailed on or about March 13, 1997 to all
stockholders of record at the close of business on February 27, 1997 in
connection with the solicitation by the Board of Directors (the "RVSI Board")
of Robotic Vision Systems, Inc. (the "Company") of Proxies for the Annual
Meeting of Stockholders (the "Meeting") to be held on April 10, 1997. Proxies
will be solicited by mail, and all expenses of preparing and soliciting such
Proxies will be paid by the Company. All Proxies duly executed and received by
the persons designated as proxy therein will be voted on all matters presented
at the Meeting in accordance with the specifications given therein by the
person executing such Proxy or, in the absence of specified instructions, will
be voted for the named nominees to the RVSI Board and in favor of the
proposals to amend the Company's 1996 Stock Plan and to ratify the selection
of Deloitte & Touche LLP. The RVSI Board does not know of any other matter
that may be brought before the Meeting but, in the event that any other matter
should come before the Meeting, or any nominee should not be available for
election, the persons named as proxy will have authority to vote all Proxies
not marked to the contrary in their discretion as they deem advisable. Any
stockholder may revoke his Proxy at any time before the Meeting by written
notice to such effect received by the Company at the address set forth above,
Attn: Corporate Secretary, by delivery of a subsequently dated Proxy or by
attending the Meeting and voting in person.
The total number of shares of the Company's Common Stock outstanding as of
February 27, 1997 was 20,883,549. The Common Stock is the only class of
securities of the Company entitled to vote, each share being entitled to one
non-cumulative vote. Only stockholders of record as of the close of business
on February 27, 1997 will be entitled to vote. A majority of the shares of
Common Stock outstanding and entitled to vote, or 10,441,775 shares, must be
present at the Meeting in person or by proxy in order to constitute a quorum
for the transaction of business. Abstentions and broker nonvotes will be
counted for purposes of determining the presence or absence of a quorum for
the transaction of business. Assuming the presence of a quorum, a vote of a
majority of the shares of Common Stock present and voting, in person or by
proxy, at the Meeting is required to pass upon each of the matters presented.
Abstentions will be counted in tabulations of the votes cast on each of the
proposals presented at the Meeting, whereas broker nonvotes will not be
counted for purposes of determining whether a proposal has been approved.
"Broker nonvotes" are proxies received from brokers who, in the absence of
specific voting instructions from beneficial owners of shares held in
brokerage name, have declined to vote such shares in those instances where
discretionary voting by brokers is permitted.
A list of stockholders entitled to vote at the Meeting will be available at
the Company's offices, 425 Rabro Drive, Hauppauge, New York, for a period of
ten days prior to the Meeting and at the Meeting itself for examination by any
stockholder.
1
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of February 27, 1997 by (i) each director or
director-nominee of the Company, (ii) each person known by the Company to own
beneficially 5% or more of the Company's Common Stock, (iii) each officer
named in the Summary Compensation Table elsewhere herein and (iv) all
directors and executive officers as a group:
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND ADDRESS OF COMMON STOCK PERCENT
OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) OF CLASS
------------------- --------------------- --------
<S> <C> <C>
Pat V. Costa................................. 380,177(2) 1.8%
Frank A. DiPietro............................ 48,000(3) (15)
Donald F. Domnick............................ 25,700(4) (15)
Jay M. Haft.................................. 551,546(5) 2.6%
Donald J. Kramer............................. 11,654(6) (15)
Mark Lerner.................................. 134,128(7) (15)
Howard Stern................................. 92,478(8) (15)
Robert H. Walker............................. 69,290(9) (15)
Steven J. Bilodeau........................... 29,494(10) (15)
Earl H. Rideout.............................. 22,552(11) (15)
Tomas Kohn................................... 37,155(12) (15)
General Motors Corporation
767 Fifth Avenue
New York, New York 10153.................... 1,225,775 5.9%
Marie Cioti
408 Mamaroneck Road
Scarsdale, New York 10583................... 1,100,000 5.3%
All current executive officers and directors
as a group (11 persons)..................... 1,393,684(13)(14) 6.4%
</TABLE>
- --------
(1) Includes shares issuable pursuant to currently exercisable options and
warrants as well as those options and warrants which will become
exercisable within 60 days of February 27, 1997. Except as otherwise
indicated, the persons named herein have sole voting and dispositive
power with respect to the shares beneficially owned.
(2) Includes (i) 348,576 shares issuable to Mr. Costa upon exercise of
outstanding options and (ii) 1,601 vested shares held under the Company's
Stock Ownership Plan ("Stock Ownership Plan") over which shares Mr. Costa
has voting power, but does not have dispositive control.
