<PAGE>
================================================================================
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
FLIR SYSTEMS INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
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Notes:
<PAGE>
[LOGO OF FLIR SYSTEMS(TM)]
16505 S.W. 72ND AVENUE
PORTLAND, OREGON 97224
(503) 684-3731
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 2, 1997
To the Shareholders of FLIR Systems, Inc.:
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders (the "Annual
Meeting") of FLIR Systems, Inc. (the "Company") will be held on Friday, May 2,
1997, at 3:00 p.m., at the Multnomah Athletic Club, 1849 S.W. Salmon Avenue,
Portland, Oregon 97205 for the following purposes:
1.ELECTION OF DIRECTORS. To elect two directors, each for a three-year
term.
2.RATIFICATION OF APPOINTMENT OF AUDITORS. To ratify the appointment by
the Board of Directors of Price Waterhouse LLP as independent auditors of
the Company for the fiscal year ending December 31, 1997; and
3.OTHER BUSINESS. To transact such other business as may properly come
before the meeting or any adjournments thereof.
The Board of Directors of the Company has fixed the close of business on
March 3, 1997 as the record date for the determination of shareholders
entitled to notice of and to vote at the Annual Meeting. Only shareholders of
record at the close of business on that date will be entitled to notice of and
to vote at the Annual Meeting or any adjournments thereof.
By Order of the Board,
/s/ Robert P. Daltry
Chairman of the Board of Directors
and Chief Executive Officer
Portland, Oregon
March 31, 1997
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR
NOT YOU PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE DATE,
SIGN AND COMPLETE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
FLIR SYSTEMS, INC.
16505 S.W. 72ND AVENUE
PORTLAND, OR 97224
(503) 684-3731
----------------
PROXY STATEMENT
FOR THE
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 2, 1997
----------------
INTRODUCTION
GENERAL
This Proxy Statement is being furnished to the shareholders of FLIR Systems,
Inc., an Oregon corporation ("FLIR" or the "Company"), as part of the
solicitation of proxies by the Company's Board of Directors (the "Board of
Directors") from holders of the outstanding shares of FLIR common stock, par
value $0.01 per share (the "Common Stock"), for use at the Company's Annual
Meeting of Shareholders to be held on May 2, 1997, and at any adjournments or
postponements thereof (the "Annual Meeting"). At the Annual Meeting,
shareholders will be asked to elect two members of the Board of Directors,
ratify the appointment by the Board of Directors of Price Waterhouse LLP as
independent auditors of the Company for the fiscal year ending December 31,
1997, and transact such other business as may properly come before the meeting
or any adjournments thereof. This Proxy Statement, together with the enclosed
proxy card, is first being mailed to shareholders of FLIR on or about March
31, 1997.
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
The Board of Directors has fixed the close of business on March 3, 1997 as
the record date for the determination of the shareholders entitled to notice
of and to vote at the Annual Meeting. Accordingly, only holders of record of
shares of Common Stock at the close of business on such date will be entitled
to vote at the Annual Meeting, with each such share entitling its owner to one
vote on all matters properly presented at the Annual Meeting. On the record
date, there were approximately 3,500 beneficial holders of the 5,432,963
shares of Common Stock then outstanding. The presence, in person or by proxy,
of a majority of the total number of outstanding shares of Common Stock
entitled to vote at the Annual Meeting is necessary to constitute a quorum at
the Annual Meeting.
If the enclosed form of proxy is properly executed and returned in time to
be voted at the Annual Meeting, the shares represented thereby will be voted
in accordance with the instructions marked thereon. Executed but unmarked
proxies will be voted FOR the election of the two nominees for election to the
Board of Directors and FOR the ratification of the appointment of Price
Waterhouse LLP as the Company's independent auditors for the fiscal year
ending December 31, 1997. The Board of Directors does not know of any matters
other than those described in the Notice of Annual Meeting that are to come
before the Annual Meeting. If any other matters are properly brought before
the Annual Meeting, the persons named in the proxy will vote the shares
represented by such proxy upon such matters as determined by a majority of the
Board of Directors.
The presence of a shareholder at the Annual Meeting will not automatically
revoke such shareholder's proxy. A shareholder may, however, revoke a proxy at
any time prior to its exercise by filing a written notice of revocation with,
or by delivering a duly executed proxy bearing a later date to, Corporate
Secretary, FLIR Systems, Inc., 16505 S.W. 72nd Avenue, Portland, Oregon 97224,
or by attending the Annual Meeting and voting in person. However, a
shareholder who attends the meeting need not revoke a previously executed
proxy and vote in person unless such shareholder wishes to do so. All valid,
unrevoked proxies will be voted at the Annual Meeting.
1
<PAGE>
ELECTION OF DIRECTORS
At the Annual Meeting, two directors will be elected, each for a three-year
term. Unless otherwise specified on the proxy, it is the intention of the
persons named in the proxy to vote the shares represented by each properly
executed proxy for the election as directors of the persons named below as
nominees. The Board of Directors believes that the nominees will stand for
election and will serve if elected as directors. However, if either of the
persons nominated by the Board of Directors fails to stand for election or is
unable to accept election, the number of directors constituting the Board of
Directors may be reduced prior to the Annual Meeting or the proxies may be
voted for the election of such other person as the Board of Directors may
recommend.
Under the Company's articles and bylaws, the directors are divided into
three classes composed of two directors each. The term of office of only one
class of directors expires in each year, and their successors are elected for
terms of three years and until their successors are elected and qualified.
There is no cumulative voting for election of directors.
