SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
Starmet Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials: _________________
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing:
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No:
(3) Filing party:
(4) Date Filed:
<PAGE>
STARMET CORPORATION
2229 Main Street
Concord, MA 01742
NOTICE OF SPECIAL MEETING IN LIEU OF
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MARCH 22, 2000
TO THE STOCKHOLDERS OF STARMET CORPORATION:
Notice is hereby given that a special meeting in lieu of the Annual Meeting of
the Stockholders of Starmet Corporation (the "Company"), a Massachusetts
corporation, will be held on March 22, 2000 at 10:00 a.m. at State Street Bank
and Trust Company, 225 Franklin Street, Boston, Massachusetts for the following
purposes:
1. To elect Board of Directors for the ensuing year.
2. To consider and act upon a proposal to ratify the selection of
the firm of BDO Seidman, LLP as independent auditors for the
Company for the fiscal year ending September 30, 2000.
3. To transact other business as may properly come before the
Meeting.
Only stockholders of record at the close of business on February 22, 2000 are
entitled to receive notice of and to vote at the Meeting.
All stockholders are cordially invited to attend the Meeting in person. To
ensure your representation at the Meeting, however, you are urged to sign and
return the enclosed proxy card as promptly as possible in the enclosed
postage-prepaid envelope. You may revoke your proxy in the manner described in
the accompanying Proxy Statement at any time before it has been voted at the
Meeting. Any stockholder attending the Meeting may vote in person even if he or
she has returned a proxy.
By order of the Board of Directors,
/s/ Thomas A. Wooters
Thomas A. Wooters, Clerk
Concord, Massachusetts
February 14, 2000
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING, WHETHER OR NOT
YOU PLAN TO ATTEND THE MEETING. PLEASE SIGN THE ENCLOSED PROXY CARD AND RETURN
IT PROMPTLY IN THE ENCLOSED STAMPED ENVELOPE BY RETURN MAIL TO:
EquiServe Proxy Services
P.O. Box 9391
Boston, MA 02205-9391
<PAGE>
Starmet Corporation
2229 Main Street
Concord, MA 01742
PROXY STATEMENT
February 14, 2000
Proxies in the form enclosed with this Proxy Statement are solicited by the
Board of Directors (the "Board") of Starmet Corporation (the "Company") for use
at a special meeting in lieu of the Annual Meeting of Stockholders to be held on
Wednesday, March 22, 2000, at 10:00 a.m. (the "Meeting"), at State Street Bank
and Trust Company, 225 Franklin Street, Boston, Massachusetts.
When a proxy is returned properly signed, the persons named as attorneys in the
proxies will vote shares in accordance with the stockholder's instructions. Any
stockholder submitting a proxy has the right to withhold votes for any
individual nominee to the Board of Directors by writing that nominee's name on
the space provided on the proxy. In the absence of contrary instructions, the
proxyholders will vote the shares in favor of the two proposals set forth in
this Proxy Statement.
Sending in a proxy will not affect a stockholder's right to attend the Meeting
and vote in person. A proxy may be revoked by a notice in writing delivered to
the Clerk of the Company at any time prior to the commencement of the Meeting or
by voting in person at the Meeting. A later proxy revokes an earlier proxy. Any
written notice of revocation or subsequent proxy should be sent so as to be
delivered to Starmet Corporation, 2229 Main Street, Concord, Massachusetts.
The Company will pay expenses in connection with the solicitation of the
enclosed proxy, including the charges of brokerage houses and other
intermediaries for forwarding documents to stockholders. In addition to this
solicitation by mail, Company employees may solicit proxies by telephone, fax or
in person. They will not receive additional compensation for those services. The
Company may retain a proxy solicitation firm to solicit proxies.
STOCK AND VOTING
This Proxy Statement and the form of proxy are being first mailed on or about
February 29, 2000 to those persons who are holders of record of the Common Stock
of the Company on February 22, 2000. As of that date, we expect that 4,800,674
shares of Common Stock will be issued and outstanding, of which 3,041,419 are
entitled to one vote per share. The remaining 1,759,255 outstanding shares of
Common Stock are subject to the Massachusetts Control Share Acquisition Act and,
as a result, presently have no voting rights. See "Massachusetts Control Share
Acquisition Act" on page 14.
The representation in person or by proxy of at least a majority of the
outstanding shares of Common Stock entitled to vote at the Meeting is necessary
to establish a quorum for the transaction of business. A quorum consists of
shares representing at least 51% of the votes that are entitled to be cast at
the Meeting. Votes withheld from any nominee, abstentions and broker non-votes
are counted as present or represented for purposes of determining the presence
or
-2-
<PAGE>
absence of a quorum. A "non-vote" occurs when a broker holding shares for a
beneficial owner votes on one proposal, but does not vote on another proposal
because the broker has not received instructions from the beneficial owner.
