FLUKE CORPORATION
Notice of Annual Meeting of Stockholders
To the Stockholders:
The Annual Meeting of Stockholders of Fluke Corporation will be held in
the Auditorium at the corporate headquarters of Fluke Corporation, 6920
Seaway Boulevard, Everett, Washington, on Wednesday, September 14, 1994,
at 5:00 p.m. for the following purposes:
A. ELECTION OF DIRECTORS. To elect four Directors to serve three-
year terms expiring at the 1997 Annual Meeting of Stockholders following
their election and until their successors are elected and qualified.
B. OTHER BUSINESS. To transact such other business as may properly
come before the meeting, and all adjournments or postponements thereof.
The stock transfer books of the Company will not be closed. The Board of
Directors has fixed the close of business on July 29, 1994 as the record
date for the determination of stockholders entitled to notice of, and to
vote at, said Annual Meeting.
Your attention is directed to the accompanying Proxy Statement. To
constitute a quorum for the conduct of business at the Annual Meeting,
it is necessary that holders of a majority of all outstanding shares
entitled to vote at the meeting be present in person or be represented
by proxy. To assure representation at the Annual Meeting, you are urged
to date and sign the enclosed proxy and return it promptly in the
enclosed envelope.
By order of the Board of Directors
August 5, 1994 Douglas G.McKnight
Everett, Washington Vice President, General Counsel
and Corporate Secretary
<PAGE>
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Fluke Corporation, a Washington corporation
(the "Company"), of proxies in the accompanying form for use at the
Annual Meeting of Stockholders to be held on September 14, 1994, and any
adjournment or postponement of such meeting. The Annual Meeting will be
held at 5:00 p.m. in the Auditorium at the corporate headquarters of the
Company in Everett, Washington.
The principal office of the Company is at 6920 Seaway Boulevard,
Everett, Washington 98203. The approximate date of the mailing of this
Proxy Statement and the enclosed form of proxy is August 8, 1994.
Proxies are solicited so that each stockholder may have an opportunity
to vote. These proxies will enable stockholders to vote on all matters
which are scheduled to come before the meeting. When proxies are
returned properly executed, the shares represented thereby will be voted
in accordance with the stockholders' directions. Stockholders are urged
to specify their choice by marking the appropriate box on the enclosed
proxy card; if no choice has been specified, the shares will be voted as
recommended by the Board of Directors. Means have been provided whereby
a stockholder may vote against, or abstain from voting on, any matter as
may properly come before the meeting. Under Washington state law, shares
which are voted "abstain" and "broker non-votes" (shares held by a
broker or nominee as to which a broker or nominee indicates on the proxy
that it does not have the authority to vote on a particular matter) will
be counted as shares that are present and entitled to vote for purposes
of determining the presence of a quorum but as unvoted for purposes of
determining the approval of any matter submitted to the stockholders for
a vote. The proxy cards also confer discretionary authority to vote the
shares authorized to be voted thereby on any matter which was not known
on the date of the Proxy Statement but may properly be presented for
action at the meeting.
Your vote is important. Accordingly, you are asked to sign, date and
return the accompanying proxy card regardless of whether or not you plan
to attend the meeting.
Any stockholder returning a proxy has the power to revoke it at any time
before shares represented by the proxy are voted at the meeting. A
stockholder may also revoke his proxy by attending the meeting and
voting at the meeting. Any shares represented by an unrevoked proxy will
be voted unless the stockholder attends the meeting and votes in person.
A stockholder's right to revoke his proxy is not limited by or subject
to compliance with a specified formal procedure, but written notice
should be given to the Corporate Secretary of the Company at or before
the meeting so that the number of shares represented by proxy can be
appropriately adjusted.
The expense of printing and mailing proxy material will be borne by the
Company. In addition to the solicitation of proxies by mail,
solicitation may be made by certain Directors, officers and other
employees of the Company in person or by telephone, telegraph or telex.
No additional compensation will be paid for such solicitation.
Arrangements will also be made with brokerage firms and other
custodians, nominees and fiduciaries to forward proxy solicitation
material to certain beneficial owners of the Company's Common Stock and
the Company will reimburse such brokerage firms, custodians, nominees
and fiduciaries for reasonable out-of-pocket expenses incurred by them
in connection therewith.
1. VOTING SECURITIES AND RECORD DATE
The holders of the Company's $.25 par value Common Stock are entitled to
vote at the Annual Meeting. On the record date, July 29, 1994, there
were outstanding 7,749,750 shares of Common Stock.