Information as to Nominees and Continuing Directors. The following table
sets forth the names of the Board of Directors' nominees for election as a
director and those directors who will continue to serve after the Annual
Meeting. Also set forth is certain other information with respect to each such
person's age at April 1, 1997, principal occupation or employment during the
past five years, the periods during which he has served as a director of FLIR,
and the positions currently held with FLIR.
<TABLE>
<CAPTION>
DIRECTOR EXPIRATION
NOMINEES: AGE SINCE OF TERM POSITION HELD WITH FLIR
--------- --- -------- ---------- -----------------------
<C> <C> <C> <C> <S>
George Porter......... 66 1993 1997 Director
Ronald L. Turner...... 50 1993 1997 Director
<CAPTION>
CONTINUING DIRECTORS:
---------------------
<C> <C> <C> <C> <S>
W. Allen Reed......... 49 1992 1998 Director
J. Kenneth Stringer President, Chief Operating
III................... 44 1993 1998 Officer and Director
Robert P. Daltry...... 53 1987 1999 Chairman of the Board of
Directors and Chief Executive
Officer
John C. Hart.......... 63 1987 1999 Director
</TABLE>
George Porter. Mr. Porter was elected to the Board of Directors in 1993.
From 1985 to 1992, Mr. Porter served as Vice President-Finance and Chief
Financial Officer of NIKE, Inc., and continued to serve as Treasurer of NIKE
until 1993. Prior to joining NIKE in 1982, Mr. Porter served as Vice President
and Controller of Evans Products Company, Portland, Oregon, for nine years.
Mr. Porter, who is a Certified Public Accountant, worked at Price Waterhouse
for twelve years.
Ronald L. Turner. Mr. Turner was elected to the Board of Directors in 1993.
Since January 1993, Mr. Turner has served as President and Chief Executive
Officer of Computing Devices International, an aerospace company, which is a
division of Ceridian Corporation. From 1987 to 1993, Mr. Turner was President
and Chief Executive Officer of GEC-Marconi Electronic Systems Corporation, a
defense electronics company. Prior to 1987, Mr. Turner worked for Martin
Marietta Corporation for 14 years in a variety of executive positions. Mr.
Turner serves on the Board of Directors of BTG, Inc., the American Electronics
Association and on the Board of Govenors of the Aerospace Industries
Association of America, Inc. He is also a past President and a member of the
Board of Governors of the Massachusetts Institute of Technology Society of
Sloan Fellows.
W. Allen Reed. Mr. Reed has served as a Director of the Company since April
1992. Mr. Reed is President of General Motors Investment Management
Corporation. From 1991 to 1994, Mr. Reed was Vice President and Treasurer of
GM Hughes Electronics Corporation and Hughes Aircraft Company ("Hughes"). From
1984 to 1991, Mr. Reed was President of the Hughes Investment Management
Company, a wholly-owned subsidiary of Hughes. Prior to joining Hughes, Mr.
Reed was Vice President and Portfolio Manager for Allen & Associates
Investment Management Company. Mr. Reed serves on the Boards of Directors of
Westrec Financial
2
<PAGE>
Corporation, General Motors Acceptance Corporation, Motors Insurance Corp.,
Taubman Centers, Inc. and Foreign Fund, Inc. Mr. Reed also serves as Chairman
of the Investment Advisory Committee for the Howard Hughes Medical Institute.
J. Kenneth Stringer III. Mr. Stringer joined the Company in 1984 as Vice
President of Finance and Chief Financial Officer and was appointed Executive
Vice President in 1990. Mr. Stringer was elected to the Board of Directors in
April 1993. In April 1995, Mr. Stringer was appointed President and Chief
Operating Officer. Prior to joining the Company, Mr. Stringer spent six years
with Evans Products Company, Portland, Oregon, as Director of Financial
Reporting. He started his career with Touche Ross and Company (which
subsequently became Deloitte & Touche). Mr. Stringer received his B.S. degree
from the University of Oregon, with a major in Accounting. He is a Certified
Public Accountant.
Robert P. Daltry. Mr. Daltry joined the Company in 1987 as President and
Chief Executive Officer and a member of the Board of Directors. He was elected
Chairman of the Board of Directors in April 1993. From 1984 to 1987, Mr.
Daltry was employed by Lear Siegler, Inc., an aerospace company, where he
served as Vice President of Marketing for the Instrument and Avionics Systems
Division. From 1981 to 1984, Mr. Daltry served as Regional Manager for Singer-
Kearfott, an aerospace company. Mr. Daltry holds a B.A. in Accounting from
Grove City College and is a graduate of the U.S. Army Command and General
Staff College.
John C. Hart. Mr. Hart has served as a Director of the Company since
February 1987 and as Chairman of the Board of Directors from 1987 to April
1993. From 1982 through 1993, Mr. Hart served as Vice President of Finance,
Treasurer and a member of the Board of Directors of Louisiana-Pacific
Corporation.
Board of Directors Committees and Nominations by Shareholders. The Board of
Directors acts as a nominating committee for selecting nominees for election
as directors. The Company's bylaws also permit shareholders to make
nominations for the election of directors, if such nominations are made
pursuant to timely notice in writing to the Company's Secretary. To be timely,
notice must be delivered to, or mailed to and received at, the principal
executive offices of the Company not less than 60 days nor more than 90 days
prior to the date of the meeting, provided that at least 60 days notice or
prior public disclosure of the date of the meeting is given or made to
shareholders. If less than 60 days notice or prior public disclosure of the
date of the meeting is given or made to shareholders, notice by the
shareholder to be timely must be received by the Company not later than the
close of business on the tenth day following the date on which such notice of
the date of the meeting was mailed or such public disclosure was made. A
shareholder's notice of nomination must also set forth certain information
specified in Article III, Section 3.16 of the Company's bylaws concerning each
person the shareholder proposes to nominate for election and the nominating
shareholder.