An automated system administered by the Company's transfer agent tabulates the
votes. The vote on each matter submitted to shareholders is tabulated
separately. The Company's By-Laws provide that, except where a larger vote is
required by the Company's Articles of Organization or By-Laws, the holders of a
majority of the stock present or represented and voting on a matter shall decide
any matter to be voted on by the stockholders. Abstentions are included in the
number of shares present or represented and voting on each matter and,
therefore, with respect to votes on specific proposals, will have the effect of
negative votes. Broker "non-votes" are not so included. If you hold shares in
"street name" through a broker or other nominee, your broker or nominee may not
be permitted to exercise voting discretion with respect to certain matters. If
you do not give your broker or nominee specific instructions, your shares may
not be voted on those matters and will not be considered as present and entitled
to vote with respect to those matters.
The election of directors is by plurality of the votes cast at the Meeting
either in person or by proxy. The approval of a majority of the votes properly
cast at the Meeting, either in person or by proxy, is required to approve
proposal 2 and any other business which may properly be brought before the
Meeting or any adjournment thereof.
With regard to the election of directors, votes may be left blank, cast in favor
or withheld; votes that are left blank will be counted in favor of the election
of the directors named on the proxy. Votes that are withheld will have the
effect of a negative vote. Abstentions may be specified on all proposals other
than the election of directors and will be counted as present for purposes of
the proposal on which the abstention is noted. Broker non-votes will have no
effect on proposal 2.
The Board of Directors and management of the Company deem the proposals
described in this Proxy Statement to be in the best interest of the Company and
recommend that the stockholders approve them. Management intends to vote their
shares of Common Stock in favor of each proposal. See "Principal and Management
Stockholders." For these purposes, management includes all directors and
executive officers.
The Board of Directors knows of no other matter to be presented at the Meeting.
If any other matter is properly presented at the Meeting shares represented by
all proxies received by the Company will be voted on such matters in accordance
with judgment of the persons named as attorneys in the proxies.
The Company's Annual Report on Form 10-K containing financial statements and
Management's Discussion and Analysis of Financial Condition and Results of
Operations for the fiscal year ended September 30, 1999 is being mailed with the
Proxy Statement to all stockholders entitled to vote.
PRINCIPAL AND MANAGEMENT STOCKHOLDERS
The following table sets forth certain information as of December 31, 1999, with
respect to beneficial ownership of the Common Stock of the Company (i) by each
stockholder known to
-3-
<PAGE>
the Company to own beneficially more than 5% of the Company's Common Stock, (ii)
by each director of the Company, (iii) by each of the executive officers named
in the Summary Compensation Table, elsewhere herein, and (iv) by all directors
and executive officers of the Company and its subsidiaries as a group. In
accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as
amended, a person is deemed to be the beneficial owner, for purposes of this
table, of any shares of Common Stock of the Company if he or she has or shares
voting power or investment power with respect to such security or has the right
to acquire beneficial ownership of such security at any time within 60 days of
December 31, 1999. As used herein "voting power" is the power to vote or direct
the voting of shares, and "investment power" is the power to dispose of or
direct the disposition of shares. Except as indicated in the notes following the
table below, each person named has sole voting and investment power with respect
to the shares listed as being beneficially owned by such person.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Beneficial
Beneficial Owner Ownership Beneficially Owned Percent
- ---------------- --------- --------------------------
<S> <C> <C>
WIAF Investors Co. (1)(2) 2,055,415 41.78%
466 Arbuckle Avenue
Lawrence, NY 11516
George J. Matthews (3) 436,991 9.01%
Chairman of the Board of Directors,
Director & Consultant
C/O Matthews Associates Limited
13 Hickory Hill
Manchester, MA 01944
Dimensional Fund Advisors, Inc. (4) 307,700 6.41%
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
Meryl J. Chrein (1)(2) 269,800 5.59%
21 Copper Beech Lane
Lawrence, NY 11559
Robert E. Quinn (5) 123,812 2.53%
President, CEO, Treasurer
William T. Nachtrab (6) 30,167 *
Vice President, Engineering & Technology
Douglas F. Grotheer (7) 17,074 *
President of CMI Corporation
Bruce E. Zukauskas(8) 22,000 *
Vice President, Operations
Kenneth A. Smith, Director (9) 18,500 *
Frank H. Brenton, Director (9) 18,500 *
Matthew Brady, Director 16,000 *
Gerald R. Hoolahan, Director -- --
Brian B. Sand, Director
51,700 1.08%
Randal E. Vataha -- --
All directors and executive officers (13 persons) as a group (10) 747,077 14.79%
<FN>
- ---------------------
(1) Does not reflect the effect on voting rights of the Massachusetts Control Share Acquisition Act. The
Company is subject to Chapter 110D of the Massachusetts General Laws which governs "control share
-4-
<PAGE>
acquisitions," which are acquisitions of beneficial ownership of shares which would raise the voting
power of the acquiring person above any one of three thresholds: one-fifth, one-third or one-half of
the total voting power. All shares acquired by the person making the control share acquisition
within 90 days before or after any such threshold is crossed obtain voting rights only upon the
authorization from a majority of the stockholders other than the person acquiring such shares,
officers of the Company and those directors of the Company who also are employees. Based on certain
filings made with the SEC, the Company believes that certain control share acquisitions have
occurred and that the members of the group which affected such control share acquisitions, namely
WIAF Investors Co., Charles Alpert, Joseph Alpert, Melvin B. Chrein, Meryl J. Chrein, and Marshall
J. Chrein (collectively the "Investor Group") are the holders of 1,759,255 shares (the "Affected
Shares") which were acquired in control share acquisitions (within the meaning of Chapter 110D) and
accordingly will have no voting rights unless or until such voting rights are authorized as
described in "Description of Capital Stock."