Each holder of Common Stock has the right to cumulate his votes and cast
as many votes as are equal to the number of Directors to be elected by
the holders of Common Stock multiplied by the number of his shares.
These votes may be cast for one candidate or distributed among as many
candidates as the stockholder sees fit. If a stockholder wishes to
cumulate his votes, he should multiply his number of shares times the
number of Directors to be elected by the holders of Common Stock and
then write the number of votes he wishes for each candidate next to his
name on the proxy card. On other matters, each share of Common Stock is
entitled to one vote at the meeting.
2. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following persons are known by the Board of Directors to own
beneficially more than 5% of any class of the outstanding voting
securities of the Company as of July 29, 1994:
AMOUNT AND NATURE
NAME AND ADDRESS OF BENEFICIAL PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER OWNERSHIP OF CLASS
$.25 Par Value Fluke Capital and 1,467,496 18.9
Common Stock Management Services Company
11400 S.E. 6th, Suite 230
Bellevue, Washington 98004
$.25 Par Value Philips Electronics N.V. 1,388,144 17.9
Common Stock P.O. Box 218
5600 MD Eindhoven
The Netherlands
The following tabulation sets forth, as of July 29, 1994, the amount of
shares of Common Stock of the Company beneficially owned by each of the
Directors and the executive officers listed in the Summary Compensation
Table and by all Directors and executive officers as a group:
AMOUNT AND NATURE PERCENT OF
OF BENEFICIAL OWNERSHIP CLASS
Dr. J. Peter Bingham 600 (1)(2) -
Philip M. Condit 3,000 (3) -
John D. Durbin 3,119 (4) -
David L. Fluke 1,538,854 (3)(5) 19.0
John M. Fluke, Jr. 1,513,673 (5)(6) 18.7
Robert S. Miller, Jr. 1,600 (2) -
William G. Parzybok, Jr. 68,164 (7) .8
Dr. David S. Potter 6,589 (8) -
N. Stewart Rogers 5,622 (3)(9) -
John R. Smith 23,016 (10) .3
Stephen C. Tumminello 2,600 (1)(2) -
Richard W. Van Saun 34,349 (11) .4
James E. Warjone 3,105 (3) -
Ronald R. Wambolt 36,652 (12) .5
George M. Winn 100,634 (13) 1.2
All Directors & executive
officers as a group (20 persons) 1,931,936 (14) 23.9
(1) Excludes 1,388,144 shares of Common Stock owned by Philips
Electronics N.V. (Philips). Dr. Bingham and Mr. Tumminello are nominees
designated by Philips for election as Directors of the Company.
Beneficial ownership of these shares is disclaimed.
(2) Includes 600 shares issuable pursuant to options within 60 days
after the date of this Proxy Statement.
(3) Includes 3,000 shares issuable pursuant to options within 60 days
after the date of this Proxy Statement.
(4) Includes 119 shares held in trust pursuant to the Deferred
Compensation Plan for Directors and 2,400 shares issuable pursuant to
options within 60 days after the date of this Proxy Statement.
(5) Includes 9,453 shares in trust for Mr. David Fluke, of which Mr.
John Fluke and Mrs. Virginia Fluke Gabelein are cotrustees; 9,452 shares
in trust for Mr. John Fluke, of which Mr. David Fluke and Mrs. Virginia
Fluke Gabelein are cotrustees, 9,453 shares in trust for Mrs. Virginia
Fluke Gabelein, of which Mr. David Fluke and Mr. John Fluke are
cotrustees; and 1,467,496 shares held by a limited partnership of which
Mr. David Fluke and Mr. John Fluke are general partners, and each of
which is the holder of approximately one third of the stock and a
director of the corporate managing partner. Except to the extent that
Mr. David Fluke and Mr. John Fluke have a pecuniary interest in the
shares as or through a general partner or limited partner of the limited
partnership, beneficial ownership of these shares is disclaimed.
(6) Includes 7,400 shares issuable pursuant to options within 60 days
after the date of this Proxy Statement.
(7) Includes 31 shares held in trust pursuant to the Deferred
Compensation Plan for Directors and 64,800 shares issuable pursuant to
options within 60 days after the date of this Proxy Statement.
(8) Includes 4,279 shares held in trust pursuant to the Deferred
Compensation Plan for Directors and 2,200 shares issuable pursuant to
options within 60 days after the date of this Proxy Statement.
(9) Includes 718 shares in trusts for which Mr. Rogers is trustee and
as to which he has voting and investment power and 567 shares in a trust
over which Mr. Rogers has a durable power of attorney and as to which
beneficial ownership is disclaimed.