The Board of Directors has appointed a standing Audit Committee. The members
of the Audit Committee currently are Messrs. Reed and Porter. The Audit
Committee reviews the scope of the independent annual audit, the independent
public accountants' letter to the Board of Directors concerning the
effectiveness of the Company's internal financial and accounting controls and
management's response to that letter, if deemed necessary. The audit committee
met twice during the fiscal year ended December 31, 1996. The Board of
Directors also has appointed a Compensation Committee which reviews executive
compensation and makes recommendations to the full Board regarding changes in
compensation, and also administers the Company's stock option plans. During
the fiscal year ended December 31, 1996, the Compensation Committee held two
meetings. The members of the Compensation Committee currently are Messrs. Hart
and Turner.
During 1996 the Company's Board of Directors held four meetings. Each
incumbent director attended more than 75% of the aggregate of the total number
of meetings held by the Board of Directors and the total number of meetings
held by all committees of the Board on which he served during the period that
he served.
See "Management--Executive Compensation" for certain information regarding
compensation of directors.
3
<PAGE>
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
ELECTION OF ITS NOMINEES FOR DIRECTOR. If a quorum is present, the Company's
bylaws provide that directors are elected by a plurality of the votes cast by
the shares entitled to vote. Abstentions and broker non-votes are counted for
purposes of determining whether a quorum exists at the Annual Meeting, but are
not counted and have no effect on the determination of whether a plurality
exists with respect to a given nominee.
MANAGEMENT
EXECUTIVE OFFICERS
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Robert P. Daltry........ 53 Chairman of the Board of Directors and Chief Executive Officer
J. Kenneth Stringer III. 44 President and Chief Operating Officer
Bruce A. Carocci........ 46 Vice President, Marketing
Joseph E. Conrad........ 60 Vice President, Manufacturing Operations
James A. Fitzhenry...... 41 Vice President, General Counsel and Secretary
Dr. J. Richard Kerr..... 59 Vice President, Advanced Development
William N. Martin....... 41 Vice President, Commercial Business Development
Steven R. Palmquist..... 46 Vice President, Engineering
Dean A. Queathem........ 44 Vice President, Government Sales
J. Mark Samper.......... 36 Vice President, Finance and Chief Financial Officer
</TABLE>
Information concerning the principal occupation of Messrs. Daltry and
Stringer is set forth under "Election of Directors." Information concerning
the principal occupation during the last five years of the executive officers
of the Company who are not also directors of the Company is set forth below.
Bruce A. Carocci. Mr. Carocci joined the Company in 1993 as Director of
Marketing of the Industrial Division and was appointed Vice President of
Marketing for the Company in 1995. Previously, he held a number of marketing
and sales management positions in the computer and software industry at
Tektronix, Inc., Floating Point Systems and Quantitative Technology
Corporation. Mr. Carocci received a B.S. in Science, a B.S. in Sociology and
an M.B.A. from Portland State University.
Joseph E. Conrad. Mr. Conrad joined the Company in August of 1996 as Vice
President of Manufacturing Operations. He comes to the Company with over
thirty years of experience in operations and manufacturing management. He has
held a number of management positions including Vice President of Operations
of Burr-Brown Corporation, Division General Manager and Manufacturing Manager
of several divisions of Tektronix, Inc., Manufacturing Manager of several
divisions of Hewlett Packard Company and most recently, the Cable Plant
Manager for Precision Interconnect (AMP, Inc.). Mr. Conrad received his B.S.
in Electrical Engineering from the University of Wisconsin.
James A. Fitzhenry. Mr. Fitzhenry joined the Company in 1993 as Corporate
Counsel and Director of Administration, and was appointed Vice President,
General Counsel and Secretary in 1995. From 1990-1993, Mr. Fitzhenry served in
the White House during the Bush Administration in the Office of Policy
Development and the Office of Cabinet Affairs. Previously, he worked on the
legislative staff of Senator Mark O. Hatfield (R-Ore.) and practiced law in
Portland, Oregon. Mr. Fitzhenry received his B.A. from the University of
Oregon and received his J.D. and Masters of Management degrees from Willamette
University.
Dr. J. Richard Kerr. Dr. Kerr joined the Company in 1987 as Vice President
of Engineering and Product Development. In 1995, Dr. Kerr was appointed Vice
President of Advanced Development. Previously he acted as a consultant with
several venture capital firms and start-up high technology businesses for four
years. He was
4
<PAGE>
Vice President for Marketing of Flight Dynamics, an aviation electronics
company, from 1979 to 1984. Dr. Kerr also served as President, Vice President
and Professor of the Oregon Graduate Center. Dr. Kerr received his Ph.D., M.S.
and B.S. in Electrical Engineering from Stanford University.
William N. Martin. Mr. Martin joined the Company in 1994 as Director of
Sales and was appointed Vice President, Commercial Business Development for
the Company in 1995. Prior to joining the Company, Mr. Martin was employed by
Agema Infra-Red Systems, where he initially served as Western Regional Sales
Manager and then National Sales Manager. Prior to joining Agema Infra-Red
Systems, Mr. Martin served as Regional Manager for Hughes Aircraft Company.
Mr. Martin who is an instrument multi-engine commercial pilot, attended
Wichita State University, majoring in speech and communications.
Steven R. Palmquist. Mr. Palmquist joined the Company in January of 1997 as
Vice President of Engineering. He has held various management positions with
Tektronix, Inc., most recently as the Vice President of Engineering of the
Color Printer Division. From 1983 to 1988 he was the President and CEO of
Integrated Measurement Systems, a business which he founded. He received a
B.S. in Electrical Engineering from Washington State University and a M.S. in
Electrical Engineering from the University of Illinois.