(2) Derived from a Schedules 13D/A, dated September 30,1999. The Company understands the Schedule 13D/A
to report the dissolution of the Investor Group. Each person reported sole voting and dispositive
power with respect to the shares owned by such person. The Company understands the Schedule 13D/A to
claim that none of the former members of the Investor Group is the beneficial owner of securities
beneficially owned by any other former member of the Investor Group. Also includes 79,438 which WIAF
Investors Co. has the right to acquire upon conversion of outstanding 10% Convertible Subordinated
Debentures and 40,040 and 24,000 shares which WIAF Investors Co. and Meryl J. Chrein, respectively,
have the right to acquire under outstanding warrants.
(3) Includes (i) 22,500 shares which may be purchased upon the exercise of currently exercisable
options, (ii) 2,326 shares which may be acquired upon the conversion of an outstanding 10%
Convertible Subordinated Debenture, (iii) 13,961 shares which Mr. Matthews' wife has the right to
acquire upon the conversion of an outstanding 10% Convertible Subordinated Debenture, and (iv) 1,980
shares owned by Mr. Matthews' wife. Mr. Matthews disclaims beneficial ownership of the debenture and
shares held by Mrs. Matthews.
(4) Derived from a Schedule 13G, dated February 4, 2000. According to the Schedule 13G, Dimensional Fund
Advisors Inc. ("Dimensional"), an investment advisor registered under Section 203 of the Investment
Advisors Act of 1940, furnishes investment advice to four investment companies registered under the
Investment Company Act of 1940, and serves as investment manager to certain other commingled group
trusts and separate accounts. These investment companies, trusts and accounts are the "Funds". In
its role as investment advisor or manager, Dimensional possesses voting and/or investment power over
the securities of the Company described in the Schedule 13G that are owned by the Funds. All
securities reported in the Schedule 13G are owned by the Funds. Dimensional disclaims beneficial
ownership of such securities.
(5) Includes 101,667 shares that may be purchased upon the exercise of currently exercisable options.
(6) Includes 28,167 shares that may be purchased upon the exercise of currently exercisable options.
(7) Includes 15,000 shares that may be purchased upon the exercise of currently exercisable options.
(8) Includes 20,000 shares that may be purchased upon the exercise of currently exercisable options.
(9) Includes 12,500 shares that may be purchased upon the exercise of currently exercisable options.
(10) See notes (3), (5), (6), (7), (8), and (9) above. Also includes an additional 224,667 shares which
may be purchased upon the exercise of currently exercisable options.
* Less than 1% ownership individually.
</FN>
</TABLE>
-5-
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Board of Directors currently consists of eight Directors. The number of
Directors is currently fixed at eight. Directors will be elected at the Meeting
to serve until the next Annual Meeting of Stockholders and until their
successors take office or until such Director's resignation, death or removal.
In the absence of instructions to the contrary, the proxyholders will vote
shares represented by proxies in favor of the election of all of the nominees
described below to the Board of Directors. The Board of Directors has no reason
to believe that any of these nominees will be unable to serve. If any nominee
should, for any reason, be unavailable to serve, the proxyholders will vote in
favor of the election of such other person as the Board of Directors may
recommend in place of the original nominee. Messrs. Matthews, Quinn, Smith,
Brenton, Brady, Hoolahan, Sand and Vataha are each current directors of the
Company and are each nominated for re-election.
The following are summaries of the background and business experience and
descriptions of the principal occupations of the nominees for election:
<TABLE>
<CAPTION>
Present Principal Employment
Name Age and Prior Business Experience Director Since
- ---- --- ----------------------------- --------------
<S> <C> <C> <C>
George J. Matthews 69 Chairman of the Board of Directors since 1972. Chairman 1972
of Matthews Associates Limited, which is engaged in the
business of investing in and providing management
consulting and assistance to small and medium sized
businesses, including the Company.
Robert E. Quinn 45 President of the Company since December 1, 1994 and 1994
Treasurer and Chief Executive Officer since January 20,
1998. Prior to becoming President, served as Vice
President, Sales for over five years. Elected as a
Director on November 17, 1994 to fill a vacancy created
by the enlargement of the Board of Directors by vote of
the Directors.
Kenneth A. Smith 62 Professor of Chemical Engineering at Massachusetts 1985
Institute of Technology since 1971.
Frank H. Brenton 73 Principal of Frank H. Brenton Associates, a business 1986
consulting firm. From 1984 to 1986, Chairman of the Board
of Directors of Marshall's Incorporated, an off-price
retailer and division of Melville, Inc.
Matthew Brady 36 President of Berry Hill Consulting, a benefits and 1999
insurance consulting firm.
Gerald R. Hoolahan 51 Managing Director of Halcyon Advisors Inc., a consulting 1999
firm specializing in corporate reengineering,
restructurings, and reorganizations.
