<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
[X] Definitive Proxy Statement RULE 14C-5(D)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Evans & Sutherland Computer 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] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
EVANS & SUTHERLAND
COMPUTER CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 18, 1995
TO THE HOLDERS OF COMMON STOCK OF
Evans & Sutherland Computer Corporation:
The Annual Meeting of the Shareholders of Evans & Sutherland Computer
Corporation, a Utah corporation, will be held in the Company's offices at 600
Komas Drive, Salt Lake City, Utah on May 18, 1995, at 11:00 a.m., Salt Lake City
time, for the following purposes:
1. To elect two directors to serve until the 1998 Annual Meeting of
Shareholders;
2. To consider and vote upon a proposal to adopt the Evans & Sutherland
1995 Long-Term Incentive Equity Plan as described in the accompanying
proxy statement; and
3. To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
Only shareholders of record at the close of business on March 31, 1995 (the
"Record Date"), are entitled to notice of and to vote at the meeting.
By Order of the Board of Directors
Gary E. Meredith,
Secretary
Salt Lake City, Utah
Dated: April 13, 1995
- --------------------------------------------------------------------------------
THE VOTE OF EACH SHAREHOLDER WILL BE IMPORTANT AT THIS MEETING. YOU ARE URGED
TO COMPLETE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ACCOMPANYING
ENVELOPE AS SOON AS POSSIBLE. SUCH ACTION WILL NOT AFFECT YOUR RIGHT TO VOTE IN
PERSON SHOULD YOU FIND IT POSSIBLE TO ATTEND THE MEETING.
<PAGE>
EVANS & SUTHERLAND
COMPUTER CORPORATION
600 Komas Drive
Salt Lake City, Utah 84108
April 13, 1995
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
This Proxy Statement is furnished in connection with the solicitation of
Proxies by the Board of Directors of Evans & Sutherland Computer Corporation, a
Utah corporation, (E&S or the Company) to be voted at the Annual Meeting of
Shareholders to be held on May 18, 1995, and any adjournment(s) thereof. The
Annual Meeting of Shareholders will be held at the Company's offices at 600
Komas Drive, Salt Lake City, Utah 84108 at 11:00 a.m., Salt Lake City time.
Certain directors, officers, and employees of the Company may solicit Proxies by
telephone, telegram, mail, or personal contact. Arrangements will be made with
brokers, nominees, and fiduciaries to send Proxies and proxy material to their
principals at the Company's expense. All costs incurred in connection with the
solicitation will be borne by the Company.
THE PROXY
All Proxies delivered pursuant to this solicitation are revocable at any time
at the option of the persons executing them by giving written notice to the
Secretary of the Company, by delivering a later Proxy, or by voting in person at
the meeting.
Proxies shall be voted in accordance with the directions of the shareholders.
Unless otherwise directed, Proxies will be voted (1) FOR the election of the two
nominees for director, (2) FOR the adoption of the Evans & Sutherland 1995 Long-
Term Incentive Equity Plan, and (3) in the discretion of the persons named in
the accompanying Proxy, upon such other matters as may properly come before the
meeting.
INFORMATION ON OUTSTANDING STOCK
The Company's authorized capital stock consists of 30 million shares of $0.20
par value common stock, 5 million shares of class A preferred stock, no par
value, and 5 million shares of class B preferred stock, no par value. As of
March 31, 1995 (the "Record Date"), there were 8,623,442 shares of common stock
issued and outstanding and there were no shares of preferred stock outstanding.
Each share of common stock is entitled to one vote. Only shareholders of record
at the close of business on the Record Date will be entitled to notice of and to
vote at the meeting. The presence at the meeting, in person or by proxy, of a
majority of the shares entitled to vote shall constitute a quorum for the
transaction of business.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth, as of the Record Date, the name of each
person who owns of record or is known by the Company to own beneficially more
than 5% of the outstanding shares of common stock, the number of shares owned by
all directors and officers as a group, and the percentage of the outstanding
shares represented thereby.
-1-
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature
Name and Address of of Beneficial Percent
Beneficial Owner Ownership (1) of Class
- ----------------- ----------------- --------
<S> <C> <C>
HOLDERS OF MORE THAN 5%
State of Wisconsin Investment Board....................... 830,000 shares (2) 9.6
P.O. Box 7842, Madison, Wisconsin 53707
Vanguard/Primecap Fund, Inc............................... 783,500 shares (3) 9.1
P.O. Box 2600, Valley Forge, Pennsylvania 19482-2600
Brinson Partners, Inc. anD Brinson Trust Company.......... 506,000 shares (4) 5.9
209 S. LaSalle, Chicago, Illinois 60604-1295
DIRECTORS & EXECUTIVE OFFICERS
Stewart Carrell........................................... 46,750 shares (5) *
Henry N. Christiansen..................................... 24,250 shares *
Peter O. Crisp............................................ 60,687 shares (6) *
James R. Oyler............................................ 0 shares *
Ivan E. Sutherland........................................ 57,780 shares (7) *
John E. Warnock........................................... 3,750 shares *
Gary E. Meredith.......................................... 7,000 shares *
Ronald R. Sutherland...................................... 12,000 shares *
Lloyd D. Turner........................................... 13,332 shares *
Rodney S. Rougelot........................................ 19,435 shares (8) *
Richard F. Leahy.......................................... 13,052 shares (8) *
Robert A. Schumacker...................................... 15,500 shares (8) *
Directors and Officers (20 as a Group)...................... 292,107 shares (5)(6)(7)(8)(9) 3.4
</TABLE>
- --------
*Does not exceed one percent (1%) of class.
(1) Pursuant to the rules of the Securities and Exchange Commission, shares
shown as "beneficially" owned include (a) shares subject to options
exercisable within 60 days of the Record Date, (b) shares held by
unincorporated entities and in trusts and estates over which an individual
holds at least shared voting or investment powers, and (c) shares held in
trusts and estates of which at least 10 percent of the beneficial interest
of such trust is attributable to specified persons in the immediate family
of the individual(s) involved. This information is not necessarily
indicative of beneficial ownership for any other purpose. The directors
and Named Executive Officers of the Company have sole voting and investment
power over the shares of the Company's common stock held in their names,
except as noted in the following footnotes.
(2) State of Wisconsin Investment Board has sole voting and dispositive power
according to Schedule 13G filed with the Securities and Exchange
Commission.
(3) Vanguard/Primecap Fund, Inc. has sole voting power and shared dispositive
power according to Schedule 13G filed with the Securities and Exchange
Commission.
(4) The Brinson ownership group has sole voting and dispositive power according
to Schedule 13G filed with the Securities and Exchange Commission.
(5) The number of shares attributable to Mr. Carrell includes 4,750 shares
which are issuable upon conversion of $200,000 of convertible debentures at
a conversion rate of $42.10 per share, acquired by Mr. Carrell on March 7,
1995.
(6) Mr. Crisp disclaims beneficial ownership of 6,900 shares held in trust for
the benefit of his children.
-2-
<PAGE>
(7) The number of shares attributable to Mr. Sutherland includes 11,300 shares
held by the Sutherland Family Trust of 1980 as to which Mr. Sutherland is a
co-trustee with Marcia Sutherland. Each trustee has sole voting and
dispositive power.
(8) Messrs. Rougelot, Leahy, and Schumacker are former executive officers of
the registrant who served during the last completed fiscal year and are
included herein with the current executive officers of the Company as the
Named Executive Officers, pursuant to the rules of the Securities and
Exchange Commission.
(9) The total figure for directors and officers as a group includes 147,965
shares subject to stock options which are currently exercisable or will be
exercisable on or before May 30, 1995. This figure includes 39,000 shares
for Mr. Carrell, 18,250 shares each for Messrs. Christiansen, Crisp, and
Sutherland, 3,750 shares for Mr. Warnock, 7,000 shares for Mr. Meredith,
12,000 shares for Mr. Ronald R. Sutherland, and 13,332 shares for Mr.