(3) Includes (i) 3,000 shares issuable to Mr. DiPietro upon exercise of
outstanding options and (ii) 28,000 shares owned of record by his spouse.
(4) Includes 7,000 shares issuable to Mr. Domnick upon exercise of
outstanding options.
(5) Includes (i) 50,000 shares issuable to Mr. Haft upon exercise of
outstanding options, (ii) 62,000 shares issuable upon exercise of
outstanding warrants, (iii) 398,100 shares owned of record by his spouse
and (iv) 7,666 shares held indirectly in a retirement trust.
(6) Includes 8,802 shares issuable to Mr. Kramer upon exercise of outstanding
options.
(7) Includes 126,128 shares issuable to Morgen, Evan & Company, Inc., of
which Mr. Lerner is the principal owner, upon exercise of outstanding
warrants and 8,000 issuable to Mr. Lerner upon exercise of outstanding
options.
2
<PAGE>
(8) Includes (i) 66,330 shares issuable to Mr. Stern upon exercise of
outstanding options and (ii) 6,148 vested shares held under the Stock
Ownership Plan over which shares Mr. Stern has voting power, but does not
have dispositive control.
(9) Includes (i) 39,664 shares issuable to Mr. Walker upon exercise of
outstanding options and (ii) 5,626 vested shares held under the Stock
Ownership Plan over which shares Mr. Walker has voting power, but does
not have dispositive control.
(10) Includes (i) 23,750 shares issuable to Mr. Bilodeau upon exercise of
outstanding options and (ii) 5,744 vested shares held under the Stock
Ownership Plan over which shares Mr. Bilodeau has voting power, but does
not have dispositive control.
(11) Includes (i) 22,244 shares issuable to Mr. Rideout upon exercise of
outstanding options and (ii) 308 vested shares held under the Stock
Ownership Plan over which shares Mr. Rideout has voting power but does
not have dispositive control.
(12) Mr. Kohn is a nominee for the position of director. His beneficial
ownership includes (i) 36,471 shares owned of record in his name and (ii)
684 shares owned of record by his spouse.
(13) Includes (i) 580,098 shares owned of record and beneficially and (ii)
790,089 shares issuable upon exercise of certain outstanding stock
options and warrants.
(14) Includes (i) 23,497 vested shares held in the Stock Ownership Plan for
certain officers of the Company over which shares such officers have
voting power, but do not have dispositive control.
(15) Less than one percent.
COMPLIANCE WITH SECTION 16(A) OF SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10% of the Company's
Common Stock, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission ("SEC"). Officers, directors and greater
than 10% stockholders are required by SEC rule to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no such forms were
required for those persons, the Company believes that during the fiscal year
ended September 30, 1996, all filing requirements applicable to its officers,
directors and greater than 10% beneficial owners were complied with except
that Mr. Kramer was not timely in his filing of one monthly report of one
transaction.
3
<PAGE>
ELECTION OF DIRECTORS
Eight directors are to be elected at the Meeting to serve for a term of one
year or until their respective successors are elected and qualified.
INFORMATION CONCERNING NOMINEES
The following table sets forth the positions and offices presently held with
the Company by each nominee, his age and his tenure as a director.
<TABLE>
<CAPTION>
POSITIONS AND OFFICES DIRECTOR
NAME AGE PRESENTLY HELD WITH THE COMPANY SINCE
---- --- ------------------------------- --------
<S> <C> <C> <C>
Pat V. Costa.................. 53 Chairman of the Board, President, 1984
Chief Executive Officer
Frank A. DiPietro............. 70 Director 1992
Jay M. Haft................... 61 Director 1977
Donald J. Kramer.............. 64 Director 1995
Mark J. Lerner................ 44 Director 1994
Howard K. Stern............... 59 Senior Vice President and Director 1981
Robert H. Walker.............. 61 Executive Vice President, Secretary, 1990
Treasurer and Director
Tomas Kohn.................... 56 -- --
</TABLE>
PAT V. COSTA has served as President, Chief Executive Officer and Chairman
of the RVSI Board since July 1984. Prior thereto and from 1977, Mr. Costa was
employed by GCA Corporation, most recently in the capacity of Executive Vice
President. GCA was engaged in the manufacturing of various electronic
instrumentation equipment and systems.
FRANK A. DIPIETRO began his career with General Motors Corporation ("GM") in
1944. During his forty-six year career with GM, he was actively involved in
automobile assembly and manufacturing engineering systems. He retired in 1990
and continues as a consultant in laser systems in several industries. At the
time of his retirement, Mr. DiPietro held the position of Director of
Manufacturing Engineering, Chevrolet-Pontiac-Canada Car Group, for GM. In
1996, he was elected to the position of Director-at-Large for the Society of
Manufacturing Engineers.