Brian B. Sand 34 President of KABZ Co., a supplier of specialty products 1999
for the retail trade.
Randal E. Vataha 51 President and co-founder of Game Plan LLC, an investment 1999
banking firm partially owned by BankBoston.
</TABLE>
-6-
<PAGE>
The Board of Directors recommends that the stockholder vote FOR the election of
each of the eight nominees.
INFORMATION ABOUT THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors met four times during the fiscal year ended September 30,
1999. There was no Director who attended fewer than 75 percent of the aggregate
of all board meetings and all meetings of committees on which he served during
the fiscal year.
The Board of Directors has an Audit Committee of non-employee Directors selected
annually at the first Meeting of Board following the Annual Meeting of
Stockholders. The Audit Committee, which met three times during fiscal 1999,
meets with the Company's independent auditors and principal financial personnel
to review the scope and results of the annual audit and the Company's financial
reports. The Audit Committee also reviews the scope of audit and non-audit
services performed by the independent public accountants, and reviews the
adequacy and effectiveness of internal accounting controls. The present members
of the Audit Committee are Messrs. Brenton, Smith, Brady, Hoolahan, Sand and
Vataha.
The Board of Directors has a Stock Option Committee which was formed during
fiscal year 1997. The Stock Option Committee, which met during fiscal year 1999,
recommends to the Board of Directors for its approval the terms, amounts and
recipients of stock options under the Company's stock option plans. The present
members of the Stock Option Committee are Messrs. Matthews and Quinn.
The Board of Directors does not have standing committees on compensation or
nominations.
DIRECTORS' COMPENSATION AND STOCK OPTION PLAN
Each outside director of the Company receives an annual fee of $15,000 and is
eligible to receive options under the Company's 1995 Directors Option Plan (the
"1995 Directors Plan"). During fiscal 1999, the Company granted to each of
Messrs. Matthews, Smith, Brenton, Brady, Hoolahan, Sand and Vataha options to
purchase 3,000 shares of Common Stock at an exercise price of $3.80 per share,
based on the market price of the Common Stock at that time. At the same time,
the Company also granted Mr. Quinn (in his capacity as President of the Company)
an incentive stock option to purchase 7,500 shares of Common Stock at the same
exercise price under the Company's 1998 Stock Option Plan.
The Company has entered into a management agreement with Matthews Associates
Limited ("MAL"), a Massachusetts corporation, of which George J. Matthews,
Director and Chairman of the Board of Directors of the Company, is sole owner.
The management agreement is described under Employment Arrangements below.
-7-
<PAGE>
EXECUTIVE COMPENSATION
The following table discloses for the periods presented the compensation for the
person who served as the Company's Chief Executive Officer and for each of the
four most highly compensated executive officers of the Company, other than the
Chief Executive Officer, whose total compensation exceeded $100,000 for the
Company's fiscal year ended September 30, 1999 (collectively, "the Named
Executive Officers"):
<TABLE>
<CAPTION>
Long Term Compensation
----------------------
Annual Compensation Awards Payouts
------------------- ------ -------
Securities
Restricted Underlying All Other
Name and Principal Other Annual Stock Options/SARS LTP Compensation
Position Year(1) Salary($) Bonus ($) Compensation ($)(2) Award(s)$ (#) (6) Payouts $ ($)
-------- ------- --------- --------- ------------------- ---------- ------- --------- ---
<S> <C> <C> <C> <C> <C> <C> <C>
George J. Matthews (4)(5) 1999 287,500 -- -- -- 3,000 -- --
Chairman of Board of 1998 350,000 -- -- -- 7,500 -- --
Directors 1997 350,000 -- -- -- -- -- --
Robert E. Quinn (3) (5) 1999 200,000 -- -- -- 7,500 -- --
President , CEO and 1998 200,000 17,312 -- -- 15,000 -- --
Treasurer 1997 200,000 15,000 -- -- 25,000 -- --
William T. Nachtrab 1999 142,000 -- -- -- 7,500 -- --
Vice President, 1998 142,000 11,792 -- -- 17,500 -- --
Technology 1997 131,616 9,050 -- -- 8,000 -- --
Douglas F. Grotheer 1999 135,000 -- -- -- 7,500 -- --
President, Starmet CMI 1998 135,000 10,261 -- -- 5,000 -- --
Corporation 1997 121,934 6,700 -- -- 5,000 -- --
Bruce E. Zukauskas 1999 135,000 -- -- -- 7,500 -- --
Vice President, 1998 128,125 9,787 -- -- 5,000 -- --
Operations 1997 110,000 6,700 -- -- 5,000 -- --
<FN>
- ----------------
(1) The Company's fiscal year ends on September 30th of each year.
(2) Excludes perquisites in amounts less than the threshold level required for reporting.
(3) Mr. Quinn's compensation for the fiscal year ended September 30, 1999 was determined pursuant to his Employment
Agreement. See "Employment Arrangements."
(4) Mr. Matthews is assigned as a consultant to the Company pursuant to a management agreement between Matthews Associates
Limited and the Company. All compensation under the agreement is paid by the Company to Matthews Associates Limited. See
"Employment Arrangements."