Turner.
ELECTION OF DIRECTORS
Two directors are to be elected at the meeting. The directors so elected
will serve for a three-year term expiring in 1998, or until their respective
successors are duly elected and qualified. Proxies will be voted for the
election of Mr. Henry N. Christiansen and Mr. James R. Oyler. In the event a
nominee is unable to serve, the Proxies will be voted for a substitute nominee,
if any, to be designated by the Board of Directors, to serve for the term
proposed for the nominee replaced. The Board of Directors has no reason to
believe that any nominee will be unavailable. All directors have served
continuously since first elected as a director. Directors are elected by a
plurality of the votes present in person or represented by proxy and entitled to
vote at the meeting.
<TABLE>
<CAPTION>
First Expiration
Elected as of Current
Name Principal Occupation a Director Term
- --------------------------- --------------------------- ---------- ----------
<S> <C> <C> <C>
Nominees for Election
Henry N. Christiansen (1) Professor, Civil 1983 1995
Engineering Department
Brigham Young University
James R. Oyler (2) President of the Company 1994 1995
and Chief
Executive Officer
Incumbent Directors
Stewart Carrell (3) Chairman of the Board of 1984 1996
the Company
Peter O. Crisp (4) General Partner of Venrock 1980 1997
Associates
Ivan E. Sutherland (5) Vice President and Fellow 1968 1997
of Sun
Microsystems, Inc.
John E. Warnock (6) Chairman and Chief 1992 1996
Executive Officer of
Adobe Systems, Inc.
</TABLE>
- --------
(1) Mr. Christiansen (age 59) has been a member of the Board for 12 years. He
served as a consultant to the Company from 1978 to 1981. He has served as
a Professor of Civil Engineering at Brigham Young University since 1965 and
also served as Chairman of the Department of Civil Engineering from May
1980 to August 1986.
(2) Mr. Oyler (age 49) was appointed President and Chief Executive Officer of
the Company and a member of the Board of Directors in December 1994. He is
also a director of Ikos Systems, Inc. Previously, Mr. Oyler served as
Senior Vice President of Harris Corporation from 1976 through 1990 and also
served as consultant with Booz, Allen & Hamilton.
-3-
<PAGE>
(3) Mr. Carrell (age 61) was elected Chairman of the Board of Directors of the
Company on March 7, 1991. He has been a member of the Board for 11 years.
He also serves as the Chairman of FOCAL Surgery, Inc. and Seattle Silicon
Corporation, and he is a director of Diasonics Ultrasound Inc. and Tripos,
Inc. From mid-1984 until October 1993, Mr. Carrell was Chairman and Chief
Executive Officer of Diasonics, Inc., a medical imaging company. From
November 1983 until early 1987, Mr. Carrell was also a General Partner in
Hambrecht & Quist, a west coast based investment banking and venture
capital firm.
(4) Mr. Crisp (age 62) has been a member of the Board for 15 years. He has
been a General Partner of Venrock Associates, a venture capital firm based
in New York, since 1969. He is also a Director of American Superconductor
Corp., Apple Computer, Inc., Long Island Lighting Co., Thermedics, Inc.,
Thermo Electron Corporation, Thermo Power Corporation, Thermotrex
Corporation, and United States Trust Corporation.
(5) Mr. Sutherland (age 56) has been a member of the Board for 27 years. He is
Vice President and Fellow for Sun Microsystems, Inc. From 1980 to late
1990, Mr. Sutherland served as Vice President and Technical Director for
Sutherland, Sproull and Associates, Inc. Also during this period, Mr.
Sutherland was associated with ATV as a partner and advisor in venture
capital activities. From March 1976 to July 1980, he served as Fletcher
Jones Professor of Computer Science and head of the Computer Science
Department at the California Institute of Technology. Mr. Sutherland
served as a Vice President and the Chief Scientist of the Company from 1968
until June 1974, a Vice President of Picture Design Group from July 1974 to
December 1974, and as a Senior Scientist for the Rand Corporation from
January 1975 to May 1976.
(6) Mr. Warnock (age 54) has been a member of the Board for 3 years. He is the
Chairman and Chief Executive Officer of Adobe Systems, Inc. He was a
founder of Adobe and has served as a director and its Chief Executive
Officer since 1982. He was also the President of Adobe from 1982 through
March 1989. From April 1978, until the founding of Adobe, he was Principal
Scientist of the Imaging Sciences Laboratory at Xerox Corporation's Palo
Alto Research Center.
The Board of Directors has established three committees, the Audit Committee,
the Compensation and Stock Options Committee, and the Nomination Committee. The
members of all three committees are Stewart Carrell, Henry N. Christiansen,
Peter O. Crisp, Ivan E. Sutherland, and John E. Warnock.
The Audit Committee coordinates audit activities with the Company's external
auditors to assure that the Board of Directors receives directly any
recommendations of the auditors for the improvement of accounting controls
without having such recommendations screened by the management of the Company.
The Audit Committee held two meetings during fiscal year 1994.
Pursuant to delegated authority from the Board of Directors, Mr. Oyler, as
Chief Executive Officer, determines all salaries except salaries for corporate
officers. The Compensation and Stock Options Committee reviews and approves
stock option recommendations, under existing plans, received from management.
The Compensation and Stock Options Committee held three meetings during fiscal
year 1994.
The Nomination Committee makes recommendations to the Board of Directors
concerning candidates for election as directors. The Nomination Committee will
consider nominees recommended by shareholders for election as a director. Such
recommendations should be sent to the Secretary of the Company for presentation
to the Nomination Committee. There were no separate meetings of the Nomination
Committee held in fiscal 1994.
-4-
<PAGE>
Members of the Board of Directors employed by the Company do not receive any
separate compensation for services performed as a director. Those members of
the Board of Directors not employed by the Company receive $20,000 annual
retainer per year plus $1,000 for each Board meeting attended. There is no
separate compensation for committee meeting attendance. The Board of Directors
held seven Board Meetings during fiscal 1994 including two Board meetings by
telephone. Each member of the Board of Directors attended at least 75% of the
meetings of the Board of Directors.
1989 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
On February 2, 1989, the Board of Directors adopted the 1989 Stock Option
Plan for Non-Employee Directors (the "Non-Employee Directors Plan"), which was
approved by the shareholders on May 16, 1989. Under the Non-Employee Directors
Plan, 200,000 shares are reserved for issuance of options.
Pursuant to the Non-Employee Directors Plan, each non-employee director of
the Company, serving at such time, received an option on May 16, 1989 to
purchase 10,000 shares, which option was immediately exercisable. Each person
who becomes an Eligible Director (non-employee) subsequent to the date of
adoption of the Plan, receives an automatic grant, on the date of his first
appointment or election to the Board, of an option to purchase 2,000 shares.
Such option is exercisable in four annual installments on the first, second,
third, and fourth anniversaries of the date of the grant.
In addition to the initial grants, each Eligible Director is automatically
granted an additional option to purchase 2,000 shares of the Company on the
first day of each fiscal year, provided, however, that in no event shall an
Eligible Director be granted options under the Non-Employee Directors Plan to
purchase more than 20,000 shares in the aggregate. Each option, after the
initial option, becomes exercisable in four installments on the first, second,
third, and fourth anniversaries of the date of the grant. As of the Record Date
114,000 shares remain available for future option grants under the Non-Employee
Directors Plan.
The exercise price for options granted under the Non-Employee Directors Plan
is equal to the fair market value of the common stock as of the last trading day
immediately prior to the date the option is granted. The options have a term of
ten years. However, each option automatically terminates 30 days after the
optionee ceases to be a non-employee director of the Company except by reason of
the optionee's death, disability, or employment by the Company or a subsidiary,
and terminates in 90 days upon the occurrence of one of these stated events.
-5-
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth compensation awarded to or earned by the Chief
Executive Officer of the Company and certain other highly compensated executive
officers of the Company (Named Executive Officers) for the three fiscal years
ended December 30, 1994.