JAY M. HAFT has been a practicing attorney for over 25 years and a strategic
consultant for growth stage companies. Mr. Haft also serves as Chairman of
Noise Cancellation Technologies, Inc., Extech, Inc., and Healthcare
Acquisition Corp., each a public company whose respective securities are
traded on the Nasdaq Small Cap Market. He is a Managing General Partner of
Venture Capital Associates, Ltd. and of Gen Am "1" Venture Fund, a domestic
and an international venture capital fund, respectively. From 1989 until 1994,
he was a partner of Parker Duryee Rosoff & Haft, counsel to the Company, in
New York, New York. He is currently of counsel to such firm.
TOMAS KOHN has been a Professor of Management at Boston University's School
of Management in the undergraduate, MBA, and Executive MBA programs since
1988. Dr. Kohn is the Chairman of the Board of Conduit del Ecuador, a steel
tubing manufacturer, and a member of the Board of Directors of Ideal-Alambrec,
a steel wire manufacturer, both in Quito, Ecuador. He has held these positions
since 1974 and 1972, respectively. From 1987 until the Company's acquisition
by merger of Computer Identics Corp. ("Computer Identics") in August 1996, Dr.
Kohn was a member of Computer Identics' Board of Directors, and its Chairman
since 1992. From 1986 until 1995, Dr. Kohn was a member of the Board of
Directors of N.V. Bekaert S.A., the world's largest independent steel wire
manufacturer. N.V. Bekaert was a major shareholder of Computer Identics.
4
<PAGE>
DONALD J. KRAMER was Chairman of the Board of Directors of Acuity Imaging,
Inc. ("Acuity") from January 1994 until the Company's acquisition of Acuity by
merger in September 1995. Mr. Kramer served as a director of Itran Corp. from
1982 until its merger with Automatix, Inc. in January 1994, at which time the
merger survivor assumed the Acuity name. Mr. Kramer is a private investor and
was a special limited partner of TA Associates, a private equity capital firm
located in Boston, Massachusetts, from January 1990 to March 1996. For the
previous five years, Mr. Kramer was a general partner of TA Associates. In
January 1997, Mr. Kramer was elected to the Board of publicly-owned Micro
Component Technology, Inc. Mr. Kramer is also a director of several privately
held companies.
MARK J. LERNER has been President of Morgen, Evan & Company, Inc., an
investment banking firm which focuses on Japanese-U.S. transactions, since
1992. Prior thereto and from 1990, he was a Managing Director at Chase
Manhattan Bank where he headed the Japan Corporate Finance Group. From 1982 to
1990 Mr. Lerner worked in the Investment Banking Division of Merrill Lynch as
head of its Japan Group, coordinating its New York-based Japanese activities
with professionals in Tokyo and London.
HOWARD STERN has been Senior Vice President and Technical Director of the
Company since December 1984. Prior thereto and from 1981, he was Vice
President of the Company.
ROBERT H. WALKER is and has been Executive Vice President and Secretary-
Treasurer of the Company since December 1986. Prior thereto and from December
1984 he was Senior Vice President of the Company. From 1983 to 1985 he also
served as Treasurer. Mr. Walker is also a director of Tel Instrument
Electronics Corporation, a publicly-owned company.
As long as it is the beneficial owner of at least 5% of the Company's issued
and outstanding Common Stock, GM has the right to designate a representative
for nomination to serve on the RVSI Board. GM has not designated such a
representative for the current year.
IDENTIFICATION OF EXECUTIVE OFFICERS
(Excludes executive officers who are also directors)
<TABLE>
<CAPTION>
NAME AGE POSITION(S) PRINCIPAL OCCUPATION
---- --- ----------- --------------------
<S> <C> <C> <C>
Steven J. Bilodeau...... 38 President, RVSI Is and since October 1995 has been
Electronics President, RVSI Electronics Division.
Division Prior thereto and from December 1986, he
was Executive Vice President of the
Company. Between April 1985 and December
1986, he served the Company in various
capacities, most recently as Vice
President of Operations.
Earl H. Rideout......... 50 Vice President Is and since February 1989 has been Vice
President of the Electronics Group for the
Company. Prior thereto and from 1986 he
was Executive Vice President of Vitronics
Corporation, a firm engaged in the
manufacture and distribution of solder
reflow ovens for the electronics industry.
From 1984 to 1986 he was President and
Chief Operating Officer of Testamatic
Corporation, a manufacturer of bare board
test equipment.
William E. Yonescu...... 54 Vice President Is and since June 1991 has been Vice
President for New Product Development of
the Company. Prior thereto and from March
1984, he was Research and Development
Manager of the Company.