(10) Includes 20,300 shares issuable pursuant to options within 60 days
after the date of this Proxy Statement.
(11) Includes 32,400 shares issuable pursuant to options within 60 days
after the date of this Proxy Statement.
(12) Includes 35,400 shares issuable pursuant to options within 60 days
after the date of this Proxy Statement.
(13) Includes 90,600 shares issuable pursuant to options within 60 days
after the date of this Proxy Statement and 175 shares owned by his son.
(14) Includes 343,520 shares issuable pursuant to options within 60 days
after the date of this Proxy Statement. For purposes of computing the
percent of class only, such shares are deemed outstanding. The shares
described in footnote (5) are included only once in the computation of
shares.
3. ELECTION OF DIRECTORS
Pursuant to the Company's Articles of Incorporation which provide for a
classified Board, four Directors out of a total of twelve Directors are
to be elected by the holders of the Common Stock at this Annual Meeting.
Pursuant to the terms of the Stock Purchase Agreement which was part of
the acquisition of the Philips T&M Business, the Board agreed to
nominate two Philips designees for election to the Board of Directors as
long as Philips owns more than 12% of the Company's outstanding Common
Stock and one Director as long as it owns more than 6% of the
outstanding Common Stock. Mr. Tumminello has been nominated for
election pursuant to this agreement.
The four Directors will serve three-year terms expiring at the 1997
Annual Meeting and until their successors have been elected and
qualified. Unless the vote is withheld by the stockholder, proxies will
be voted for the election of the following Directors:
JOHN D. DURBIN
Mr. Durbin, age 59, has been a Director of the Company since 1990. He
has been the Chairman and President of Hostar International Inc. since
1988. Mr. Durbin serves on the Audit and Compensation Committees of the
Board. He is also a Director of Puget Sound Power and Light Company.
JOHN M. FLUKE, JR.
Mr. John Fluke, age 51, has been a Director of the Company since 1976.
He has been Chairman of Fluke Capital and Management Services Company
since 1979 and served as Chairman of the Board of the Company from 1983
until 1990. Mr. John Fluke serves on the Finance and Nominating
Committees of the Board. He is also a Director of PACCAR Inc. He is
the brother of David L. Fluke, a Director of the Company.
N. STEWART ROGERS
Mr. Rogers, age 64, has been a Director of the Company since 1976. He
is Chairman of the Board of PENWEST, Ltd., a position he has held since
1991. He previously served as Senior Vice President of Univar
Corporation from 1971 until his retirement in 1991. Mr. Rogers serves
on the Executive, Finance and Nominating Committees of the Board. He is
also a Director of U.S. Bancorp, VWR Corporation, and Univar
Corporation.
STEPHEN C. TUMMINELLO
Mr. Tumminello, age 57, has been a Director of the Company since 1989.
He has been Chief Executive Officer of Philips Electronics North America
Corporation (PENAC) since 1990 and previously served as Executive Vice
President of PENAC from 1986 to 1990. He is one of the two Directors
designated by Philips.
It is intended that votes will be cast pursuant to the enclosed proxy
for the election as Directors of the foregoing nominees, and executing
the proxy will give the proxies the discretionary authority to cumulate
votes in the election of Directors if they so choose. If any nominee
shall not be a candidate for election as a Director at the meeting, it
is intended that votes will be cast pursuant to the enclosed proxy for
such substitute nominee as may be nominated by the existing Directors.
No circumstances are presently known which would render any nominee
named herein unavailable.
Under the Company's Bylaws, stockholders seeking to nominate other
candidates for election to the Board of Directors at the Annual Meeting
must give written notice to the Corporate Secretary of the Company no
less than seventy (70) nor more than ninety (90) days before the
stockholders meeting containing certain information as to the
stockholder giving the notice and each proposed nominee, including
information similar to that required under the federal proxy rules. If
less than eighty (80) days' notice or prior public disclosure of the
date of the scheduled meeting is given, notice by the stockholder must
be given not later than the tenth day following the earlier of the
mailing of notice of the meeting or the date public disclosure of the
meeting date was made. The Bylaws provide that no person shall be
elected a Director of the Company unless nominated in accordance with
the Bylaws. No Director nominations by stockholders for the Annual
Meeting were received by the Company prior to July 6, 1994, which was
the last day that such nominations could be made.