Dean A. Queathem. Mr. Queathem joined the Company in 1994 as Vice President
of Government Sales. From 1992 to 1994, he was Director of Business
Development for the Electronics and Space Corp., a subsidiary of ESCO
Electronics Corporation. Previously, he held various positions in marketing,
general management, contracts, and estimating at Emerson Electric Co. and
McDonnell Douglas Corporation. Mr. Queathem graduated with a B.A. from
Dartmouth College and received an MBA from Washington University.
J. Mark Samper. Mr. Samper joined the Company in 1990 as Corporate
Controller and was appointed Vice President of Finance and Chief Financial
Officer in March 1995. Prior to joining the Company, Mr. Samper spent six
years with Price Waterhouse where he served as an Audit Manager. Mr. Samper
received his B.S. degree from Oregon State University, with a major in
accounting. He is also a Certified Public Accountant.
5
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides information concerning the compensation of the
Company's Chief Executive Officer and each of the four other most highly
compensated executive officers of the Company (the "named executive officers")
for the fiscal years ending December 31, 1994, 1995 and 1996 or such periods
as the named executive officer was an officer of the Company.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
---------------------- ----------------------
STOCK LONG-TERM
OPTIONS INCENTIVE PLAN ALL
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS GRANTED PAYOUTS(1) OTHER(2)
- --------------------------- ---- -------- -------- ------- -------------- --------
<S> <C> <C> <C> <C> <C> <C>
Robert P. Daltry................................. 1994 $197,846 $195,000 -- $ -- $4,620
Chairman of the Board 1995 212,846 55,000 40,000 -- --
of Directors and Chief Executive Officer 1996 227,846 130,000 10,000 183,315 5,550
J. Kenneth Stringer III.......................... 1994 158,429 130,000 -- -- 4,594
President and Chief Operating Officer 1995 173,055 40,000 30,000 -- --
1996 183,125 100,000 8,000 137,486 5,775
William N. Martin................................ 1995 134,597 -- 15,000 -- --
Vice President, Commercial Business 1996 175,956 35,000 5,000 45,829 --
Development
James A. Fitzhenry............................... 1995 125,374 20,000 7,500 -- --
Vice President, General Counsel and 1996 134,584 35,000 5,000 45,829 5,113
Secretary
Dr. J. Richard Kerr.............................. 1994 119,850 40,000 -- -- 4,620
Vice President, Advanced Development 1995 125,100 10,000 10,000 -- --
1996 126,000 25,000 5,000 -- 5,708
</TABLE>
- -----------
(1) The amounts set forth under Long-term Incentive Plan Payouts represent the
dollar value of shares of restricted stock that were earned in 1996 based
upon the Company's achievement of specified performance goals. The number
of shares earned was as follows: Mr. Daltry--13,332; Mr. Stringer--9,999;
Mr. Martin--3,333 and Mr. Fitzhenry--3,333. The value of these shares was
calculated based upon the closing price of the Common Stock on December
31, 1996.
(2) The amounts set forth under All Other Compensation represent matching
amounts contributed on behalf of the named executive officers to the
Company sponsored 401(k) employee savings and retirement plan covering all
of the Company's employees.
6
<PAGE>
STOCK OPTIONS
The following table sets forth information concerning options granted to the
named executives during the year ended December 31, 1996 under the Company's
1992 Stock Incentive Plan:
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED
PERCENT OF ANNUAL RATES OF
NUMBER OF TOTAL STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM (2)
OPTIONS EMPLOYEES PRICE EXPIRATION ----------------
NAME GRANTED (1) IN 1996 PER SHARE DATE 5% 10%
- ---- ---------- ---------- --------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Robert P. Daltry........ 10,000 3.0% $10.13 01/19/06 $86,473 $219,140
J. Kenneth Stringer III. 8,000 2.4% $10.13 01/19/06 69,178 175,312
William N. Martin....... 5,000 1.5% $10.13 01/19/06 43,247 109,570
James A. Fitzhenry...... 5,000 1.5% $10.13 01/19/06 43,247 109,570
Dr. J. Richard Kerr..... 5,000 1.5% $10.13 01/19/06 43,247 109,570
</TABLE>
- --------
(1) Options granted in 1996 became exercisable starting 12 months after the
grant date, with one-third of the options becoming exercisable at that
time and with an additional one-third of the options becoming exercisable
on the second and third anniversary dates of the option grant,
respectively.
(2) The amounts shown are hypothetical gains based on the indicated assumed
rates of appreciation of the Common Stock compounded annually for a ten
year period. Actual gains, if any, on stock option exercises are dependent
on the future performance of the Common Stock and overall stock market
conditions. There can be no assurance that the Common Stock will
appreciate at any particular rate or at all in future years.
OPTIONS EXERCISED IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
The following table sets forth, for each of the named executive officers,
the shares acquired during 1996 and the related value realized, and the number
and value of unexercised options as of December 31, 1996.
<TABLE>
<CAPTION>
OPTIONS EXERCISED NUMBER OF SECURITIES VALUE OF UNEXERCISED
IN LAST FISCAL UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
YEAR(1) OPTIONS AT DECEMBER 31, 1996 DECEMBER 31, 1996(2)
------------------ ---------------------------- -------------------------
NUMBER OF VALUE
SHARES REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
--------- -------- -------------- --------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert P. Daltry........ -- $ -- 148,533 36,667 $1,280,967 $69,583
J. Kenneth Stringer III. -- -- 61,850 28,000 364,021 54,000
William N. Martin....... 4,167 10,157 3,333 17,500 833 28,488
James A. Fitzhenry...... 5,501 30,792 1,667 10,000 6,668 24,375
Dr. J. Richard Kerr..... -- -- 11,000 11,667 46,903 8,333
</TABLE>
- --------
(1) The value realized is based on the difference between the market price at
the time of exercise of the options and the applicable exercise price.