</TABLE>
5
<PAGE>
Executive officers are elected annually by the RVSI Board to hold office
until the first meeting of the RVSI Board following the next annual meeting of
stockholders and until their successors are chosen and qualified.
INFORMATION CONCERNING THE RVSI BOARD
The RVSI Board held four meetings during the year ended September 30, 1996.
All then incumbent directors attended 100% of such meetings, except for
Messrs. DiPietro and Stern, each of whom missed one meeting.
The Stock Option Committee of the RVSI Board reviews and implements
appropriate action with respect to all matters pertaining to stock options
granted under the Company's 1996 Non-Executive Employee Stock Option Plan,
1996 Stock Plan, 1991 Stock Option Plan and 1987 Incentive Stock Option Plan.
The Stock Option Committee is currently composed of Messrs. Haft and DiPietro.
The Stock Option Committee held thirty-nine meetings, including actions taken
by unanimous written consent in lieu of meetings, during fiscal 1996. All then
incumbent members of the Stock Option Committee participated in 100% of such
meetings.
The Audit Committee of the RVSI Board is charged with the review of the
activities of the Company's independent auditors (including, but not limited
to, fees, services and scope of audit). The Audit Committee is presently
composed of Messrs. Costa, Haft and Domnick, of which Mr. Costa is an ex
officio, non-voting member thereof. The Audit Committee met twice during the
period of performance of the 1996 fiscal year end audit. All then incumbent
members of the Audit Committee attended both meetings, except for Mr. Haft who
was not present at one meeting.
The Company does not have a nominating committee, charged with the search
for and recommendation to the RVSI Board of potential nominees for RVSI Board
positions nor does the Company have a compensation committee charged with
reviewing and recommending to the RVSI Board compensation programs for the
Company's officers. These functions are performed by the RVSI Board as a
whole.
PROPOSED AMENDMENT TO THE 1996 STOCK PLAN
The 1996 Stock Plan (the "1996 Plan") was amended by the Board of Directors
on February 14, 1997 to increase the number of shares of Common Stock
available thereunder from 1,000,000 to 1,500,000, subject to the approval of
the Company's stockholders. The Company believes that it has been successful
in the past in attracting and retaining qualified employees, officers and
directors in part because of its ability to offer such persons options to
purchase Common Stock. The Company believes that the increase in the number of
shares reserved for issuance pursuant to the 1996 Plan is necessary for the
Company to continue to attract and retain qualified employees, officers and
directors.
The 1996 Plan provides for its administration by the RVSI Board or by a
stock option committee (the "Committee") appointed by the RVSI Board. The RVSI
Board or the Committee, as appropriate, has discretionary authority (subject
to certain restrictions) to determine the individuals to whom and the times at
which options will be granted and the number of shares subject to such
options. The RVSI Board or the Committee may interpret the provisions of the
1996 Plan and may prescribe, amend and rescind rules and regulations relating
thereto.
The purchase price of shares of Common Stock subject to an Incentive Stock
Option (within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code")), under the 1996 Plan may not be less than the
fair market value of the shares on the date upon which such option is granted.
In addition, in the case of an optionee who is also more than a 10%
stockholder of the Company, the purchase price of the shares may not be less
than 110% of the fair market value of the shares on the date upon which such
option is granted. Further, the aggregate fair market value (determined as of
the date of the option grant) of shares of Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by the holder of
the option
6
<PAGE>
during any calendar year may not exceed $100,000. The option price of non-
qualified options granted under the 1996 Plan ("Non-Qualified Options") is
determined by the RVSI Board or the Committee in its absolute discretion at
the time of grant, but shall in no event be less than the minimum legal
consideration required. In addition, option grants at less than fair market
value are intended to qualify as performance-based compensation under Section
162(m) of the Code, and shall be exercisable only upon the attainment of pre-
established, objective performance goals.
The 1996 Plan is open to participation by employees, including officers of
the Company or of any subsidiary of the Company, as well as by non-employee
directors of, or consultants to, the Company or any subsidiary of the Company.
At February 27, 1997, there were approximately 692 employees (including 6
officers) of the Company eligible to participate in the 1996 Plan; in
addition, an aggregate of 10 non-employee directors and consultants were
eligible to participate in the 1996 Plan. Subject to stockholder approval of
the amendment proposed herein, on February 28, 1997, the Committee granted Mr.
Bilodeau, President of the RVSI Electronics Division, a six-year option under
the 1996 Plan to acquire 75,000 shares of the Company's Common Stock at an
exercise price of $15.75 per share, the market value of such shares on that
date.