The Directors whose terms expire at the 1995 Annual Meeting are as
follows:
DR. J. PETER BINGHAM
Dr. Bingham, age 52, has been a Director of the Company since 1993. He
has been the President of Philips Laboratories in the U.S. since 1991.
Dr. Bingham previously served as Vice President of Technology at the
Philips Consumer Electronics Company from 1985 to 1991. He is one of
the two Directors designated by Philips.
WILLIAM G. PARZYBOK, JR.
Mr. Parzybok, age 52, has been Chairman of the Board, Chief Executive
Officer and a Director of the Company since 1991. He previously had
been employed for 22 years by the Hewlett-Packard Company where his most
recent position was Vice President and General Manager of Engineering
Applications Group from 1988 to 1991. Mr. Parzybok serves on the
Executive Committee of the Board. He is also a Director of PENWEST,
Ltd.
JAMES E. WARJONE
Mr. Warjone, age 51, has been a Director of the Company since 1987. He
is President and General Partner of Port Blakely Tree Farms, L.P., a
position he has held since 1980. He serves on the Audit, Executive and
Nominating Committees of the Board. He is also a Director of Heart
Technology, Inc.
GEORGE M. WINN
Mr. Winn, age 50, has been President, Chief Operating Officer and a
Director of the Company since 1982. He previously served as Chief
Executive Officer of the Company from 1987 to 1991. Mr. Winn serves on
the Executive Committee of the Board. He is also a Director of Heart
Technology, Inc.
The Directors whose terms expire at the 1996 Annual Meeting are as
follows:
PHILIP M. CONDIT
Mr. Condit, age 52, has been a Director of the Company since 1987. He
has been President of The Boeing Company since 1992. He previously
served as Executive Vice President of Boeing Commercial Airplane Group
since 1986 and held the additional position of General Manager, 777
Division since 1990. Mr. Condit serves on the Executive, Compensation
and Nominating Committees of the Board. He is also a Director of The
Boeing Company and Nordstrom, Inc.
DAVID L. FLUKE
Mr. David Fluke, age 46, has been a Director of the Company since 1989.
He has been Vice President of Fluke Capital and Management Services
Company since 1983. Mr. David Fluke serves on the Audit Committee of
the Board. He is the brother of John M. Fluke, Jr., a Director of the
Company.
ROBERT S. MILLER, JR.
Mr. Miller, age 52, has been a Director of the Company since 1993. He
previously was a Senior Partner at James D. Wolfensohn Inc., an
investment banking firm in 1992, served as Vice Chairman of the Board of
Chrysler Corporation from 1990 to 1992 and as Chief Financial Officer of
Chrysler Corporation from 1981 to 1990. Mr. Miller serves on the
Compensation and Finance Committees of the Board. He is also a Director
of Coleman Industries, Federal-Mogul Corporation, Pope & Talbot, Syntex
Corporation and U.S. Bancorp.
DR. DAVID S. POTTER
Dr. Potter, age 69, has been a Director of the Company since 1986 and
served as Chairman of the Board from 1990 to 1991. He served as Vice
President and Group Executive in charge of the Power Products and
Defense Operations Group of General Motors Corp. from 1983 until his
retirement in 1985. Dr. Potter serves on the Executive, Finance and
Nominating Committees of the Board. He is also a Director of Lockheed
Corporation.
4. BOARD STRUCTURE
During the fiscal year ended April 29, 1994 (fiscal 1994), there were
four meetings of the Board of Directors. Each of the incumbent
Directors, except Messrs. Bingham, Condit and Tumminello, attended at
least 75% of the aggregate of the total number of meetings of the Board
of Directors and the total number of meetings held by all committees of
the Board of Directors on which they served. All of the references to
meetings exclude actions taken by written consent.
The Board currently has five committees: an Executive Committee, an
Audit Committee, a Compensation Committee, a Finance Committee and a
Nominating Committee.
The Executive Committee, consisting of Messrs. Condit, Parzybok, Potter,
Rogers, Warjone and Winn, is authorized to exercise all of the powers of
the Board of Directors in the management of the business and the affairs
of the Company during intervals between meetings of the Board except for
certain matters reserved to the full Board of Directors. The Executive
Committee met two times during fiscal 1994.
The Audit Committee consists of three non-employee Directors, Messrs.
Durbin, David Fluke and Warjone. The Audit Committee reviews the
preparation and auditing of accounts of the Company; considers and
recommends to the Board of Directors the engagement of independent
certified public accountants for the ensuing year and the terms of such
engagement; reviews the scope of the audit proposed by such accountants;
implements and periodically reviews the performance of the Company's
program of internal control and reviews the internal audit function of
the Company; receives and reviews the reports of the independent
accountants and internal audit staff; and reviews the annual financial
report to the Directors and stockholders of the Company. The Audit
Committee met four times during fiscal 1994.