(2) The value of unexercised in-the-money options is based on the difference
between $13.75, which was the closing price of the Common Stock on
December 31, 1996, and the applicable exercise price.
7
<PAGE>
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
The following table sets forth information concerning restricted stock
awards for each of the named executive officers during the year ended December
31, 1996 under the Company's 1992 Stock Incentive Plan:
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
UNDER NON-STOCK PRICE BASED
PLANS(1)
-----------------------------
MAXIMUM
NUMBER PERFORMANCE OR OTHER THRESHOLD TARGET NUMBER
OF PERIOD UNTIL NUMBER NUMBER OF
NAME SHARES MATURATION OR PAYOUT OF SHARES OF SHARES SHARES
- ---- ------ -------------------- --------- ----------- -------
<S> <C> <C> <C> <C> <C>
Robert P. Daltry........ 40,000 1/1/96-12/31/96 0 13,332(/2/) 40,000
40,000 1/1/97-12/31/97 0 13,332(/3/) 40,000
40,000 1/1/98-12/31/98 0 13,332(/3/) 40,000
J. Kenneth Stringer III. 30,000 1/1/96-12/31/96 0 9,999(/2/) 30,000
30,000 1/1/97-12/31/97 0 9,999(/3/) 30,000
30,000 1/1/98-12/31/98 0 9,999(/3/) 30,000
William N. Martin....... 10,000 1/1/96-12/31/96 0 3,333(/2/) 10,000
10,000 1/1/97-12/31/97 0 3,333(/3/) 10,000
10,000 1/1/98-12/31/98 0 3,333(/3/) 10,000
James A. Fitzhenry...... 10,000 1/1/96-12/31/96 0 3,333(/2/) 10,000
10,000 1/1/97-12/31/97 0 3,333(/3/) 10,000
10,000 1/1/98-12/31/98 0 3,333(/3/) 10,000
Dr. J. Richard Kerr..... -- -- -- -- --
</TABLE>
- --------
(1) Payouts of awards are tied to the Company's achievement of specified
levels of pretax earnings growth, pretax return on equity and stock price
appreciation. No payouts are made if the Company does not achieve at least
10% growth in pretax earnings and pretax return on equity, and stock price
appreciation at least equal to that of a pre-selected index during the
performance period. The maximum payout is made if pretax earnings growth
exceeds 25%, pretax return on equity exceeds 17.5% and stock price
appreciation exceeds the performance of the index by more than 20%.
(2) Represents the number of shares of Common Stock earned in 1996 based on
the Company's pretax earnings growth, pretax return on equity and stock
price appreciation for the 1996 performance period.
(3) The target number of shares payable with respect to the 1997 and 1998
performance periods are not presently determinable. As required by the
regulations of the Securities and Exchange Commission, the target number
of shares shown for the 1997 and 1998 performance periods represent the
number of shares that would be earned for each period based on the
Company's actual performance in 1996.
DIRECTOR COMPENSATION
The members of the Company's Board of Directors are not compensated for
their service on the Board, but are reimbursed for out-of-pocket and travel
expenses incurred in attending Board meetings. Under the Company's 1993 Stock
Option Plan for Nonemployee Directors, as amended, an option to purchase 6,000
shares of Common Stock is automatically granted to each nonemployee director
each year on the day of the Annual Meeting.
COMPENSATION COMMITTEE REPORT
Under rules established by the Securities and Exchange Commission (the
"SEC"), the Company is required to provide certain data and information in
regard to the compensation and benefits provided to the Company's Chairman of
the Board of Directors and Chief Executive Officer and the four other most
highly compensated executive officers. In fulfillment of this requirement, the
Compensation Committee, at the direction of the Board of Directors, has
prepared the following report for inclusion in this Proxy Statement.
EXECUTIVE COMPENSATION PHILOSOPHY. The Compensation Committee of the Board
of Directors is composed entirely of outside directors. The Compensation
Committee is responsible for setting and administering the policies and
programs that govern both annual compensation and stock ownership programs
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for the executive officers of the Company. The Company's executive
compensation policy is based on principles designed to ensure that an
appropriate relationship exists between executive pay and corporate
performance, while at the same time motivating and retaining executive
officers.
EXECUTIVE COMPENSATION COMPONENTS. The key components of the Company's
compensation program are base salary, an annual incentive award, and equity
participation. These components are administered with the goal of providing
total compensation that is competitive in the marketplace, rewards successful
financial performance and aligns executive officers' interests with those of
stockholders. The Compensation Committee reviews each component of executive
compensation on an annual basis.
Base Salary. Base salaries for executive officers are set at levels believed
by the Compensation Committee to be sufficient to attract and retain qualified
executive officers. Base pay increases are provided to executive officers
based on an evaluation of each executive's performance, as well as the
performance of the Company as a whole. In establishing base salaries, the
Compensation Committee not only considers the financial performance of the
Company, but also the success of the executive officers in developing and
executing the Company's strategic plans, developing management employees and
exercising leadership. The Compensation Committee believes that executive
officer base salaries for 1996 were reasonable as compared to amounts paid by
companies of similar size.