(5) On January 20, 1998, Mr. Matthews resigned as Chief Executive Officer and Treasurer of the Company and the Company
elected Mr. Quinn as Chief Executive Officer and Treasurer.
(6) Options have been adjusted to reflect the Company's two for one stock dividend paid on April 7, 1997.
</FN>
</TABLE>
OPTION GRANTS DURING FISCAL YEAR
The following table sets forth certain information regarding options granted
during the fiscal year ended September 30, 1999 by the Company to the Named
Executive Officers:
<TABLE>
<CAPTION>
Individual Grants
--------------------------------
Potential Realizable
Number of Percent of Value at Assumed
Securities Total Options Annual Rates of Stock Price
Underlying Granted to Appreciation for
Options Employees in Exercise or Base Expiration Option Term (3)
Name Granted Fiscal Year Price (2) Date 10% 5%
- ---- ------- ----------- --------- ---- --- ---
<S> <C> <C> <C> <C> <C> <C>
George J. Matthews 3,000(1) 1.8% $3.80 7/1/2009 $ 18,169 $ 7,169
Robert E. Quinn 7,500(1) 4.5% $3.80 7/1/2009 45,422 17,923
William T. Nachtrab 7,500(1) 4.5% $3.80 7/1/2009 45,422 17,923
Douglas F. Grotheer 7,500(1) 4.5% $3.80 7/1/2009 45,422 17,923
Bruce E. Zukauskas 7,500(1) 4.5% $3.80 7/1/2009 45,422 17,923
-8-
<PAGE>
<FN>
- ----------------
(1) These options are first exercisable on July 1, 2002.
(2) The exercise price per share is the market price of the underlying Common Stock on the date of grant.
(3) Amounts represent hypothetical gains that could be achieved for the respective options if exercised at
the end of the option term. These gains are based upon assumed rates of share price appreciation set by
the Securities and Exchange Commission of five percent and ten percent compounded annually from the date
the respective options were granted to their expiration date. The gains shown are net of the option
exercise price, but do not include deductions for taxes of the options exercise price or other expenses
associated with the exercise. Actual gains, if any, are dependent on the performance of the Common Stock
and the date on which the option is exercised. There can be no assurance that the amounts reflected will
be achieved.
</FN>
</TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
The following table sets forth certain information concerning options exercised
during the fiscal year ended September 30, 1999 by the Named Executive Officers,
as well as the aggregate value of unexercised options held by such executive
officers on September 30, 1999. The Company has no outstanding stock
appreciation rights, either freestanding or in tandem with options.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised In-The-
Options at Fiscal Year-End Money Options at FY End (2)
--------------------------- ---------------------------
Shares
Acquired on Value
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
George J. Matthews 0 $ 0 22,500 8,000 $ 0 $ 0
Robert E.Quinn 0 0 101,667 25,833 0 0
William T. Nachtrab 0 0 28,167 21,833 0 0
Douglas F. Grotheer 0 0 15,000 12,500 0 0
Bruce E. Zukauskas 0 0 20,000 12,500 0 0
<FN>
- ----------------
(1) Value realized equals fair market value on the date of exercise, less the exercise price, times the
number of shares acquired, without deducting taxes or commissions paid by employee.
(2) Value of unexercised options equals fair market value of the shares underlying in-the-money options on
September 30, 1999($2.125 per share), less the exercise price, times the number of options outstanding.
</FN>
</TABLE>
PENSION PLAN TABLE
The following table sets forth the aggregate annual benefit payable upon
retirement at normal retirement age for each level of remuneration specified at
the listed years of service.
Years of Service
---------------------------------------------
Remuneration 15 20 25 30 or More
- ------------ -- -- -- ----------
$100,000 $ 23,520 $ 31,360 $ 39,220 $ 47,040
150,000 38,520 51,360 64,200 77,040
200,000 53,520 71,360 89,200 107,040
300,000 83,520 111,360 139,200 167,040
400,000 113,520 151,360 189,200 227,040
500,000 143,520 191,360 239,200 287,040
The Company has a defined benefit plan (the "Pension Plan") designed to provide
retirement benefits for employees and ancillary benefits to their beneficiaries,
joint annuitants and spouses.
-9-
<PAGE>
All employees of the Company become participants in the Pension Plan after
attaining the later of age 21 or a year of service with the Company. The Pension
Plan provides retirement benefits based on years of service and compensation. An
employee's benefits under the Pension Plan generally become fully vested after
five years of service. At normal retirement (the later of age 65 and five years
of Plan participation), participants are entitled to a monthly benefit for the
remainder of their life in an amount equal to one-twelfth of the sum of their
"Annual Credits" for their last 30 years or lesser period of employment with the
Company and its predecessors. An employee's "Annual Credit" is 1.25% of the
portion of his annual compensation that is subject to Social Security tax and
two percent (2%) of the balance of his annual compensation. Participants with
five years of service are entitled to retirement at age 55, but the monthly
benefit payable under the Pension Plan is reduced by 0.5% for each month that
early retirement precedes normal retirement but not less than $100 per month if
the Participant has ten or more years of service. The surviving spouse of a
retiree under the Plan is entitled to receive benefits equal to one-half the
amount the retiree had been receiving. Alternative benefit payments that are
equivalent to the benefit described above are also available to participants.