The Compensation Committee consists of three nonemployee Directors,
Messrs. Condit, Durbin and Miller. The Compensation Committee
recommends to the Board of Directors the compensation of the Company's
officers, approves the individuals involved in the Company's senior
management compensation program, and reviews and approves all employee
benefit programs, particularly those involving bonuses or stock awards.
The Compensation Committee met three times during fiscal 1994.
The Finance Committee consists of four non-employee Directors, Messrs.
John Fluke, Miller, Potter and Rogers. The Finance Committee recommends
to the Board of Directors or management of the Company appropriate
policies in the areas of balance sheet objectives; financing of major
capital expenditures and major acquisitions; programs for disposition of
major assets; dividend policy, stock issuance or repurchase programs;
investment of corporate cash; selection and design of bank credit
facilities; and review of investor relations programs. The Finance
Committee met four times during fiscal 1994.
The Nominating Committee consists of five non-employee Directors,
Messrs. Condit, John Fluke, Potter, Rogers and Warjone. The Committee
develops and maintains a list of potential candidates for Board
membership and recommends for approval by the full Board a slate of
Directors to be voted upon at the Annual Stockholders Meeting. The
Nominating Committee met once during fiscal 1994.
5. COMPENSATION OF DIRECTORS
The Company pays each non-employee Director an annual fee of $14,000
plus $900 for each Board meeting attended. Non-employee Directors
receive a fee of $700 for each Executive Committee meeting attended and
$650 for attendance at all other Committee meetings. Employee Directors
receive no annual or Committee meeting fees but do receive $900 for each
Board meeting attended. The Directors may, prior to each fiscal year,
elect to defer their annual fee and/or meeting fees pursuant to the
Deferred Compensation Plan for Directors. Such deferrals may be
invested either in Company stock through a blind trust or in an account
which earns interest at the Treasury bill rate.
All Directors who are not full time employees of the Company (Outside
Directors) participate in a non-qualified stock option plan. Options
are granted annually on the day of the Annual Meeting to each Outside
Director elected at or continuing a term following the meeting. The
number of stock options to be granted is determined by dividing the
Outside Director's annual stipend by the fair market value of the Common
Stock on the day of the Annual Meeting rounded up to the nearest one
hundred shares. The options are exercisable one year after the day of
grant and have a term of ten years. Each qualified Outside Director
received an option for 600 shares at $24.375 per share in fiscal 1994.
6. COMPENSATION OF EXECUTIVE OFFICERS
The individuals named in the following table were the Company's five
most highly compensated executive officers during the fiscal year ended
April 29, 1994.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Long-Term
Compensation Compensation
------------ ------------
Awards Payouts
------ -------
Securities
Under- All Other
Name And Lying LTIP Compen-
Principal Position Year Salary($) Bonus($) Options(#) Payouts($) sation($)
<1> <2> <3> <4>
- - ------------------ ---- ------ ----- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
William G. Parzybok, Jr. 1994 $310,800 $155,902 31,500 -- $84,500
Chairman of the Board 1993 172,800 0 20,000 -- 39,668
Chief Executive Officer 1992 307,392 248,918 20,000 -- 66,000
and Director
George M. Winn 1994 293,872 123,810 20,500 -- 75,100
President, Chief 1993 163,390 0 19,000 -- 37,686
Operating Officer 1992 295,006 198,681 19,000 $62,220 75,101
and Director
Ronald R. Wambolt 1994 168,014 62,693 7,200 -- 34,500
Senior Vice President 1993 89,177 0 6,500 -- 19,353
Director of Worldwide 1992 161,013 82,980 10,000 21,742 40,703
Sales & Service
Richard W. Van Saun 1994 167,865 58,789 7,200 -- 34,500
Senior Vice President 1993 88,625 0 6,500 -- 19,237
General Manager, 1992 157,318 106,645 10,000 19,226 32,502
Diagnostic Tools Division
John R. Smith 1994 143,558 57,144 4,700 -- 29,000
Vice President, 1993 76,990 0 4,000 -- 16,786
Treasurer 1992 139,006 74,291 6,000 13,466 35,301
<FN>
<1> In November 1992, the Board of Directors changed the Company's
fiscal year from one ending on the last Friday in September to one
ending on the last Friday in April. Therefore fiscal 1993 was a seven-
month transition period ending on April 30, 1993. 1994 and 1992 were
full fiscal years ending on the last Friday in April and September
respectively. The executive officers voluntarily reduced their base
salary by 10% for the period January 1993 through April 1993 as the
Company was down-sized to more closely align expense levels with
anticipated revenues.