Annual Incentive. The Compensation Committee believes that a significant
proportion of total cash compensation for executive officers should be subject
to attainment of specific Company earnings criteria. This approach creates a
direct incentive for executive officers to achieve desired performance goals
and places a significant percentage of each executive officer's compensation
at risk. Consequently, each year the Compensation Committee establishes
potential bonuses for executive officers based on the Company's achievement of
certain earnings criteria. For 1996 annual bonuses equal to 0% to 58% of base
salaries were paid to executive officers based on the Company's achievement of
such predetermined earnings criteria.
Stock Options. The Compensation Committee believes that equity participation
is a key component of its executive compensation program. Stock options are
granted to executive officers primarily based on the officer's actual and
potential contribution to the Company's growth and profitability and
competitive marketplace practices. Option grants are designed to retain
executive officers and motivate them to enhance stockholder value by aligning
the financial interests of executive officers with those of stockholders.
Stock options also provide an effective incentive for management to create
shareholder value over the long term since the full benefit of the
compensation package cannot be realized unless an appreciation in the price of
the Company's Common Stock occurs over a number of years.
Options to purchase 103,000 shares of the Company's Common Stock were
granted to the Company's executive officers (including the Company's Chief
Executive Officer) for 1996 on January 2, 1997 with an exercise price equal to
the fair market value of the underlying Common Stock on the date of grant
($13.75). These options vest cumulatively in three annual installments of 33%
and expire ten years from the date of grant.
COMPENSATION OF CHIEF EXECUTIVE OFFICER. Consistent with the executive
compensation policy and components described above, the Compensation Committee
determined the salary, bonus and stock options received by Robert P. Daltry,
the Chairman of the Board of Directors and Chief Executive Officer of the
Company, for services rendered in 1996. Mr. Daltry received a base salary of
$227,846 for 1996. He also earned a $130,000 bonus and a grant of 13,332
shares of the Company's Common Stock. Mr. Daltry received the bonus payable
and the stock grant based upon achieving particular financial performance
goals specified in advance by the Compensation Committee. On January 2, 1997,
Mr. Daltry also received options to purchase 25,000 shares of the Company's
Common Stock.
COMPENSATION COMMITTEE
John C. Hart
Ronald L. Turner
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee during the fiscal year ended
December 31, 1996, were Messrs. Hart and Turner.
STOCK PERFORMANCE GRAPH
The following graph compares the monthly return for the Company, the
Standard & Poors Mid-Cap 400 Index and the Hambrecht & Quist Technology Index.
COMPARISON OF MONTHLY RETURN*
AMONG FLIR SYSTEMS, INC., THE S & P MIDCAP 400 INDEX
AND THE HAMBRECHT & QUIST TECHNOLOGY INDEX
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
Measurement Period FLIR H&Q S&P Midcap
(Fiscal Year Covered) Systems Technology 400 Index
- ------------------- --------- ---------- ----------
<S> <C> <C> <C>
Measurement Pt- June, 1993 100.00 100.00 100.00
FYE June, 1993 93.75 103.92 100.50
FYE July, 1993 89.58 98.64 100.31
FYE August, 1993 81.25 103.89 104.45
FYE September, 1993 100.00 105.77 105.55
FYE October, 1993 91.67 108.67 105.90
FYE November, 1993 89.58 110.06 103.55
FYE December, 1993 81.25 112.66 108.36
FYE January, 1994 102.08 119.30 110.89
FYE February, 1994 101.04 120.69 109.31
FYE March, 1994 114.58 113.68 104.25
FYE April, 1994 121.88 111.41 105.03
FYE May, 1994 116.67 112.08 104.03
FYE June, 1994 107.29 105.44 100.45
FYE July, 1994 114.58 109.43 103.85
FYE August, 1994 100.00 120.39 109.29
FYE September, 1994 102.08 120.29 107.25
FYE October, 1994 112.50 128.79 108.42
FYE November, 1994 108.33 127.88 103.53
FYE December, 1994 108.33 130.77 104.48
FYE January, 1995 116.67 130.17 105.57
FYE February, 1995 120.83 139.93 111.10
FYE March, 1995 129.17 145.55 113.03
FYE April, 1995 116.67 154.79 115.30
FYE May, 1995 104.17 159.37 118.09
FYE June, 1995 118.75 176.56 122.89
FYE July, 1995 117.71 191.86 129.30
FYE August, 1995 108.33 195.50 131.69
FYE September, 1995 102.08 201.07 134.88
FYE October, 1995 106.25 203.65 131.42
FYE November, 1995 108.33 202.50 137.16
FYE December, 1995 102.08 196.34 136.82
FYE January, 1996 87.50 200.71 138.80
FYE February, 1996 104.17 208.37 143.52
FYE March, 1996 102.08 200.26 145.23
FYE April, 1996 106.25 222.11 149.67
FYE May, 1996 116.67 225.20 151.69
FYE June, 1996 102.08 209.46 149.42
FYE July, 1996 107.29 189.54 139.31
FYE August, 1996 114.58 200.78 147.34
FYE September, 1996 109.38 223.04 153.77
FYE October, 1996 116.67 219.24 154.21
FYE November, 1996 113.54 240.89 162.90
FYE December, 1996 114.58 235.59 163.08
</TABLE>
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* The monthly return on investment (change in stock price plus reinvested
dividends) for each of the periods for the Company, the Standard & Poors
Mid-Cap 400 Index and the Hambrecht & Quist Technology Index is based on the
stock price on June 22, 1993, the date of the Company's initial public
offering.
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SECTION 16 REPORTS
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "1934
Act") requires the Company's directors and officers, and persons who own more
than 10% of a registered class of the Company's equity securities, to file
initial reports of ownership and reports of changes in ownership with the SEC.