<TABLE>
<CAPTION>
Long-Term Compensation
--------------------------------
Annual Compensation Awards Payouts
----------------------------------- ---------------------- --------
Other
Annual Restricted All Other
Compen- Stock Options/ LTIP Compen-
Name and Salary (1) Bonus (2) sation (3) Award(s) SARs (4) Payouts sation (5)
Principal Position Year ($) ($) ($) ($) (#) ($) ($)
- ----------------------- ---- ----------- ---------- ---------- ------------ -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James R. Oyler (6) 1994 $ 23,077 $ - None None 150,000 None $ None
President and Chief 1993 - - " " None " "
Executive Officer 1992 - - " " " " "
Stewart Carrell 1994 146,314 - None None 20,000 None 4,620
Chairman of the 1993 110,000 120,000 " " None " None
Board of Directors 1992 112,115 - " " " " "
Ronald R. Sutherland 1994 201,417 - None None 30,000 None 4,620
Vice President, 1993 134,816 25,000 " " None " 4,497
Government Simulation 1992 126,212 30,000 " " " " 4,364
Lloyd D. Turner 1994 181,721 - None None 30,000 None 4,619
Vice President, 1993 134,226 18,000 " " None " None
Graphics Systems 1992 - - " " " " "
Gary E. Meredith 1994 173,880 - None None 35,000 None 4,620
Vice President and 1993 141,337 18,000 " " None " 4,254
Chief Financial Officer 1992 118,077 - " " " " 4,364
Rodney S. Rougelot (7) 1994 374,146 - None None None None 684,620
Former President and 1993 305,654 - " " " " 4,497
Chief Executive Officer 1992 256,082 - " " " " 4,364
Richard F. Leahy (8) 1994 177,379 - None None None None 268,120
Former Vice President, 1993 154,469 - " " " " 4,497
Secretary and Treasurer 1992 134,446 - " " " " 4,364
Robert A. Schumacker (9) 1994 313,625 - None None None None 662,620
Former Vice President, 1993 174,769 47,000 " " " " 4,497
Simulation Division 1992 161,769 53,000 " " " " 4,364
</TABLE>
- --------
(1) Reported compensation amounts are before 401(k) savings plan salary
deferrals and group medical expense deferrals. The fiscal years 1994 and
1993 were 52-week years, whereas 1992 was a 53-week year. Also, pursuant
to Company policy, annual salary increases if granted to E&S employees
including executives, are effective as of the first day of July.
-6-
<PAGE>
(2) Bonus compensation amounts were awarded according to earnings performance
for the years reported in the table, however, actual bonus payment occurred
in the year subsequent to which the bonus was earned.
(3) There are no "Other Annual Compensation" items to be included in this
report in conformance with limitations prescribed in the revised
regulations of the Securities and Exchange Commission. The aggregate value
of perquisites for each of the listed individuals was minimal.
(4) Non-qualified stock options were granted in 1994 to certain of the
individuals listed in the table. The life of the listed options are for
ten years from the date of grant, with vesting occurring at the rate of
one-third of the total grant on each of the one-year anniversaries
subsequent to the grant date.
(5) The amounts disclosed in "All Other Compensation" represent the Company's
contribution to E&S's 401(k) Deferred Savings Plan and the amount paid,
payable, or accrued to certain of the individuals listed in the table
pursuant to the resignation, retirement, or any other termination of such
executive officer's employment with the Company. (See footnotes 7, 8, and
9 below.)
(6) Mr. Oyler's "Salary" for 1994 is for one month. His employment began on
November 28, 1994, with a base salary of $300,000.
(7) Mr. Rougelot, former director and Chief Executive Officer of the Company,
resigned as an officer on December 6, 1994, and resigned as a director and
retired from the Company on December 29, 1994. Included in "All Other
Compensation" for 1994 is an accrued amount of $680,000, paid in 1995, as
part of a Mutual Release and Separation Agreement.
(8) Mr. Leahy, former Vice President, Secretary and Treasurer of the Company,
resigned as an officer on April 1, 1994, and retired from the Company on
November 30, 1994. Included in "All Other Compensation" for 1994, is an
amount paid of $263,500 as part of a Transition Employment and Separation
Agreement.
(9) Mr. Schumacker, former Vice President - Simulation Division, resigned as an
officer and retired from the Company on December 30, 1994. Included in
"All Other Compensation" for 1994 is an accrued amount of $658,000, paid in
1995, as part of a Release and Separation Agreement.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning the issuance of stock
options granted during fiscal year 1994 by each of the Named Executive Officers.
No SARs were granted in 1994.
<TABLE>
<CAPTION>
Individual Grants
--------------------------------------------------------
Number of % of Total
Securities Options/SARs Potential Realizable Value
Underlying Granted to at Assumed Annual Rates
Options/SARs Employees in Exercise or of Stock Price Appreciation
Granted (1) Fiscal Year Base Price Expiration for Option Term (2)
Name (#) (%) ($/Share) Date At 5% At 10%
- --------------------- ------------ ------------ ----------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
James R. Oyler 150,000 33.7% $12.225 11/28/04 $1,153,236 $2,922,525
Stewart Carrell 20,000 4.5% 12.250 12/29/04 154,079 390,467
Gary E. Meredith 35,000 7.9% 12.250 12/29/04 269,639 683,317
Ronald R. Sutherland 30,000 6.7% 12.250 12/29/04 231,119 585,700
Lloyd D. Turner 30,000 6.7% 12.250 12/29/04 231,119 585,700
Rodney S. Rougelot - - - - - -
Richard F. Leahy - - - - - -
Robert A. Schumacker - - - - - -
</TABLE>
- --------
(1) The options granted are all non-qualified stock options which become
exercisable at 1/3 of the option shares on the first anniversary of the
grant date and 1/3 per year for the next two years thereafter. The options
have a 10-year term, subject to earlier termination in the event of the
optionee's cessation of service with the Company.
(2) The five percent and ten percent assumed annual rates of compounded stock
price appreciation are mandated by the rules of the Securities and Exchange
Commission. There is no assurance to any executive officer or any other
-7-
<PAGE>
holder of the Company's securities that the value realized over the 10-year
option term will be at or near the value estimated at the assumed 5% and 10%
levels or at any other defined level.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
The following table sets forth information concerning the exercise of stock
options/SARs during fiscal year 1994 by each of the Named Executive Officers and
lists the value of their unexercised options and SARs on December 30, 1994.
<TABLE>
<CAPTION>
Number of Unexercised Value Of Unexercised
Options/SARs In-the-Money Options/SARs
Shares Acquired Value At Fiscal Year-End At Fiscal Year-End
On Exercise Realized Exercisable/Unexercisable (1) Exercisable/Unexercisable
Name (#) ($) (#) ($)
- ------------- --------------- -------- ----------------------------- -------------------------
<S> <C> <C> <C> <C>
James R. Oyler None $ None 0 / 150,000 $0 / $153,750
Stewart Carrell None None 39,000 / 20,000 0 / 20,000
Gary E. Meredith None None 7,000 / 35,000 0 / 35,000
Ronald R. Sutherland 8,000 25,040 12,000 / 30,000 0 / 30,000
Lloyd D. Turner None None 6,666 / 43,334 0 / 30,000
Rodney S. Rougelot None None 22,000 / 0 0 / 0
Richard F. Leahy 12,000 45,000 10,000 / 0 0 / 0
Robert A. Schumacker 5,000 21,250 18,000 / 0 0 / 0
</TABLE>
- --------
(1) The options/SARs identified above are all non-qualified stock options with
no associated stock appreciation rights (SARs).
PENSION PLAN
The Company supports a defined benefit pension plan with contributions based
upon actuarial computations which take into account many assumptions and factors
including, among others, projected average salary and time in service.
Directors of the Company who are not otherwise full-time employees are not
eligible for participation in the Pension Plan. The Company's 1994 expense for
the Pension Plan of $2,165,000 was 4.6% of the total remuneration of those
participants covered by the Pension Plan for the fiscal year 1994.