<2> Includes the variable pay plan discussed in the Compensation
Committee Report and the profit-sharing bonus plan which provides for
semi-annual cash payments to all U.S. and certain foreign employees
(depending on local compensation policies) based upon 14% of the
adjusted pretax earnings of the U.S. operations and the foreign
subsidiaries included in the plan, computed without reduction for
certain employee benefit plans. If after-tax earnings fall below 6% of
revenues, payment of the profit sharing bonus is at management's
discretion. Each employee's share of the profit-sharing bonus is based
upon the percentage relationship of the employee's base earnings to the
total base earnings of all the employees included in the plan.
<3> The Long-Term Performance Award Plan was discontinued at the end of
fiscal 1990. The payment in fiscal 1992 was for the three year period
1990-1992.
<4> Includes an annual accrual of 20% of base salary (unless otherwise
determined by the Board of Directors) to each executive officer's
account in the Supplemental Retirement Income Plan (a non-qualified
unfunded defined contribution plan). The allocation for fiscal 1993 was
prorated for the seven-month fiscal period. This column also includes
the Company's matching contributions to the individual's 401(k) account
and Directors fees. For fiscal 1994, the contribution to the
Supplemental Retirement Income Plan for each of the individuals listed
in the table were as follows: Mr. Parzybok, $80,400; Mr. Winn, $71,000;
Mr. Wambolt, $34,000; Mr. Van Saun, $34,000; and Mr. Smith, $29,000.
Each of the individuals listed in the table received a matching
contribution of $500 to their 401(k) account in fiscal 1994 and Messrs.
Parzybok and Winn each received $3,600 in Director's fees.
</TABLE>
<TABLE>
OPTION GRANTS IN THE LAST FISCAL YEAR
<CAPTION>
Number of Percentage of
Securities Total Options
Underlying Granted to Exercise Grant Date
Options Employees Price Expiration Present
Name Granted<1> During 1994<2> Per Share Date Value<3>
- - ---- ---------- ----------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
William G. Parzybok, Jr. 10,000 4.1% $23.125 5/28/03 $123,210
21,500 8.7% $28.1875 4/29/04 264,902
George M. Winn 20,500 8.3% $28.1875 4/29/04 252,581
Ronald R. Wambolt 7,200 2.9% $28.1875 4/29/04 88,711
Richard W. Van Saun 7,200 2.9% $28.1875 4/29/04 88,711
John R. Smith 4,700 1.9% $28.1875 4/29/04 57,909
<FN>
<1> The options are granted at 100% of the market value on the date of
grant and are exercisable 40% after one year, an additional 30% after
three years and the final 30% after five years.
<2> The Company granted options representing 246,300 shares in fiscal
1994.
<3> Valued using the Black-Scholes valuation method with the following
assumptions: volatility: 20%; term of the option: 10 years; rate of
dividend increase: 5%; and risk free rate: 7%.
</TABLE>
<TABLE>
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUE
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised in-the-Money Options
Options at Fiscal at Fiscal Year-End<1>
Year-End
Shares ---------------------- ---------------------
Acquired on Value Exercis- Unexer- Exercis- Unexer-
Name Exercise Realized able cisable able cisable
- - ---- -------- -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
William G. Parzybok, Jr. 0 0 64,800 70,700 $463,450 $231,300
George M. Winn 0 0 90,600 64,900 854,875 294,562
Ronald R. Wambolt 0 0 35,400 24,300 322,362 99,169
Richard W. Van Saun 0 0 32,400 24,300 288,612 99,169
John R. Smith 0 0 20,300 14,900 176,588 56,100
<FN>
<1> This amount represents the aggregate market value at fiscal year
end (April 29, 1994) based upon the closing price of the Company's stock
on the American Stock Exchange on that date of $28.125 per share less
the aggregate exercise price of those unexercised options which have an
exercise price below the fiscal year end market price.
</TABLE>
PENSION PLAN WITH SUPPLEMENTAL EQUALIZATION
The following table sets forth the estimated annual benefits upon
retirement assuming retirement at age 65 with a single life annuity
under the Company's pension plan and includes an equalization amount as
an additional allocation to the Supplemental Retirement Income Plan for
those executive officers who retire prior to the end of fiscal 1999 as
described below.