Such persons also are required to furnish the Company with copies of all
Section 16(a) reports they file.
Based solely on its review of the copies of such reports received by it with
respect to fiscal 1996, or written representations from certain reporting
persons, the Company believes that all filing requirements applicable to its
directors, officers and persons who own more than 10% of a registered class of
the Company's equity securities have been complied with for fiscal 1996.
CERTAIN TRANSACTIONS AND RELATIONSHIPS
The Company purchases certain components of its thermal imaging systems
from, and sells certain of its products to, Hughes and its affiliates,
including General Motors Corporation. Hughes is the Company's largest
shareholder. During the year ended December 31, 1996, the Company purchased
components aggregating $1,670,000 from Hughes and its subsidiaries. At
December 31, 1996, the Company owed Hughes $128,000. Sales of the Company's
products to Hughes and its affiliates amounted to $103,000 for the year ended
December 31, 1996. The Company believes that the terms and conditions of its
transactions with Hughes and its affiliates are no less favorable to the
Company than could be obtained from unaffiliated third parties.
STOCK OWNED BY MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The following table sets forth certain information known to the Company with
respect to the beneficial ownership of the Company's Common Stock as of March
3, 1997 by: (i) each person known by the Company to beneficially own more than
5% of the outstanding shares of Common Stock, (ii) each of the Company's
directors, (iii) each of the Company's named executive officers, and (iv) all
directors and executive officers as a group. Except as otherwise indicated,
the Company believes that each of the following shareholders has sole voting
and investment power with respect to the shares beneficially owned by such
shareholder.
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK PERCENT
BENEFICIALLY COMMON STOCK
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED(1) OUTSTANDING
- ------------------------------------ ------------ ------------
<S> <C> <C>
Hughes Aircraft Company(2)........................... 760,500 13.9%
7200 Hughes Terrace Bldg.
Los Angeles, CA 90045
Fidelity Investments(3).............................. 483,600 8.8%
82 Devonshire Street
Boston, MA 02109
Heartland Advisors, Inc.(4).......................... 431,900 7.9%
790 North Milwaukee St.
Milwaukee, WI 53202
Robert P. Daltry..................................... 216,792 3.8%
John C. Hart......................................... 27,000 *
George Porter........................................ 32,000 *
W. Allen Reed(5)..................................... 27,000 *
J. Kenneth Stringer III.............................. 116,746 2.1%
Ronald L. Turner..................................... 27,000 *
J. Richard Kerr...................................... 22,195 *
James A. Fitzhenry................................... 9,367 *
William N. Martin.................................... 6,666 *
Directors and Executive Officers as a group (14
persons)............................................ 504,932 8.6%
</TABLE>
- --------
*Less than one percent (1%).
11
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(1) Beneficial ownership is determined in accordance with rules of the SEC,
and includes voting power and investment power with respect to shares.
Shares issuable upon the exercise of outstanding stock options that are
currently exercisable or become exercisable within 60 days from March 3,
1997 are considered outstanding for the purpose of calculating the
percentage of Common Stock owned by such person, but not for the purpose
of calculating the percentage of Common Stock owned by any other person.
The number of shares that are issuable upon the exercise of options that
are currently exercisable or exercisable within 60 days of March 3, 1997
is as follows: Mr. Daltry -- 165,200; Mr. Hart -- 27,000; Mr. Porter --
27,000; Mr. Reed -- 27,000; Mr. Stringer -- 74,517; Mr. Turner -- 27,000;
Mr. Martin -- 3,333; Dr. Kerr-- 16,000; Mr. Fitzhenry -- 5,834; and all
officers and directors as a group -- 389,717. The table does not include
shares subject to options that will be granted to Messrs. Hart, Porter,
Reed and Turner under the 1993 Stock Option Plan for Nonemployee Directors
immediately after the Annual Meeting.
(2) This information as to beneficial ownership is based on a Schedule 13G
filed by General Motors Corporation ("GM"), GM Hughes Electronics
Corporation ("GMHE") and Hughes Aircraft Company ("Hughes") with the
Securities and Exchange Commission on February 7, 1994. Hughes is a
wholly-owned subsidiary of GMHE, which is a wholly-owned subsidiary of GM.
Each of GM and GMHE has its principal executive offices located at 3044
West Grand Blvd., Detroit, Michigan 48202-3091. The Schedule 13G states
that as of December 31, 1993 Hughes was the beneficial owner of 760,500
shares of Common Stock as to which it had sole voting and dispositive
power and that GM and GMHE had shared voting and dispositive power with
respect to such shares.
(3) This information as to beneficial ownership is based on a Schedule 13G
filed by Fidelity Investments with the Securities and Exchange Commission
on February 14, 1997. The Schedule 13G states that as of December 31,
1996, Fidelity Investments was the beneficial owner of 483,600 shares of
Common Stock as to which it had sole voting and dispositive power.
(4) This information as to beneficial ownership is based on a Schedule 13G
filed by Heartland Advisors, Inc., with the Securities and Exchange
Commission on February 12, 1997. The Schedule 13G states that as of
December 31, 1996, Heartland Advisors, Inc., was the beneficial owner of
431,900 shares of Common Stock as to which it had sole voting and
dispositive power.
(5) Mr. Reed is President of General Motors Investment Management Corporation.
Mr. Reed disclaims beneficial ownership of the 760,500 shares of Common
Stock beneficially owned by Hughes Aircraft Company.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed Price Waterhouse LLP to act as
independent auditors for the Company for the fiscal year ending December 31,
1997, subject to ratification of such appointment by the Company's
shareholders.