The following table illustrates the approximate annual retirement benefits
(not including social security benefits) under the Pension Plan, assuming
retirement at age 65, based upon years of accredited service and final
qualifying earnings as defined in the Pension Plan, and also assuming that the
employee elects a straight life annuity.
<TABLE>
<CAPTION>
Years of Service
------------------------------------------------
Remuneration 15 20 25 30 35
------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$125,000 ........ $ 27,450 $ 36,600 $ 45,750 $ 54,900 $ 64,050
150,000 ........ 33,075 44,100 55,125 66,150 77,175
175,000 ........ 38,700 51,600 64,500 77,400 90,300
200,000 ........ 44,325 59,100 73,875 88,650 103,425
225,000 ........ 49,950 66,600 83,250 99,900 115,641
250,000 ........ 55,575 74,100 92,625 111,150 115,641
300,000 ........ 66,825 89,100 111,375 115,641 115,641
400,000 ........ 89,325 115,641 115,641 115,641 115,641
450,000 ........ 100,575 115,641 115,641 115,641 115,641
500,000 ........ 111,825 115,641 115,641 115,641 115,641
</TABLE>
- --------
-8-
<PAGE>
(1) For purposes of determining benefits at normal retirement, remuneration is
based upon the final average qualifying earnings of the employee, which is
the average of the five consecutive calendar years that will produce the
highest average earnings out of the last ten calendar years of employment.
(2) Beginning in 1989, compensation taken into account under the qualified
pension plan for any individual in any year was limited to $200,000,
indexed annually by the Internal Revenue Service for cost of living
increases. For 1994, the applicable limit was reduced to $150,000.
(3) Under the pension provisions described above, the credited years of service
for the Named Executive Officers listed in the proceeding compensation
table are as follows: Messrs. James R. Oyler, 0 years; Stewart Carrell, 2
years; Gary E. Meredith, 18 years; Ronald R. Sutherland, 13 years; Lloyd D.
Turner, 2 years; Rodney S. Rougelot, 22 years; Richard F. Leahy, 26 years;
and Robert A. Schumacker, 22 years.
REPORT OF THE COMPENSATION AND STOCK OPTIONS COMMITTEE
OF THE BOARD OF DIRECTORS
GENERAL
The following report shall not be deemed incorporated by reference into any
filing under the Securities Act of 1933 (the "1933 Act") or under the Securities
Exchange Act of 1934 (the "1934 Act"), except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under either the 1933 Act of the 1934 Act.
The Compensation and Stock Options Committee of the Board of Directors (the
"Committee") establishes and oversees the general compensation policies of the
Company, which include specific compensation levels for executive officers, cash
incentive initiatives for executives and the technical staff, and the Key
Employee Stock Option Plan. The Committee is composed of the Chairman of the
Board and the four independent outside directors.
E&S operates in highly competitive businesses and competes nationally for
personnel at the executive and technical staff level. Outstanding candidates
are aggressively recruited, often at premium salaries. Highly qualified
employees are essential to the success of the Company.
The Company is committed to providing competitive compensation that helps
attract, retain, and motivate the highly skilled people it requires. The
Committee strongly believes that a considerable portion of the compensation for
the Chief Executive Officer and other top executives must be tied to the
achievement of business objectives and to business unit and overall company
performance, both current and long-term.
The Board of Directors and the Compensation and Stock Options Committee have
determined that it is in the best interests of the Company to administer the
Company's employee benefit plans under the old Rule 16b-3 promulgated under
Section 16 of the Securities Exchange Act of 1934 until such time as the Company
is required to administer its employee benefit plans under the new Rule 16b-3.
In order to comply with the applicable rule, the Compensation and Stock Options
Committee has established the Stock Option Administrative Subcommittee to
administer all stock options granted to members of the Board of Directors. This
subcommittee is composed of three disinterested individuals who are not
directors or employees of the Company.
EXECUTIVE COMPENSATION
The salary of the Chief Executive Officer is established solely by the
Committee, while the salary of other executives is recommended by the Chief
Executive Officer for review and approval of the Committee. The prime source of
information in determining executive salaries is the survey published annually
by the American Electronics Association (AEA), entitled "Executive Compensation
In The Electronics Industry". This is the preferred resource because of the
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electronics industry applicability and because of the nature and large size of
the sample. The Committee has determined that, as a general rule, executive,
management, and top technical salaries should fall between the 50th and 75th
percentiles of the AEA survey.
During 1994, Company performance continued to reflect the difficult economic
conditions of the markets served by the Company. In light of these difficult
market conditions, modest salary increases were granted for most key executives
in reflection of Company performance.
It is company policy to pay cash bonuses to the Chief Executive Officer,
executives, managers, and members of the technical staff based on profitability
and achievement of specific individual objectives and business unit and company
business plan objectives. The overall bonus pool provision is determined by a
formula based on the operating profit of the Company. This provision ensures a
return to the shareholders prior to any incentive payments to executives.
Bonus awards to the Chief Executive Officer are the sole responsibility of
the Committee and are based on the philosophy that incentive compensation should
be directly and materially linked to the operating results of the Company.
Because company profitability declined during the last three years, no bonus
awards were granted to the Chief Executive Officer the past two years.
The Committee, with assistance from the Chief Executive Officer, determines
the allocation of the bonus pool among business groups, with the primary
consideration being group contribution to company profitability. The Chief
Executive Officer recommends to the Committee bonus awards for the executives,
emphasizing company and group profitability, and based on his evaluation of the
contribution of the particular individuals. The four most highly compensated
executives, besides the Chief Executive Officer, are included in the proxy
statement and, as with the Chief Executive Officer, these bonus awards declined
in the last three years.
Other than the company pension plan, the long-term component of the
compensation for the Chief Executive Officer and other executives is the Key
Employee Stock Option Plan. The plan does not provide for automatically-timed
option grants, but rather provides for grants at the discretion of the
Committee. In general, stock options are granted to executives, key managers,
and technical staff whose individual assignments are anticipated to have high
leverage in terms of achieving the longer-term objectives of the Company. Stock
options were granted to certain of the Named Executive Officers during fiscal
year 1994 (see table "Option/SAR Grants in Last Fiscal Year" on page 7 of this
proxy).
With assistance from outside compensation consultants, the Compensation and
Stock Options Committee has developed and recommends for adoption the Evans &
Sutherland 1995 Long-term Incentive Equity Plan, a comprehensive, performance-
based, executive compensation program.
This report is submitted by the members of the Compensation and Stock Options
Committee.
Stewart Carrell Ivan E. Sutherland
Henry N. Christiansen John E. Warnock
Peter O. Crisp
TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL ARRANGEMENTS
In April 1984, the Board of Directors authorized a form of severance
agreement which provides that, upon termination of employment (i) by the Company
within two years of a change in control which has not been approved by a
majority of the directors in office immediately preceding such change in control
(an "unapproved change in control") or (ii) by the executive for good reason
within two years after such an unapproved change in control, such executive will
be entitled to
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receive, among other things, an amount equal to the sum of his base salary at
the date of termination plus any amount awarded under the President's Plan or
the Executive Plan for the year preceding the year of termination multiplied by
two and a pro rata portion of any award related to any uncompleted performance
award period under the President's Plan, the Executive Plan, or the Stock Bonus
Plan. Such agreements would also require the Company to provide certain
benefits, including insurance coverage, for each person after termination of
employment for a two year period and to provide each person with an amount in
cash equal to an amount which he would have received under the Company pension
plans had he been fully vested and had he remained employed for two additional
years, reduced by the pension benefits he will actually receive under such
pension plans. However, each executive may terminate employment with the Company
within 90 days of an unapproved change in control without good reason, in which
case the severance benefits are limited to an amount in cash equal to the sum of
his annual base salary at the date of termination plus an amount equal to the
amount of any award received under the President's Plan, the Executive Plan, or
the Stock Bonus Plan for the year preceding the year of termination. Such
arrangements confer no benefits either prior to an unapproved change in control
nor after a change in control which has been approved by the Board of Directors
as described above. Because such agreements may impose significant costs upon
the Company following a change in control, they may tend to discourage takeover
attempts. The Board of Directors has authorized the President or the Board, in
his or their discretion, to cause the Company to enter into such severance
agreements with up to approximately twelve persons, including some or all of the
officers of the Company and such other key employees as the President shall in
his discretion designate. The Company has not yet entered into any such
agreements.