<TABLE>
<CAPTION>
Years of Credited Service
Highest Five Year
Average Cash Compensation 10 Years 15 Years 20 Years 25 Years 30 Years
- - ------------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$125,000 $15,267 $22,900 $30,533 $38,167 $45,800
$150,000 18,600 27,900 37,200 46,500 55,800
$175,000 21,933 32,900 43,867 54,833 65,800
$200,000 25,267 37,900 50,533 63,167 75,800
$225,000 27,830 41,745 55,660 69,575 83,490
$250,000 27,830 41,745 55,660 69,575 83,490
</TABLE>
The Company's pension plan covers all U.S. employees with more than one
year of service with the Company. Pension benefits are based upon years
of service with the Company (maximum of 30 years of credited service)
and the highest five year average cash compensation earned. Benefits,
which are subject to a Social Security offset, are determined by
reference to total cash compensation. By law, the current maximum
amount of annual compensation which can be taken into account in the
computation of pension benefits is $150,000. For those executive
officers who retire prior to the end of fiscal 1999, a calculation of
the present value of the pension benefit will be made as if the maximum
amount of annual compensation which could be taken into account in the
computation of pension benefits is $235,840, the maximum level prior to
the enactment of the Revenue Reconciliation Act of 1993. Any difference
between the present value of the actual pension benefit to be paid and
the present value of the pension benefit using the $235,840 limit (the
equalization amount) will be accrued as an additional allocation to the
executive officer's Supplemental Retirement Income Plan account in the
year of retirement. The Company will increase by 1% the annual
allocation to each executive officer's Supplemental Retirement Income
Plan account beginning in fiscal 1995 to somewhat offset the impact of
the new compensation limits. This additional 1% allocation will be
deducted from any equalization amount. For those executive officers who
do not retire prior to fiscal 1999, the maximum amount of compensation
as established by law will apply to their pension benefit. The current
credited years of service, respectively, for the individuals named in
the foregoing table are as follows: William G. Parzybok, Jr., 2 years;
George M. Winn, 24 years; Ronald R. Wambolt, 12 years; Richard W. Van
Saun, 23 years; and John R. Smith, 21 years.
RETENTION ARRANGEMENTS
The Company has employment agreements with Messrs. Parzybok, Winn,
Wambolt and Van Saun which are cancelable by the Board upon three-years
notice. During the term of the agreement Mr. Parzybok will hold the
position of Chief Executive Officer and shall receive a minimum annual
base salary of $300,000 (current base salary is $350,000). Mr. Winn
will hold the position of President of the Company and shall receive a
minimum annual base salary of $295,000 (current base salary is
$310,000). Mr. Wambolt will hold the position of Senior Vice President,
Director of Worldwide Sales and Service or will serve in such other
capacity to which he may be assigned and shall receive a minimum annual
base salary of $161,000 (current base salary is $177,000). Mr. Van Saun
will hold the position of Senior Vice President, General Manager,
Diagnostic Tools Division or will serve in such other capacity to which
he may be assigned and shall receive a minimum base salary of $153,000
(current base salary is $177,000). The base salary shall be reviewed at
least annually by the Board of Directors and may be adjusted upwards as
appropriate. Under the agreements, the Company may terminate Messrs.
Parzybok's, Winn's, Wambolt's or Van Saun's employment at any time.
However, if the termination is without cause, the Company must pay, for
the remaining term of the contract (minimum of one year), severance
equal to the average annual cash compensation for the three complete
fiscal years prior to the date of termination, and certain other
compensation reduced by any compensation from other employment received
beyond one year after termination. Messrs. Parzybok, Winn, Wambolt or
Van Saun must give 60 days notice to the Company if he chooses to
resign. The agreements contain non-competition provisions during the
period of payment of severance benefits. If terminated without cause on
July 29, 1994, the following maximum severance benefits would be
payable; cash compensation, Mr. Parzybok, $1,545,318; Mr. Winn,
$1,455,503; Mr. Wambolt, $733,961; Mr. Van Saun, $720,416; estimated
variable compensation, Mr. Parzybok, $52,500; Mr. Winn, $38,750; Mr.
Wambolt, $19,913; Mr. Van Saun, $19,913; contribution to the
supplemental retirement program, Mr. Parzybok, $73,500; Mr. Winn,
$65,100; Mr. Wambolt, $37,170; Mr. Van Saun, $37,170; immediate
exercisability of all stock options for the term of the agreement, and
the continuation of medical and life insurance benefits for the term of
the agreement.