Assuming approval of the proposed amendment to the 1996 Plan and after
giving effect thereto, there would be 1,500,000 shares of Common Stock
available for issuance under the 1996 Plan, of which, as of the record date,
972,268 shares would be reserved for then issued and outstanding options.
BOARD RECOMMENDATION
The affirmative vote of the holders of a majority of the shares of Common
Stock of the Company present and voting in person or by proxy at the Meeting
is required for approval of this proposal. The RVSI Board recommends a vote
FOR such proposal.
7
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION
Set forth below is the aggregate compensation for services rendered in all
capacities to the Company during its fiscal years ended September 30, 1996,
1995 and 1994 by its Chief Executive Officer and each of its four most highly
compensated executive officers whose compensation exceeded $100,000 during its
fiscal year ended September 30, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------------ ------------------------------------
AWARDS PAYOUTS
------------------ -----------------
OTHER RESTRIC- LONG ALL
NAME AND ANNUAL TED TERM IN- OTHER
PRINCIPAL FISCAL COMPEN- STOCK NUMBER OF CENTIVE COMPEN-
POSITION YEAR SALARY BONUS SATION AWARDS OPTIONS PAYOUTS SATION
--------- ------ -------- ------- ------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Pat V. Costa............ 1996 $252,801 $85,000 -- -- -- -- $ 2,250(2)
Chief Executive 1995 $180,494 $55,300 -- -- -- -- $177,250(1)(2)
Officer 1994 $176,702 $36,000 -- -- -- -- $ 52,310(1)(2)
Steven J. Bilodeau...... 1996 $167,280 $75,000 -- -- -- -- $ 2,250(2)
Executive 1995 $142,312 $45,000 -- -- -- -- $ 2,250(2)
Vice President 1994 $139,260 $31,000 -- -- -- -- $ 2,686(2)
Earl H. Rideout......... 1996 $122,747 $40,000 -- -- -- -- $ 2,250(2)
Vice President 1995 $124,080 $19,000 -- -- -- -- $ 751(2)
1994 $112,127 $13,500 -- -- -- -- --
Howard Stern............ 1996 $144,544 $60,000 -- -- -- -- $ 2,250(2)
Senior Vice 1995 $120,322 $33,500 -- -- -- -- $ 2,250(2)
President 1994 $117,787 $26,000 -- -- -- -- $ 2,347(2)
Robert H. Walker........ 1996 $142,229 $60,000 -- -- -- -- $ 2,250(2)
Executive Vice 1995 $116,165 $36,000 -- -- -- -- $ 2,250(2)
President 1994 $111,715 $26,000 -- -- -- -- $ 1,785(2)
</TABLE>
- --------
(1) During fiscal 1992, the Company entered into a Stock Appreciation Rights
Agreement with Mr. Costa. Under the terms of this agreement, Mr. Costa
would receive a cash payment based on the appreciation in the market value
of the Company's Common Stock. The maximum cash payments which could be
made under this agreement were $50,000 for each of the fiscal years ended
September 30, 1993 and 1994, $75,000 for fiscal year ended September 30,
1995 and $100,000 for fiscal year ended September 30, 1996, provided
however, that the timing of these payments could have been accelerated by
the RVSI Board. Payments of $50,000 were made to Mr. Costa for each of the
years ended September 30, 1993 and 1994, and payments for the years ended
September 30, 1995 and September 30, 1996, which aggregated $175,000, were
made during fiscal 1995. No further payments will be made under this
agreement.
(2) Represents accrued and vested payments under the Stock Ownership Plan. For
Mr. Costa, this amount equaled $2,310 amd $2,250 for the fiscal years
ended September 30, 1994 and 1995, respectively.
8
<PAGE>
Set forth below is information with respect to grants of stock options
during the fiscal year ended September 30, 1996:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF TOTAL OPTIONS
SECURITIES GRANTED
UNDERLYING TO EMPLOYEES EXERCISE OR
OPTIONS IN FISCAL BASE PRICE EXPIRATION
GRANTED YEAR ($/SH) DATE
---------- ------------- ----------- ----------
<S> <C> <C> <C> <C>
Pat V. Costa.................... 400,000 24.3% $18.25 1/19/2002
Steven J. Bilodeau.............. 100,000 6.1% $18.25 1/19/2002
Earl H. Rideout................. 15,000 0.9% $18.25 1/19/2002
Howard Stern.................... 40,000 2.4% $18.25 1/19/2002
Robert H. Walker................ 30,000 1.8% $18.25 1/19/2002
</TABLE>
Set forth below is further information with respect to the unexercised
options to purchase the Company's Common Stock under the Company's 1987, 1991
and 1996 stock option plans:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT SEPTEMBER 30, 1996 AT SEPTEMBER 30, 1996
ACQUIRED ON VALUE -------------------------------- -------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ---------- -------------- --------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Pat V. Costa............ 138,000 $2,825,972 262,326 345,000 $2,162,741 $269,250
Steven J. Bilodeau...... 83,500 $1,563,542 -- 112,500 -- $135,388
Earl H. Rideout......... 15,000 $ 286,996 16,744 31,250 $ 200,615 $194,707
Howard Stern............ 52,000 $ 974,020 62,580 51,250 $ 729,188 $122,307
Robert H. Walker........ 32,000 $ 605,516 42,914 40,279 $ 486,907 $112,145
</TABLE>
PENSION BENEFITS
The following table sets forth the estimated annual plan benefits payable
upon retirement in 1997 at age sixty-five after fifteen, twenty, twenty-five,
thirty and thirty-five years of credited service to the Company.