In addition to the Termination of Employment and Change of Control protection
for key officers noted above, the Company has entered into separate agreements
with certain executive officers of the Company regarding severance and
termination issues. A summary of these agreements follow:
On June 23, 1994, an agreement was entered into with Mr. Steven C. Eror, Vice
President, Assistant Chief Financial Officer, which provides, in the unlikely
event that circumstances result in dismissal, regardless of the quality of
service he has rendered, for other than cause, in the first year of his
employment, the Company will pay him the unpaid portion of his total first year
compensation of $107,000 according to the Company's standard payroll procedures.
If at any time Mr. Eror voluntarily terminates his employment, the severance
policies set forth in the Company's Employee Handbook and Policies shall apply.
On November 29, 1994, an agreement was entered into with Mr. James R. Oyler,
President of the Company and Chief Executive Officer, which provides, in the
unlikely event that circumstances result in dismissal, regardless of the quality
of service he has rendered, for other than cause, the Company will pay him an
amount equal to one year's base salary, plus the amount, if any, of the prior
year's bonus, and medical and life insurance benefits for one year.
On December 6, 1994, an agreement was entered into with Mr. Gary E. Meredith,
Vice President, Chief Financial Officer and Corporate Secretary, which provides,
in the unlikely event that circumstances result in dismissal, regardless of the
quality of service he has rendered, for other than cause, the Company will pay
him an amount equal to one and a half times the then current year's base salary,
plus the amount, if any, of the prior year's bonus. In addition, the Company
will pay the medical insurance premiums under the Company's regular insurance
plan for continuation coverage and, after the expiration of continuation
coverage, under the conversion policy provided under the medical plan. The
Company will also pay a single sum cash payment for Company defined benefit
pension plan service lost due to early termination. If at any time Mr. Meredith
voluntarily terminates his employment, the severance policies set forth in the
Company's Employee Handbook and Policies shall apply.
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COMPARATIVE STOCK PERFORMANCE CHART
The following graph presents a five year comparison of cumulative total
shareholder return on the common stock of the Company with the cumulative total
return on the S&P 500 Index and the Hambrecht & Quist Computer Hardware Sector
Index. It assumes the investment of $100 on January 1, 1990, and the
reinvestment of all dividends.
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG EVANS & SUTHERLAND, S&P 500 INDEX AND
HAMBRECHT & QUIST COMPUTER HARDWARE SECTOR INDEX
<TABLE>
<CAPTION>
Hambrecht &
Quist Computer
Measurement period Evans & S&P 500 Hardware Sector
(Fiscal Year Covered) Sutherland Index Index
- --------------------- ---------- -------- ---------------
<S> <C> <C> <C>
Measurement PT -
01/01/90 $100 $100 $100
FYE 12/28/90 $ 74 $ 97 $109
FYE 12/27/91 $ 90 $126 $105
FYE 12/25/92 $ 76 $136 $ 91
FYE 12/31/93 $ 80 $150 $ 95
FYE 12/30/94 $ 62 $152 $118
</TABLE>
ADOPTION OF EVANS & SUTHERLAND 1995 LONG-TERM INCENTIVE EQUITY PLAN
On February 21, 1995, the Board of Directors adopted the Evans & Sutherland
1995 Long-Term Incentive Equity Plan (the "Plan") subject to approval by the
shareholders. The 1995 Plan authorizes grants of Incentive Stock Options
("ISOs"), Non-qualified Stock Options ("NQSOs"), Stock Appreciation Rights
("SARs"), Stock Awards, and Dividend Equivalents. The total number of shares of
Company common stock available for awards under the 1995 Plan is 350,000, plus
any shares that are available from prior plans that have not yet been granted or
which may subsequently become available by termination or cancellation under the
prior plans.
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The Board believes that use of long-term incentives as authorized under the
1995 Plan to be beneficial to the Company as a means of promoting the Company's
success and enhancing its value by linking the personal interests of its key
employees to those of its shareholders and by providing them with an incentive
for outstanding performance. These incentives also provide the Company
flexibility in its ability to attract and retain the services of employees upon
whose judgment, interest, and special effort the successful conduct of the
Company's operation is largely dependent. The following summary of the 1995
Plan is qualified in its entirety by reference to the 1995 Plan, a copy of which
is included at the end of this Proxy Statement as Appendix A.
Administration
- --------------
The 1995 Plan will be administered by a committee appointed by the Board (the
"Committee"). The Committee will have the exclusive authority to administer the
1995 Plan, including the power to determine eligibility, the types and sizes of
awards, and the price and timing of awards.
Description of the Available Awards:
1. Incentive Stock Options
-----------------------
An ISO is a stock option that satisfies the requirements specified in
Section 422 of the Internal Revenue Code (the "Code"). In order for an option
to qualify as an ISO, the price payable to exercise the option must equal or
exceed the fair market value of the stock at the date of the grant, the
option must lapse no later than ten years from the date of the grant, and the
stock subject to ISOs that are first exercisable by an employee in any
calendar year must not have a value of more than $100,000 as of the date of
grant. Certain other requirements must also be met.
An optionee will not be treated as receiving taxable income upon
either the grant of an ISO or upon the exercise of an ISO. However, the
difference between the exercise price and the fair market value on the date
of exercise will be an item of tax preference at the time of exercise in
determining liability for the alternative minimum tax, assuming that the
common stock is either transferable or subject to a substantial risk of
forfeiture under Section 83 of the Code. If at the time of exercise, the
common stock is both nontransferable and is subject to a substantial risk of
forfeiture, the difference between the exercise price and the fair market
value of the common stock (determined at the time the common stock becomes
either transferable or not subject to a substantial risk of forfeiture) is a
tax preference item in the year in which the common stock becomes either
transferable or not subject to a substantial risk of forfeiture.
If common stock acquired by the exercise of an ISO is not sold or
otherwise disposed of within two years from the date of its grant and is held
for at least one year after the date such common stock is transferred to the
optionee, any gain or loss resulting from its disposition will be treated as
long-term capital gain or loss. If such common stock is disposed of before
the expiration of the above-mentioned holding periods, a "disqualifying
disposition" will occur. If disqualifying disposition occurs, the optionee
will realize ordinary income in the year of the disposition in an amount
equal to the difference between the fair market value of the common stock on
the date of exercise and the exercise price, or the selling price of the
common stock and the exercise price, whichever is less. The balance of the
optionee's gain on a disqualifying disposition, if any, will be taxed as
capital gain.
In the event an optionee exercises an ISO using common stock acquired
by a previous exercise of an ISO, unless the stock exchange occurs after the
required holding periods, such exchange shall be deemed a disqualifying
disposition of the stock exchanged.
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The Company will not be entitled to any tax deduction as a result of the
grant or exercise of an ISO, or on a later disposition of the common stock
received, except that in the event of a disqualifying disposition, the
Company will be entitled to a deduction equal to the amount of ordinary
income realized by the optionee.
2. Non-Qualified Stock Options
---------------------------
An NQSO is any stock option other than an Incentive Stock Option. Such
options are referred to as "non-qualified" because they do not meet the
requirements of, and are not eligible for, the favorable tax treatment
provided by Section 422 of the Code.
No taxable income will be realized by an optionee upon the grant of an
NQSO, nor is the Company entitled to a tax deduction by reason of such grant.
Upon the exercise of an NQSO, the optionee will realize ordinary income in an
amount equal to the excess of the fair market value of the common stock on
the date of exercise over the exercise price and the Company will be entitled
to a corresponding tax deduction.