Benefits payable under the plan are not reduced by Social Security payments to
the retiree. Amounts shown assume benefits commence at age 65. Benefit amounts
shown are straight-life annuities. The executive officers named in the Summary
Compensation Table have the following years of credited service for pension plan
purposes: Robert E. Quinn-23 years; William T. Nachtrab-9 years; and Douglas
Grotheer-19 years and Bruce Zukauskas-17 years. Mr. Matthews does not
participate in the Pension Plan.
EMPLOYMENT ARRANGEMENTS
Employment Agreement with Mr. Quinn
In October 1997, the Company entered into an amended employment agreement with
Mr. Quinn. Pursuant to the agreement, Mr. Quinn will receive initial
compensation at the annual rate of $200,000, subject to such annual increases
and bonuses as the Board of Directors may from time to time determine. The
agreement shall continue in force until February 28, 2002, unless terminated by
either party in accordance with its terms, and is subject to annual renewals as
described in the agreement. During the term of the agreement and for a period of
two years after its expiration, or after the termination of Mr. Quinn's
employment with the Company, whichever occurs later, Mr. Quinn may not compete
directly or indirectly with the Company within the continental United States.
The Company shall require any successor to a majority of its business activities
to assume its obligations under this agreement.
Employment Agreements with Messrs. Nachtrab, Grotheer, and Raftery
In October 1997, the Company entered into employment agreements with Messrs.
Nachtrab, Grotheer, and Raftery (each an "Executive"). Under the terms of their
respective agreements, Messrs. Nachtrab, Grotheer, and Raftery are entitled to
an annual base salary of $142,000, $135,000 and $125,000 respectively, subject
to such annual increases and bonuses as the Board of Directors may from time to
time determine. Each of the agreements shall continue in force for an initial
period of three (3) years, unless such agreement is terminated by the Company or
the Executive in accordance with its terms. Annually, the Board of Directors, in
its discretion, may extend the term of each agreement for an additional year.
During the term of each Agreement and for a period of 18 months after any
termination of employment, each Executive may neither
-10-
<PAGE>
i) compete directly or indirectly with the Company within the continental United
States nor ii) solicit any of the Company's customers or employees. Each of the
agreements may be terminated by the Company prior to a change in control (as
defined in the agreements) and upon twelve months written notice.
Management Agreement with Matthews Associates Limited
The Company has entered into a management agreement with MAL. The agreement
provides MAL with a minimum compensation of $350,000 per annum for all services
under the agreement. This agreement was modified to reduce the minimum
compensation to $225,000 beginning April 1, 1999. The agreement expires on
February 28, 2004, subject to annual renewals as described in the agreement. In
the event of termination of MAL by the Company, the Company is obligated to pay
to MAL all of the amounts due under the agreement for the remaining term.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended September 30, 1999, the Board of Directors of the
Company was responsible for establishing executive compensation (other than
stock option compensation). Messrs. Quinn and Matthews participated in
deliberations of the Company's Board of Directors concerning executive officer
compensation. Neither participated in setting his own compensation. No executive
officer of the Company served as a director or member of a compensation
committee, or its equivalent, of another entity, one of whose executive officers
served as director of the Company.
Notwithstanding anything to the contrary set forth in any of the Company's
filings under the Securities Act of 1933, as amended, or under the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including this proxy statement, in whole or in part, the following report on
compensation and the Stock Performance Graph contained elsewhere herein shall
not be incorporated by reference into any such filings nor shall be deemed to be
soliciting material or deemed filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended, or under the Securities Exchange
Act of 1934, as amended.
REPORT OF THE BOARD OF DIRECTORS AND STOCK OPTION COMMITTEE ON
EXECUTIVE COMPENSATION
During the fiscal year ended September 30, 1999, the Board of Directors of the
Company was responsible for establishing and administering the policies which
govern annual compensation (other than stock option compensation) for the
Company's executive officers. The Stock Option Committee was responsible for
considering stock option compensation for the Company's executive officers.
Overview
The Board of Directors has historically established levels of executive
compensation that provide for a base salary intended to allow the Company to
hire, motivate and retain qualified executive officers. From time to time, the
Board has also, on occasion, approved annual cash incentive bonuses based on the
Company's performance or on the performance of the executive in question. From
time to time, the Stock Option Committee recommends to the Board of Directors
-11-
<PAGE>
for its approval grants of stock options to executive officers and key employees
in order to bring the stockholders' interests more sharply into the focus of
such officers and employees. In fiscal 1999, the Stock Option Committee
recommended, and the Board of Directors approved, the grant of stock options to
all of the Company's employees and directors.
The Board of Directors establishes the annual salary and bonus of each of the
executive officers other than the Chief Executive Officer, based on the
recommendations made by the Chief Executive Officer. In determining the
recommendations for salary and bonus for each of the other executive officers,
the Chief Executive Officer considers each officer's individual performance,
attainment of individual goals and the contribution to the overall attainment of
the Company's goals.