<TABLE>
<CAPTION>
YEARS OF SERVICE
---------------------------------------
REMUNERATION 15 20 25 30 35
- ------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$100,000................................ $20,318 $27,090 $33,863 $33,863 $33,863
$125,000................................ $26,018 $34,690 $43,363 $43,363 $43,363
$150,000................................ $31,718 $42,290 $52,863 $52,863 $52,863
$175,000................................ $31,718 $42,290 $52,863 $52,863 $52,863
$200,000................................ $31,718 $42,290 $52,863 $52,863 $52,863
$225,000................................ $31,718 $42,290 $52,863 $52,863 $52,863
$250,000................................ $31,718 $42,290 $52,863 $52,863 $52,863
$300,000................................ $31,718 $42,290 $52,863 $52,863 $52,863
$400,000................................ $31,718 $42,290 $52,863 $52,863 $52,863
$500,000................................ $31,718 $42,290 $52,863 $52,863 $52,863
</TABLE>
9
<PAGE>
The amount of compensation covered by the Company's Pension Plan (the
"Pension Plan") is determined in accordance with rules established by the
Internal Revenue Service and includes all dollar items shown on the Summary
Compensation Table with the exception of 401(k) contributions. Effective with
the fiscal year ended September 30, 1996, for purposes of calculating the
pension benefit, earnings are limited to $150,000, as adjusted for any cost of
living increases authorized by the Code. This earnings limit has been adjusted
to $160,000 for calendar year 1997.
At September 30, 1996, Mr. Costa had twelve years, Mr. Bilodeau had twelve
years, Mr. Rideout had eight years, Mr. Stern had twenty-five years and Mr.
Walker had thirteen years of credited service with the Company.
A participant in the Pension Plan will receive retirement income based on
23% of his final average salary up to his applicable Social Security covered
compensation level plus 38% of any excess, reduced proportionately for less
than twenty-five years of credited service at normal retirement at age 65,
subject to the $150,000 limit described above. Final average salary is defined
in the Pension Plan as the average of a participant's total compensation
during the five consecutive calendar years in the ten calendar year period
prior to his normal retirement date which produces the highest average. A
participant is 100% vested in his accrued pension benefit after five years of
service as defined in the Pension Plan.
EMPLOYEE AGREEMENTS
Mr. Pat Costa is employed as Chief Executive Officer and President of the
Company under an indefinite term agreement which currently provides for an
annual base salary of $235,000. Pursuant to the terms of his employment
agreement, Mr. Costa has been granted certain rights in the event of the
termination of his employment or a change in control of the Company.
Specifically, in the event of termination for any reason other than for cause
and other than voluntarily, Mr. Costa will be entitled to the continuance of
salary and certain fringe benefits for a period of twelve months and may
exercise all outstanding stock options which are exercisable during the
twelve-month period following termination at any time within such twelve-month
period. In the event of the occurrence of a change in control of the Company
(as defined in his employment agreement) and, further, in the event that Mr.
Costa is not serving in the positions of Chief Executive Officer, President
and Chairman of the Company (other than for cause) within one year thereafter,
Mr. Costa will be entitled to exercise all outstanding stock options,
regardless of when otherwise exercisable, during the six-month period
following the termination date of his employment.
The Company has also granted certain rights in the event of termination of
employment to Messrs. Bilodeau, Rideout, Stern, Walker and Yonescu.
Specifically, in the event of involuntary termination other than for cause,
each officer will be given a termination package which provides for three
months severance pay and continued benefits, with the exception of Mr. Rideout
whose employment agreement allows for six months severance pay. In addition,
the Company has agreed to provide a maximum of one hundred days' advance
written notice to Messrs. Bilodeau, Stern and Walker in the event the Company
should desire to terminate their employment other than for cause. In such
event, each such person shall be entitled to exercise all outstanding stock
options, regardless of when otherwise exercisable, during a specified period
following such termination.