Upon a subsequent sale or other disposition of common stock acquired
through exercise of an NQSO, the optionee will realize short-term or long-
term capital gain or loss to the extent of any intervening appreciation or
depreciation. Such a resale by the optionee will have no tax consequence to
the Company.
3. Stock Appreciation Rights
-------------------------
An SAR is the right granted to an employee to receive that appreciation
in the value of a share of common stock over a certain period of time. Under
the 1995 Plan, the Company may pay that amount in cash, in common stock, or
in a combination of both.
A recipient who receives an SAR award is not subject to tax at the time
of the grant and the Company is not entitled to a tax deduction by reason of
such grant. At the time such award is exercised, the recipient must include
in income the appreciation inherent in the SARs (i.e. the difference between
the fair market value of the common stock on the date of grant and the fair
market value of the common stock on the date the SAR is exercised). The
Company is entitled to a corresponding tax deduction in the amount equal to
the income includible by the recipient in the year in which the recipient
recognizes taxable income with respect to the SAR.
4. Stock Awards
------------
Under the Stock Award feature of the 1995 Plan, a key employee or
consultant may be granted a specified number of shares of common stock or
units equivalent in value to shares. However, vested rights to such shares
may be subject to certain restrictions or conditions established by the
Committee, such as continuous service with the Company, attainment of certain
business objectives, or other performance based achievements. If the employee
fails to comply with any of the restrictions during the period specified by
the Committee, or the performance standards are not satisfied, the stock is
forfeited.
A recipient of a Stock Award will recognize ordinary income equal to
the fair market value of the common stock ("Awarded Stock") at the time the
restrictions lapse. The Company is entitled to a tax deduction equal to the
amount of income recognized by the recipient in the year in which the
restrictions lapse.
Instead of postponing the income tax consequences of a Stock Award, the
recipient may elect to include the fair market value of the common stock in
income in the year the award is granted. This election is made under Section
83(b) of the Code. This Section 83(b) election is made by filing a written
notice with the Internal Revenue Service office with which the
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recipient files his or her Federal income tax return. The notice must be
filed within 30 days of the date of grant and must meet certain technical
requirements.
The tax treatment of the subsequent disposition of the Awarded Stock will
depend upon whether the recipient has made a Section 83(b) election to
include the value of the common stock in income when awarded. If the
recipient makes a Section 83(b) election, any disposition thereafter will
result in a capital gain or loss equal to the difference between the selling
price of the common stock and the fair market value of the common stock on
the date of grant. Such capital gain or loss will be a long-term or short-
term capital gain or loss depending upon the period the Awarded Stock is
held. If no Section 83(b) election is made, any disposition thereafter will
result in a capital gain or loss equal to the difference between the selling
price of the Awarded Stock and the fair market value of the Awarded Stock on
the date the restrictions lapsed. Again, such capital gain or loss will be a
long-term or short-term capital gain or loss depending upon the period the
Awarded Stock is held.
During the period in which a recipient holds the Awarded Stock, if
dividends are declared prior to the lapse of the restrictions, the dividends
will be treated for tax purposes by the recipient and the Company in the
following manner: If the recipient makes a Section 83(b) election to
recognize income at the time of the Stock Award, the dividends will be taxed
as dividend income to the recipient when the restrictions lapse. Under such
circumstances, the Company will not be entitled to a tax deduction, nor will
it be required to withhold for applicable taxes. If no such election is made
by the recipient, the dividends will be taxed as compensation to the
recipient at the time the restrictions lapse and will be deductible by the
Company and subject to income tax withholding at that time.
5. Dividend Equivalents
--------------------
The 1995 Plan also allows for the granting of dividend equivalent
rights in conjunction with the grant of other awards under the 1995 Plan.
Such dividends or dividend equivalents may be paid currently or may be
credited to a participant's account. Any crediting of dividends or dividend
equivalents may be subject to such restrictions and conditions as the
Committee may establish, including reinvestment in additional shares or share
equivalents. A recipient of a dividend equivalent will not be treated as
receiving taxable income upon the grant of a dividend equivalent. The
recipient will recognize ordinary income at the time dividend equivalents are
paid.
Recent Tax Changes
- ------------------
Section 162(m) of the Code, adopted as part of the Revenue Reconciliation Act
of 1993, generally limits to $1 million the deduction that can be claimed by any
publicly-held corporation for compensation paid to any "covered employee" in any
taxable year beginning after December 31, 1993. The term "covered employee" for
this purpose is defined generally as the chief executive officer and the four
other highest paid employees of the corporation.
Performance-based compensation is outside the scope of the $1 million
limitation, and, hence, generally can be deducted by a publicly-held corporation
without regard to amount; provided that, among other requirements, such
compensation is approved by shareholders. Among the items of performance-based
compensation that can be deducted without regard to amount (assuming shareholder
approval and other applicable requirements are satisfied) is compensation
associated with the exercise price of a stock option so long as the option has
an exercise price equal to or greater than the fair market value of the
underlying stock at the time of the option grant. All options granted under the
1995 Plan will have an exercise price at least equal to the fair market value of
the underlying stock on the date of grant.
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Tax Withholding
- ---------------
The Company shall have the right to deduct from any settlement of an award
made under the 1995 Plan, including the delivery or vesting of shares, a
sufficient amount to cover withholding of any federal, state, or local taxes
required by law, or to take such other action as may be necessary to satisfy any
such withholding obligations. The Committee may permit shares to be used to
satisfy required tax withholding and such shares shall be valued at their fair
market value as of the settlement date of the applicable award.
Plan Amendment
- --------------
The 1995 Plan may be amended by the Committee as it deems necessary or
appropriate to better achieve the purposes of the 1995 Plan, except that no such
amendments which would increase the number of shares available for issuance or
cause the 1995 Plan not to comply with Rule 16b-3 (or any successor rule) under
the Securities Exchange Act of 1934 or Section 162(m) of the Internal Revenue
Code shall be made without the approval of the Company's shareholders.
THE AFFIRMATIVE VOTE OF A MAJORITY OF A QUORUM OF SHAREHOLDERS IS REQUIRED
FOR THE APPROVAL OF THE ADOPTION OF THE LONG-TERM INCENTIVE EQUITY PLAN. THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR
APPROVAL OF THIS PROPOSAL. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE
SO VOTED UNLESS SHAREHOLDERS SPECIFY OTHERWISE ON THEIR PROXY CARDS.
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, executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities to file with the Securities
and Exchange Commission (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 beneficial owners are required
by SEC regulation to furnish the Company with copies of all Section 16(a)
reports they file.
Based solely upon review of the copies of such reports furnished to the
Company and written representations that no other reports were required, the
Company believes that there was compliance for the fiscal year ended December
30, 1994 with all Section 16(a) filing requirements applicable to the Company's
officers, directors, and greater than ten-percent beneficial owners.
SELECTION OF AUDITORS
KPMG Peat Marwick LLP, independent certified public accountants, has been
selected by the Board of Directors as the firm to audit the accounts and to
report on the financial statements of the Company for the current fiscal year
ending December 29, 1995. Neither KPMG Peat Marwick LLP, nor any of its members
has any financial interest, direct or indirect, in the Company, nor has KPMG
Peat Marwick LLP, nor any of its members ever been connected with the Company as
promoter, underwriter, voting trustee, director, officer, or employee. It is
anticipated that a representative of KPMG Peat Marwick LLP will attend the
meeting and shall be available to respond to appropriate questions. It is not
anticipated that the representative from KPMG Peat Marwick LLP will make any
statement or presentation.
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SHAREHOLDER PROPOSALS
Any proposal(s) to be submitted by a shareholder for consideration at the
next Annual Meeting of Shareholders to be held in 1996 must be received by the
Company on or before December 15, 1995.