Stock Options and Other Compensation
Long-term incentive compensation for executive officers consists of stock
options granted under the Company's Stock Option Plans (the "Plans"). Executive
officers as well as other employees of the Company participate in the Plans. The
1998 Stock Plan provides for the granting of additional options in the future.
The Company also believes that its Pension Plan is an attractive feature for all
employees.
Basis for the Compensation of the Chief Executive Officer
Mr. Quinn assumed the position of Chief Executive Officer of the Company on
January 20, 1998 and is compensated by the Company at an annual base salary of
$200,000. Mr. Quinn is entitled to participate in the Company's Stock Option
Plans and to receive bonuses at the discretion of the Board of Directors, in
accordance with the terms of his Employment Agreement with the Company. See
"Employment Arrangements-- Employment Agreement with Mr. Quinn."
George J. Matthews
Robert E. Quinn
Kenneth A. Smith
Frank H. Brenton
Matthew Brady
Gerald R. Hoolahan
Brian B. Sand
Randal E. Vataha
-12-
<PAGE>
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
Set forth below is a line graph comparing the five-year cumulative total return
of the Company's Common Stock against the cumulative total return of the NASDAQ
Stock Market (U.S.) Index and the Dow Jones Aerospace and Defense Index.
Cumulative total return is measured assuming an initial investment of $100 and
reinvestment of dividends.
Comparison Of Five Year Cumulative Total Return*
Among Starmet Corporation,
The NASDAQ Stock Market (U.S.) Index
And The Dow Jones Aerospace & Defense Index
[GRAPH DEPICTING THE DATA LISTED IN THE TABLE BELOW]
Cumulative Total Return %
--------------------------------------------
9/94 9/95 9/96 9/97 9/98 9/99
Starmet Corporation 100 58 84 182 95 22
NASDAQ Stock Market (U.S.) 100 138 164 225 229 372
Dow Jones Aerospace & Defense 100 159 223 280 219 226
* Assumes $100 was invested on September 30, 1994 in Starmet Common Stock and
each of the noted indices, and assuming reinvestment of dividends, if any.
Fiscal year ending September 30.
-13-
<PAGE>
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors of the Company has selected the firm of BDO Seidman, LLP,
independent certified public accountants, to serve as auditors of the Company
for the fiscal year ending September 30, 2000. BDO Seidman, LLP acted as the
Company's independent auditors for the fiscal year ended September 30, 1999.
Representatives of BDO Seidman, LLP are expected to be present at the Meeting,
with the opportunity to make a statement if they desire to do so, and are
expected to be available to respond to appropriate questions.
This proposal has been unanimously approved by the Board of Directors, which
recommends that stockholders vote FOR its adoption.
MASSACHUSETTS CONTROL SHARE ACQUISITION ACT
The Company is subject to Chapter 110D of the Massachusetts General Laws which
governs "control share acquisitions," which are acquisitions of beneficial
ownership of shares which would raise the voting power of the acquiring person
(1) above any one of three thresholds: one-fifth, one-third or one-half of the
total voting power. Each time one of these thresholds is crossed, all shares
acquired by the person making the control share acquisition within 90 days
before or after such time, obtain voting rights only upon the authorization from
a majority of the stockholders other than the person acquiring such shares,
officers of the Company and those directors of the Company who also are
employees.
The Company believes that certain control share acquisitions have occurred and
that the members of the group which effected such control share acquisitions,
namely WIAF Investors Co., Charles Alpert, Joseph Alpert, Melvin B. Chrein,
Meryl J. Chrein, Michael Chrein, and Marshall J. Chrein (collectively the
"Investor Group") are the holders of 1,759,255 Affected Shares which were
acquired in control share acquisitions and, accordingly, will have no voting
rights unless or until such voting rights are authorized as described above. The
Company's belief is based upon filings made by stockholders with the SEC on
Schedule 13D and certain amendments thereto. The members of the Investor Group
may deliver to the Company a control share acquisition statement in accordance
with the provisions of Section 3 of Chapter 110D and demand that the Board of
Directors of the Company call a special meeting for the purpose of considering
whether voting rights shall be authorized for the Affected Shares. No control
share acquisition statement has been delivered to the Company and no such demand
has been made. The question of authorization of voting rights for the Affected
Shares will not be considered at the Meeting.
The Control Share Acquisition Act further provides that if voting rights
subsequently are authorized for the Affected Shares and such authorization, when
added to all other shares of the Company beneficially owned by the holder,
entitles the holder to own or control the voting of shares of the Company having
a majority or more of all voting power in the election of directors, then each
other stockholder of record of the Company who does not vote in favor of
authorizing voting rights for the shares acquired in such control share
acquisition may demand payment for the appraised value of his stock. The Company
understands the Schedule 13D/A dated September 30, 1999 was filed by the
Investor Group to report the dissolution of the Investor
-14-
<PAGE>
Group. Each person reported sole voting and dispositive power with respect to
the shares owned by such person. The Company understands the Schedule 13D/A to
claim that none of the former members of the Investor Group is the beneficial
owner of securities beneficially owned by any other former member of the
Investor Group. Based upon the Company's understanding of intent of the
statements in the Schedule 13D/A, no holder of the Company's Common Stock is
presently the beneficial owner of shares which, if entitled to vote, would
represent a majority of the voting power in the election of directors.