Unless otherwise indicated, properly executed proxies will be voted in favor
of ratifying the appointment of Price Waterhouse LLP to audit the books and
accounts of the Company for the fiscal year ending December 31, 1997. No
determination has been made as to what action the Board of Directors would
take if the shareholders do not ratify the appointment.
A representative of Price Waterhouse LLP is expected to be present at the
Annual Meeting and will be given an opportunity to make a statement if he or
she desires to do so and will be available to respond to appropriate
questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THIS PROPOSAL.
12
<PAGE>
DATE FOR SUBMISSION OF SHAREHOLDER PROPOSALS
Any shareholder proposal intended for inclusion in the proxy statement and
form of proxy relating to the Company's 1998 Annual Meeting of Shareholders
must be received by the Company not later than December 1, 1997, pursuant to
the proxy soliciting regulations of the SEC. In addition, the Company's bylaws
require that notice of shareholder proposals and nominations for director be
delivered to the Secretary of the Company not less than 60 days nor more than
90 days prior to the date of an annual meeting, unless notice or public
disclosure of the date of the meeting occurs less than 60 days prior to the
date of such meeting, in which event, shareholders may deliver such notice not
later than the 10th day following the day on which notice of the date of the
meeting was mailed or public disclosure thereof was made. Nothing in this
paragraph shall be deemed to require the Company to include in its proxy
statement and form of proxy for such meeting any shareholder proposal which
does not meet the requirements of the SEC in effect at the time.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors does not know
of any other matters to be presented for action by the shareholders at the
1997 Annual Meeting. If, however, any other matters not now known are properly
brought before the meeting, the persons named in the accompanying proxy will
vote such proxy in accordance with the determination of a majority of the
Board of Directors.
COST OF SOLICITATION
The cost of soliciting proxies will be borne by the Company. In addition to
use of the mails, proxies may be solicited personally or by telephone by
directors, officers and employees of the Company, who will not be specially
compensated for such activities. Also, W.F. Doring & Co. may solicit proxies
at an approximate cost of $2,500 plus reasonable expenses. Such solicitations
may be made personally, or by mail, facsimile, telephone, telegraph or
messenger. The Company will also request persons, firms and companies holding
shares in their names or in the name of their nominees, which are beneficially
owned by others, to send proxy materials to and obtain proxies from such
beneficial owners. The Company will reimburse such persons for their
reasonable expenses incurred in that connection.
ADDITIONAL INFORMATION
A copy of the Company's Annual Report to Shareholders for the fiscal year
ended December 31, 1996 accompanies this Proxy Statement. The Company is
required to file an Annual Report on Form 10-K for its fiscal year ended
December 31, 1996 with the Securities and Exchange Commission. Shareholders
may obtain, free of charge, a copy of the Form 10-K (without exhibits) by
writing to Investor Relations, FLIR Systems, Inc., 16505 S.W. 72nd Avenue,
Portland, Oregon 97224.
By Order of the Board of Directors
/s/ Robert P. Daltry
Chairman of the Board of Directors
and Chief Executive Officer
Portland, Oregon
March 31, 1997
13
<PAGE>
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PROXY
FLIR SYSTEMS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of FLIR Systems, Inc., an Oregon corporation
(the "Company"), hereby appoints Robert P. Daltry and J. Kenneth Stringer III,
or either of them, with full power of substitution in each, as proxies to cast
all votes which the undersigned shareholder is entitled to cast at the Annual
Meeting of Shareholders (the "Annual Meeting") to be held at 3:00 p.m. on
Friday, May 2, 1997 at the Multnomah Athletic Club, 1849 S.W. Salmon Avenue,
Portland, Oregon 97205 and any adjournments or postponements thereof upon the
following matters.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. UNLESS DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED "FOR" THE ELECTION OF THE NOMINEES LISTED IN PROPOSAL 1, FOR
PROPOSAL 2 AND IN ACCORDANCE WITH THE RECOMMENDATIONS OF A MAJORITY OF THE
BOARD OF DIRECTORS AS TO OTHER MATTERS. The undersigned hereby acknowledges
receipt of the Company's Proxy Statement and hereby revokes any proxy or
proxies previously given.
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD TODAY, USING THE ENCLOSED
ENVELOPE.
- -------------------------------------------------------------------------------
-- FOLD AND DETACH HERE --
<PAGE>
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Please mark
your votes as
indicated in [X]
this example
FOR the WITHHOLD
nominees AUTHORITY
1. ELECTION OF TWO DIRECTORS FOR A listed below to vote for all
THREE-YEAR TERM. (except as nominees
indicated below) listed below
[_] [_]
2. Ratification of appointment of
auditors.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. In their discretion, the proxies
are authorized to vote upon such
other matters as may properly
come before the meeting or any
adjournments or postponements
thereof.
George Porter and Ronald L. Turner
INSTRUCTION: To withhold authority
to vote for any nominee write that
nominee's name(s) in this space:
- ---------------------------------
---------------------------------
Type or Printed name(s)
---------------------------------
Authorized Signature
---------------------------------
Title or authority, if applicable
---------------------------------
Date
Please sign exactly as your name appears on
this Proxy Card. If shares are registered in
more than one name, all such persons should
sign. A corporation should sign in its full
corporate name by a duly authorized officer,
stating his/her title. Trustees, guardians,
executors and administrators should sign in
their official capacity, giving their full
title as such. If a partnership, please sign
in the partnership name by authorized
person(s).
IF YOU RECEIVE MORE THAN ONE PROXY CARD, PLEASE SIGN AND RETURN ALL SUCH CARDS
IN THE ACCOMPANYING ENVELOPE.
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