DIRECTORS' COMPENSATION
During the fiscal year ended September 30, 1996, directors who were not
otherwise employees of the Company were compensated at the rate of $1,500 for
attendance at each meeting of the RVSI Board or any committee thereof; $750
for attendance at any second meeting held during the same day and $200 for
participation at a telephonic meeting or execution of a consent in lieu of a
meeting.
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REPORT ON EXECUTIVE COMPENSATION
RVSI does not have a compensation committee charged with reviewing and
recommending to the RVSI Board compensation programs for the Company's
executive officers. These functions are performed by the RVSI Board as a
whole.
Compensation Philosophy
RVSI believes that executive compensation should:
. provide motivation to achieve strategic goals by tying executive
compensation to Company performance, as well as affording recognition of
individual performance,
. provide compensation reasonably comparable to that offered by other
high-technology companies in a similar industry, and
. align the interests of executive officers with the long-term interests
of the Company's stockholders through the award of equity purchase
opportunities.
RVSI's compensation plan is designed to encourage and balance the attainment
of short-term operational goals, as well as the implementation and realization
of long term strategic initiatives. As greater responsibilities are assumed by
an executive officer, a larger portion of compensation is "at risk".
This philosophy is intended to apply to all management, including RVSI's
Chief Executive Officer, Pat V. Costa.
Compensation Program
RVSI's executive compensation program has three major components: base
salary, short-term incentive bonus payments and long-term equity incentives.
Compensation packages offered to executive officers are based primarily on
the recommendations of nationally recognized compensation and benefits
consulting firms hired by the Company. The Company seeks to position total
compensation at or near the median levels of other high-tech companies in a
similar industry.
Individual performance reviews are generally conducted annually. Increases
in fiscal year 1996 were based on an individual's sustained performance,
compensation study recommendations and the achievement of the Company's
revenue, profit and earnings per share goals. RVSI does not assign specific
weighting factors when measuring performance; rather, subjective judgment and
discretion is exercised in light of RVSI's overall compensation philosophy.
Base salary is determined by evaluating individual responsibility levels
utilizing independent compensation surveys to determine appropriate salary
ranges and evaluating the individual performance.
Short-term incentive bonus payments, generally, are paid to executive
officers on an annual basis. The award of bonuses and their size, in
substantial part, are linked to predetermined earnings targets, creating
direct linkage between pay and Company profitability.
The RVSI Board believes that executive officers who are in a position to
make a substantial contribution to the long term success of the Company and to
build stockholder value should have a significant equity stake in the
Company's on-going success. Accordingly, one of the Company's principal
motivational methods has been the award of stock options. In addition to
financial benefits to executive officers, if the price of RVSI's Common Stock
during the term of any such option increases beyond such option's exercise
price, the program also creates an incentive for executive officers to remain
with the Company since options generally vest and become exercisable over a
five-year period and the first increment is not exercisable until one year
after the date of grant.
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Chief Executive Officer Compensation
Pat V. Costa's compensation is determined substantially in conformity with
the compensation philosophy, discussed above, that is applicable to all of
RVSI's executive officers. Performance is measured against predefined
financial, operational and strategic objectives.
In establishing Mr. Costa's base salary and bonus the RVSI Board took into
account both corporate and individual achievements. Based upon an executive
compensation study performed for the Company in December 1995 by William
Mercer & Co., an independent compensation consultant, Mr. Costa's total fiscal
year 1995 cash compensation was approximately 30% below the median
compensation of chief executive officers of other high-technology companies in
a similar industry. The Company has continued to review its executive
compensation with compensation and benefits consultants on a regular basis.
Mr. Costa's performance objectives included quantitative goals related to
increasing revenues and earnings per share. His goals also included
significant qualitative objectives such as evaluating merger and acquisition
opportunities, increasing global market penetration and diversifying the
Company's products to include ice detection technology for the airline
industry.
In measuring Mr. Costa's performance against these goals, the RVSI Board
took note of the fact that RVSI's fiscal 1996 revenues increased by 19% and
earnings per share increased by 15%, respectively. In addition, under Mr.