OTHER MATTERS
The Board of Directors knows of no other matters to be acted upon at the
meeting. However, if any other matter properly comes before the meeting, it is
intended that the persons voting the proxies will vote them in accordance with
their best judgment.
Evans & Sutherland Computer
Corporation
Gary E. Meredith,
Secretary
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<PAGE>
Appendix A
EVANS & SUTHERLAND
1995 LONG-TERM INCENTIVE EQUITY PLAN
1. Purpose
This 1995 Long-Term Incentive Equity Plan (the "Plan") is intended to
promote the long-term success of Evans & Sutherland (the "Company") by
providing its officers and other employees with incentives to create
excellent performance and to continue in the employ of the Company, its
subsidiaries, and affiliates. By encouraging Plan participants to become
shareholders of the Company and by providing actual ownership through Plan
awards, it is also intended that participants will view the Company from an
ownership perspective.
2. Term
The Plan shall terminate at the close of business on the fifth
anniversary of its approval by the Company's shareholders. After termination
of the Plan, no future awards may be granted but previously granted awards
shall remain outstanding in accordance with their applicable terms and
conditions and the terms and conditions of the Plan.
3. Plan Administration
A Committee (the "Committee") appointed by the Board shall be
responsible for administering the Plan. The Committee shall be comprised of
persons, in such numbers as the rules reference herein shall require at any
given time, who shall qualify to administer the Plan as contemplated by (a)
Rule 16b-3 under the Securities and Exchange Act of 1934 (the "1934 Act"), as
now or hereafter applicable to the Company, or any successor rules; and (b)
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code").
The Committee shall have full and exclusive power to interpret the Plan and
to adopt such rules, regulations and guidelines for carrying out the Plan as
it may deem necessary or proper, all of which power shall be executed in the
best interests of the Company and in keeping with the objectives of the Plan.
This power includes but is not limited to selecting award recipients,
establishing all award terms and conditions and adopting modifications,
amendments and procedures, including those contemplated by Section 15 of the
Plan, as well as rules and regulations governing awards under the Plan, and
to make all other determinations necessary or advisable for the
administration of the Plan.
4. Eligibility
Any employee of the Company shall be eligible to receive one or more
awards under the Plan. "Employee" shall also include any former employee of
the Company eligible to receive an assumed or replacement award as
contemplated in Sections 5 and 8, and "Company" includes any entity that is
directly or indirectly controlled by the Company or any entity in which the
Company has a significant equity interest, as determined by the Committee.
5. Shares of Common Stock Subject to the Plan
Subject to the provisions of Section 6 of the Plan, the aggregate
number of shares of Common Stock ($.20 par value) of the Company ("shares")
which may be transferred to participants under the Plan shall be 350,000,
plus any shares available for grant on the date the Plan is approved by the
Company's shareholders, and any shares which subsequently become available to
the extent that outstanding stock options are terminated or canceled under
the Company's 1985 Stock Option Plan for Key Employees and the 1981 Stock
Bonus Plan (the "Prior Plans"). The aggregate number of shares that may be
issued under awards pursuant to
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Section 8(c) of the Plan and the aggregate number of shares that may be
covered by awards granted to any single individual under the Plan shall not
exceed 283,000 shares. The aggregate number of shares that may be represented
by incentive stock options ("ISOs") intended to comply with Section 422 of
the Code shall not exceed 850,000.
Shares subject to awards under the Plan, which expire, terminate or are
canceled without exercise or vesting shall thereafter be available for the
granting of other awards. Any shares tendered, either actually or by
attestation, by a person as full or partial payment made to the Company, on
or after the effective date of the Plan in connection with any exercise of a
stock option or receipt of shares under the Plan or Prior Plans shall again
be available for grants under the Plan. Further, in instances where a stock
appreciation right ("SAR") or other award is settled in cash, the shares
covered by such award shall remain available for issuance under the Plan.
Likewise, the payment of cash dividends and dividend equivalents paid in cash
in conjunction with outstanding awards shall not be counted against the
shares available for issuance. Any shares that are issued by the Company, and
any awards that are granted through the assumption, or in substitution for,
outstanding awards previously granted by an acquired entity shall not be
counted against the shares available for issuance under the Plan.
Any shares issued under the Plan may consist in whole or in part of
authorized and unissued shares or of treasury shares, and no fractional
shares shall be issued under the Plan. Cash may be paid in lieu of any
fractional shares in settlements of awards under the Plan.
6. Adjustments and Reorganizations
In the event of any stock dividend, stock split, combination or
exchange of shares, merger, consolidation, spin-off, recapitalization or
other distribution (other than normal cash dividends) of Company assets to
shareholders, or any other change affecting shares or share price, such
proportionate adjustments, if any, as the Committee in its discretion may
deem appropriate to reflect such change shall be made with respect to (a) the
aggregate number of shares that may be issued under the Plan, (b) each
outstanding award made under the Plan, and (c) the exercise price per share
for any outstanding stock options, SARs or similar awards under the Plan.
In the event that the Company undergoes a change in control (as defined
by the Committee), or is liquidated or reorganized, or is not the surviving
company in a merger or consolidation with another company, and in the absence
of the surviving Company's assumption of outstanding awards made under the
Plan, the Committee may provide for appropriate adjustments, including the
acceleration of vesting, and settlements of such awards either at the time of
award or at a subsequent date.
7. Fair Market Value
Fair Market Value for all purposes under the Plan shall mean the closing
price of a share as reported daily in the Wall Street Journal or similar
readily available public source for the date in question. If no sales of
shares were made on such date, the closing price of a share as reported for
the preceding day on which sales of shares were made shall be used.
8. Awards
The Committee shall determine the type or types of award(s) to be made to
each participant. Awards may be granted singly, in combination or in tandem.
Awards also may be made in combination or in tandem with, in replacement of,
as alternatives to, or as the payment form for grants or rights under any
other employee or compensation plan of the Company including the plan of any
acquired entity. The types of awards that may granted under the Plan are:
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a) Stock Options -- This is a grant of a right to purchase a specified
number of shares during a specified period as determined by the
Committee. The purchase price per share for each stock option shall be
not less than 100% of Fair Market Value on the date of grant, except if
a stock option is granted retroactively in tandem with or as a
substitution for an SAR, the exercise price may be no lower than the
Fair Market Value of a share on the date the SAR was granted. A stock
option may be in the form of an ISO which, in addition to being subject
to applicable terms, conditions and limitations established by the
Committee, complies with Section 422 of the Code. The price at which
shares may be purchased under a stock option shall be paid in full at
the time of the exercise in cash or such other method permitted by the
Committee, include (i) tendering (either actually or by attestation)
shares, (ii) surrendering a stock award valued at Fair Market Value on
the date of surrender, (iii) authorizing a third party to sell the
shares (or a sufficient portion thereof) acquired upon exercise of a
stock option and assigning the delivery to the Company of a sufficient
amount of the sale proceeds to pay for all the shares acquired through
such exercise, or (iv) any combination of the above.
The Committee may grant stock options that provide for the award of a
new stock option when the exercise price has been paid for by tendering
shares to the Company. Such a stock option shall be limited to the
number of shares tendered, with the stock option purchase price set at
the then-current Fair Market Value, and shall not extend beyond the
remaining term of the originally exercised option.
b) SARs -- This is a right to receive a payment, in cash and/or shares,
equal to the excess of the Fair Market Value of a specified number of
shares on the date the SAR is exercised over the Fair Market Value on
the date the SAR was granted as set forth in the applicable award
agreement. Except if an SAR is granted retroactively in tandem with or
in substitution for a stock option, the designated Fair Market Value in
the applicable award agreement for the date of grant shall be no lower
than the actual Fair Market Value of a share on such date of grant.
c) Stock Awards -- This is an award made or denominated in shares or units
equivalent in value to shares. All or part of any stock award may be
subject to conditions and restrictions established by the Committee, and
set forth in the award agreement, which may include but are not limited
to continuous service with the Company, achievement of specific business
objectives and other measurements of individual, business unit or
Company performance.