The Company's stockholders, at a duly-constituted meeting, may also, by
amendment to the by-laws or the Articles of Organization, provide that the
provisions of Chapter 110D shall not apply to future control share acquisitions
of the Company. Management currently has no plans to propose such an amendment.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires directors,
executive officers and stockholders who own more than 10% of the outstanding
common stock of the Company to file with the Securities and Exchange Commission
and NASDAQ reports of ownership and changes in ownership of voting securities of
the Company and to furnish copies of such reports to the Company. To the
Company's knowledge, based solely on review of the copies of such reports
furnished to the Company, during the fiscal year ended September 30, 1999, or
written representations in certain cases, all Section 16(a) filing requirements
were complied with, except that initial statements of beneficial ownership of
securities were filed late for Messrs. Mattheson, Brady, Hoolahan, Sand and
Vataha.
FINANCIAL STATEMENTS
Stockholders as of the record date of February 22, 2000 will receive with this
Proxy Statement a copy of the Company's 1999 Annual Report on Form 10-K,
including audited financial statements for the fiscal year ended September 30,
1999 but excluding exhibits. The financial statements of the Company contained
in Form 10-K are incorporated herein by reference.
STOCKHOLDER PROPOSALS FOR THE 2001 ANNUAL MEETING
Any stockholder desiring to present a proposal for consideration at the
Company's 2001 Annual Meeting of Stockholders, scheduled to be held on or about
March 15, 2001, and have it included in the Company's Proxy Statement to be
mailed to the Company's stockholders in connection with such Annual Meeting,
must submit the proposal to the Company so that it is received at the executive
offices of the Company not later November 1, 2000. Any stockholder desiring to
submit a proposal should consult applicable regulations of the Securities and
Exchange Commission. In order to curtail controversy as to the date on which a
proposal was received by the Company, it is suggested that proponents submit
their proposals by Certified Mail Return Receipt Requested to Starmet
Corporation; 2229 Main Street, Concord, Massachusetts 01742.
OTHER MATTERS
As of the date of this Proxy Statement, management of the Company knows of no
matter not specifically referred to above as to which any action is expected to
be taken at the Meeting. Persons named as proxies will vote the proxies, insofar
as they are not instructed to the contrary,
-15-
<PAGE>
in regard to such other matters and the transaction of such other business, if
any, as may properly be brought before the Meeting, as seems to them to be in
the best interests of the Company and its stockholders.
EXPENSES AND SOLICITATION
The cost of solicitation of proxies will be borne by the Company, and in
addition to directly soliciting shareholders by mail, the Company may request
banks and brokers to solicit their customers who have stock of the Company
registered in the name of nominee and, if so, will reimburse such banks and
brokers for their reasonable out-of-pocket costs. Solicitation by officers and
employees of the Company may also be made of some stockholders in person or by
mail or telephone, following the original solicitation. The Company may, if
appropriate, retain an independent proxy solicitation firm to assist the Company
in soliciting proxies. If the Company does retain a proxy solicitation firm to
assist the Company in soliciting proxies, the Company would pay such firm
customary fees and expenses.
-16-
<PAGE>
STARMET CORPORATION
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Robert E. Quinn and Thomas A. Wooters, or either
of them, as Proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated below, all the shares of
Common Stock of Starmet Corporation held of record by the undersigned on
February 22, 2000, at the Special Meeting of Stockholders to be held on March
22, 2000, or any adjournment thereof.
This proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholder. If no direction is made, this proxy will be voted
"FOR" proposals 1 and 2 and in the discretion of the Proxies on any other matter
which may be brought before the Special Meeting.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY USING THE ENCLOSED
ENVELOPE.
Please sign exactly as your name appears on the books of the Company. Joint
owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should indicate his or her title.
HAS YOUR ADDRESS CHANGED?
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
<PAGE>
/X/ PLEASE MARK VOTES AS IN THIS EXAMPLE
STARMET CORPORATION
Mark box at right if an address change has been / /
noted on the reverse side of this card
CONTROL NUMBER:
RECORD DATE SHARES:
1. Election of Directors
For All With- For All
(1) George J. Matthews (5) Matthew Brady Nominees hold Except
(2) Robert E. Quinn (6) Gerald R. Hoolahan
(3) Kenneth A. Smith (7) Brian B. Sand / / / / / /
(4) Frank H. Brenton (8) Randal E. Vataha
NOTE: If you do not wish your shares voted "For" a particular nominee, mark the
"FOr All Except" box and strike a line through the name(s) of the nominee(s).
Your shares will be voted for the remaining nominee(s).
2. To ratify the selection of BDO Seidman, LLP For Against Abstain
as independent auditors for the Company for
the fiscal year ending September 30, 2000 / / / / / /
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment
thereof.
Please be sure to sign and date this proxy. Date
Stockholder sign here Co-owner sign here
DETACH CARD DETACH CARD