Costa'a leadership, RVSI acquired Acuity in September 1995, followed by
acquisitions of International Data Matrix, Inc. ("I.D. Matrix") in October
1995, Northeast Robotics, Inc. ("NER") in May 1996, Computer Identics in
August 1996 and Systemation Engineered Products, Inc. ("Systemation") in
October 1996, respectively. These five acquisitions, strategically combining
Acuity's, I.D. Matrix' and CI's 2-D vision and bar code technologies, NER's
imaging solutions for difficult lighting situations and Systemation's
component processing systems with RVSI's own 3-D vision technology, have
positioned RVSI as the largest company supplying a broad line of 2-D and 3-D
vision-based systems and as a leader in electro-optical sensor technology. In
addition, international sales increased by 22% in fiscal 1996 over the prior
fiscal year. Further, in July 1996 the Federal Aviation Administration ("FAA")
approved the Company's ice detection system for use by Delta Air Lines
("Delta") in its de-icing operations, and in January 1997 Delta ordered an
additional quantity of systems.
Tax Considerations
Section 162(m) of the Code generally limits the deductibility of
compensation in excess of $1 million paid to the chief executive officer and
the four most highly compensated officers. Certain performance-based
compensation is excluded by Section 162(m)(4)(C) of the Code in determining
whether the $1 million cap applies. Currently the total compensation,
including salary, bonuses and excludable stock options for any of the named
executives does not exceed this limit. If in the future this regulation
becomes applicable to RVSI, the RVSI Board will not necessarily limit
executive compensation to that which is deductible, but will consider
alternatives to preserving the deductibility of compensation payments and
benefits to the extent consistent with its overall compensation objectives and
philosophy.
Summary
The RVSI Board will continue to review the Company's compensation programs
to assure such programs are consistent with the objective of increasing
stockholder value.
THE BOARD OF DIRECTORS
Pat V. Costa, Chairman
Frank DiPietro Mark Lerner
Donald Domnick Howard Stern
Jay M. Haft Robert H. Walker
Donald Kramer
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended September 30, 1996, the following officers
participated in discussions concerning executive officer compensation: Pat V.
Costa, Howard Stern and Robert H. Walker. Each of the named participants did
not participate in discussions concerning his own compensation.
PERFORMANCE GRAPH
[CHART APPEARS HERE]
TOTAL RETURN FOR: 9/30/91 9/30/92 9/30/93 9/30/94 9/30/95 9/30/96
RVSI 100.0 230.0 600.0 980.0 3720.0 2120.0
S&P 500 100.0 110.8 125.2 129.8 168.7 203.2
NASDAQ NON-FINANCIAL 100.0 105.8 137.7 137.0 190.9 222.8
NOTES:
A. Stockholder returns assume $100 was invested on September 30, 1991, with any
dividends reinvested.
B. Trading activity for RVSI from 11/21/91 through 1/4/94 was on the OTC
Bulletin Board; the balance of trading data was as reported by The Nasdaq
National Market.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of February 27, 1997, GM owned approximately 5.9% of the Company's
outstanding Common Stock. Sales to GM accounted for less than 1% of the
Company's total sales for the Company's fiscal year ended September 30, 1996.
Mr. Jay M. Haft, a director of the Company, is of counsel of Parker Duryee
Rosoff & Haft, the Company's general counsel during fiscal 1996.
Mr. Mark Lerner, a director of the Company, is President of Morgen, Evan &
Company, Inc. ("MECO"). Mr. Lerner, through MECO, provided consultation
services relative to the Company's international marketing and sales efforts.
In accordance with an agreement dated December 1993 (which was prior to his
becoming a Director of RVSI), during the fiscal years ended September 30, 1995
and September 30, 1996, the Company compensated Mr. Lerner, through MECO, in
cash in the amounts of $64,070 and $87,369, respectively, as well as with
four-year warrants, at exercise prices from $6.00 to $14.38 and $12.88,
respectively, to acquire an aggregate of 57,129 and 42,434 shares of RVSI
Common Stock, respectively. All warrants were issued at the fair market value
of RVSI's Common Stock on the date of grant. The Company believes that the
compensation paid by it to MECO was no greater than what would have had to be
paid to an unaffiliated person for substantially similar services.
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The RVSI Board has selected Deloitte & Touche LLP to audit the accounts of
the Company for the fiscal year ending September 30, 1997. Such firm, which
has served as the Company's independent auditor since 1986, has reported to
the Company that none of its members has any direct financial interest or
material indirect financial interest in the Company.
Unless instructed to the contrary, the persons named in the enclosed proxy
intend to vote the same in favor of the ratification of Deloitte & Touche LLP
as the Company's independent auditors.
A representative of Deloitte & Touche LLP is expected to attend the Meeting
and will be afforded the opportunity to make a statement and/or respond to
appropriate questions from stockholders.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the Company's 1998 Annual
Meeting of Stockholders pursuant to the provisions of Rule 14a-8, promulgated
under the Exchange Act, must be received by the Company's offices in
Hauppauge, New York by December 10, 1997 for inclusion in the Company's proxy
statement and form of proxy relating to such meeting.
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