9. Dividends and Dividend Equivalents
The Committee may provide that any awards under the Plan earn dividends
or dividend equivalents. Such dividends or dividend equivalents may be paid
currently or may be credited to a participant's account. Any crediting of
dividends or dividend equivalents may be subject to such restrictions and
conditions as the Committee may establish, including reinvestment in
additional shares or share equivalents.
10. Deferrals and Settlements
Payment of awards may be in the form of cash, stock, other awards or
combinations thereof as the Committee shall determine, and with such
restrictions as it may impose. The Committee also may require or permit
participants to elect to defer the issuance of shares or the settlement of
awards in cash under such rules and procedures as it may establish under the
Plan. It also may provide that deferred settlements include the payment or
crediting of interest on the deferral amounts, or the payment or crediting
of dividend equivalents where the deferral amounts are denominated in
shares.
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11. Transferability and Exercisability
Awards granted under the Plan shall be nontransferable or assignable
other than by will or the laws of descent and distribution, except that the
Committee may provide for the transferability of particular awards: (a) by
gift or other transfer of an award to (i) any trust or estate in which the
original award recipient or such participant's spouse or other immediate
relative has a substantial beneficial interest or (ii) a spouse or other
immediate relative; and (b) pursuant to a qualified domestic relations
order (as defined by the Code). However, any award so transferred shall
continue to be subject to all the terms and conditions contained in the
instrument evidencing such award.
In the event that a participant terminates employment with the Company
to assume a position with a governmental, charitable, educational or
similar non-profit institution, the Committee may subsequently authorize a
third party, including but not limited to a "blind" trust, to act on behalf
of and for the benefit of such participant regarding any outstanding awards
held by the participant subsequent to such termination of employment. If so
permitted by the Committee, a participant may designate a beneficiary or
beneficiaries to exercise the rights of the participant and receive any
distribution under the Plan upon the death of the participant.
12. Award Agreements
Awards under the Plan shall be evidenced by agreements that set forth
the terms, conditions and limitations for each award which may include the
term of an award (except that in no event shall the term of any ISO exceed
a period of ten years from the date of its grant), the provisions
applicable in the event the participant's employment terminates, and the
Company's authority to unilaterally or bilaterally amend, modify, suspend,
cancel or rescind any award. The Committee need not require the execution
of any such agreement, in which case acceptance of the award by the
participant shall constitute agreement to the terms of the award.
13. Foreign Participation
In order to assure the viability of awards granted to participants
employed in foreign countries, the Committee may provide for such special
terms as it may consider necessary or appropriate to accommodate
differences in local law, tax policy, or custom. Moreover, the Committee
may approve such supplements to, or amendments, restatements or alternative
versions of the Plan as it may consider necessary or appropriate for such
purposes without thereby affecting the terms of the Plan as in effect for
any other purpose; provided, however, that no such supplements, amendments,
restatements or alternative versions shall increase the share limitations
contained in Section 5 of the Plan.
14. Plan Amendment
The Plan may be amended by the Committee as it deems necessary or
appropriate to better achieve the purposes of the Plan, except that no such
amendment which would increase the number of shares available for issuance
in accordance with Sections 5 and 6 of the Plan or cause the Plan not to
comply with Rule16b-3 (or any successor rule) under the 1934 Act or Section
162(m) of the Code shall be made without the approval of the Company's
shareholders.
15. Tax Withholding
The Company shall have the right to deduct from any settlement of an
award made under the Plan, including the delivery or vesting of shares, a
sufficient amount to cover withholding
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of any federal, state or local taxes required by law, or to take such other
action as may be necessary to satisfy any such withholding obligations. The
Committee may permit shares to be used to satisfy required tax withholding
and such shares shall be valued at the Fair Market Value as of the
settlement date of the applicable award.
16. Other Benefit and Compensation Programs
Unless otherwise specifically determined by the Committee, settlements
of awards received by participants under the Plan shall not be deemed a
part of a participant's regular, recurring compensation for purposes of
calculating payments or benefits from any Company benefit plan, severance
program or severance pay law of any country. Further, the Company may adopt
other compensation programs, plans or arrangements as it deems appropriate
or necessary.
17. Unfunded Plan
Unless otherwise determined by the Committee, the Plan shall be
unfunded and shall not create (or be construed to create) a trust or a
separate fund or funds. The Plan shall not establish any fiduciary
relationship between the Company and any participant or other person. To
the extent any person holds any rights by virtue of a grant awarded under
the Plan, such rights (unless otherwise determined by the Committee) shall
be no greater than the rights of an unsecured general creditor of the
Company.
18. Use of Proceeds
The cash proceeds received by the Company from the issuance of shares
pursuant to awards under the Plan shall be used for general corporate
purposes.
19. Regulatory Approvals
The implementation of the Plan, the granting of any award under the
Plan, and the issuance of shares upon the exercise or settlement of any
award shall be subject to the Company's procurement of all approvals and
permits required by regulatory authorities having jurisdiction over the
Plan, the awards granted under it or the shares issued pursuant to it.
20. Future Rights
No person shall have any claim or rights to be granted an award under
the Plan, and no participant shall have any rights under the Plan to be
retained in the employ of the Company.
21. Governing Law
The validity, construction and effect of the Plan and any actions
taken or relating to the Plan shall be determined in accordance with the
laws of the State of Utah and applicable federal law.
22. Successors and Assigns
The Plan shall be binding on all successors and assigns of a
participant, including, without limitation, the estate of such participant
and the executor, administrator or trustee of such estate, or any receiver
or trustee in bankruptcy or representative of the participant's creditors.
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PROXY
EVANS & SUTHERLAND COMPUTER CORPORATION
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 18, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints James R. Oyler and Gary E. Meredith and
each of them, as proxies, with full power of substitution, and hereby authorizes
them to represent and vote, as designated on the reverse, all shares of Common
Stock of Evans & Sutherland Computer Corporation, a Utah corporation (the
"Company"), held of record by the undersigned, on March 31, 1995, at the Annual
Meeting of Shareholders (the "Annual Meeting") to be held at the Company's
offices at 600 Komas Drive, Salt Lake City, Utah 84108, on May 18, 1995, at
11:00 a.m., local time, or at any adjournment or postponement thereof, upon the
matters set forth on the reverse, all in accordance with and as more fully
described in the accompanying Notice of Annual Meeting of Shareholders and Proxy
Statement, receipt of which is hereby acknowledged.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE ELECTION OF THE DIRECTOR NOMINEES NAMED ON THE REVERSE AND FOR
THE PROPOSAL TO ADOPT THE EVANS & SUTHERLAND 1995 LONG-TERM INCENTIVE EQUITY
PLAN. PLEASE COMPLETE, SIGN AND DATE THIS PROXY WHERE INDICATED AND RETURN
PROMPTLY IN THE ACCOMPANYING PREPAID ENVELOPE.
(To be Signed on Reverse Side)
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+++ +
[X] Please mark your + +
votes as in this ++++++
example.
FOR ALL nominees WITHHOLD
listed at right AUTHORITY
(except to the to vote for all
contrary below) nominees listed Nominees: Henry N. Christiansen
at right James R. Oyler
1. ELECTION OF [_] [_]
DIRECTORS,
each to serve
a term of three
years expiring at the annual meeting of shareholders of
the Company to be held in 1998 and until their respective
successors shall be duly elected and qualified.
(Instructions: To withhold authority to vote for any individual
nominee, write that nominee(s) name on the space provided below.)
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FOR AGAINST ABSTAIN
2. Proposal to Adopt the Evans & Sutherland [_] [_] [_]
1995 Long-Term Incentive Equity Plan.
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting or any adjournment or
adjournments thereof.
SIGNATURE_______________________________________________ DATE___________________
SIGNATURE_______________________________________________ DATE___________________
NOTE: Please sign above exactly as the shares are issued. When shares are held
by joint tenants, both should sign. When signing as an attorney,
executor, or 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.
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