The Company has entered into change of control agreements with Mr. Smith
and the other executive officers not covered by employment agreements.
The agreements are for one calendar year and are automatically renewed
each January 1 for an additional one-year term unless the Board gives 90
days notice prior to January 1 that the agreements will not be renewed.
The agreements provide that if there is a change of control as it is
defined in the agreement, and if the officer's employment is terminated
other than for cause, disability or retirement within 24 months after
the change of control, then certain compensation and benefits will be
paid. If there had been a change of control within 24 months and notice
of termination had been given on July 29, 1994, the following severance
benefits would be payable; full base salary for the minimum 90 day
period between the notice of termination and the termination date, Mr.
Smith, $37,500; a lump sum payment as severance pay equal to two times
annual cash compensation which is the average annual cash compensation
over the three year period prior to termination, Mr. Smith, $414,168;
contribution to the supplemental retirement program, Mr. Smith, $31,500;
immediate exercisability of all stock options for one year, and the
payment of any accrued but unpaid benefits or awards at the termination
date.
7. CERTAIN TRANSACTIONS
Mr. Tumminello is an executive officer of Philips Electronics North
America Corporation, a wholly owned subsidiary of Philips and Dr.
Bingham is the President of Philips Laboratories in the U.S. On May 26,
1993 the Company completed the acquisition of the test and measurement
business of Philips Electronics N.V. of the Netherlands (Philips) with
an effective date of May 1, 1993. Since 1987, the Company and Philips
had had a strategic marketing alliance pursuant to which Philips sold
the Company's products in Europe and other selected markets and the
Company sold Philips' products in the United States and other selected
markets.
The purchase price for the Philips test and measurement business was
$41.8 million consisting of $22.4 in cash and one million shares of the
Company's Common Stock. The Series A Convertible Preferred Stock that
Philips owned was converted to common shares at the rate stated in the
preferred stock agreement, or 538,144 shares of Common Stock. After the
transaction, Philips owned 1,538,144 shares of the Company's Common
Stock or approximately 19.5 percent of the shares outstanding. As part
of the acquisition, the Company entered into service agreements and
facilities leases with Philips related to the European operations. The
Company paid Philips 18,300,000 for such services and facilities lease
rent during fiscal 1994. In addition, the Company purchased $16,500,000
of component parts and finished goods from Philips during fiscal 1994.
The Company believes the terms of these agreements are as favorable as
could be obtained from other sources. The Company cannot predict the
amount of such transactions during the 1995 fiscal year.
On June 24, 1994, pursuant to the terms of the Stock Purchase Agreement
with Philips, the Company exercised its right of first refusal to
repurchase 150,000 shares of the Company's stock from Philips at a cost
of $30.53 per share or $4.6 million, which price was based upon the
average closing price for the ten consecutive trading days prior to the
receipt of the offer.
8. COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors ("the Committee")
is made up entirely of independent outside directors. The Committee is
responsible for establishing and administering the compensation policies
for the executive officers and senior management as well as all of the
general employee benefit plans.
The Committee has developed an executive compensation plan which is made
up of four major components which are described in more detail below:
base salary, annual variable compensation, a profit-sharing bonus and an
annual stock option program. The executive compensation program is
reviewed annually by the Committee.
The Committee has considered the impact of Section 162(m) of the
Internal Revenue Code, which limits to $1 million per year the
compensation expense deduction the Company may take with respect to each
of the executive officers named in the Summary Compensation Table. This
$1 million limitation excludes specifically defined performance based
compensation. The current stock option plan applicable to the executive
officers has been approved by the stockholders and its current terms,
without any amendment, are grandfathered as performance-based
compensation until the first annual meeting after December 31, 1996.
With the current level of base salary, the Committee does not see any
risk of exceeding this limitation. It will annually review this issue
to determine the risk of exceeding the $1 million limitation and will
evaluate the regulatory modifications required to qualify any applicable
plans as performance-based as then currently defined.
BASE SALARY
The Committee establishes a base salary structure for each executive
officer position which defines the minimum, mid-point and maximum salary
level and the appropriate percentage relationship between base salary
and targeted total cash compensation. The salary structures are
reviewed annually and each executive officer position is evaluated and
matched as closely as possible with comparable survey positions. The
Committee utilizes multiple compensation surveys, some of which are
focused only on electronics companies and others which are more broadly
based industrial companies, all of which compare the positions and
duties based upon comparably sized companies. The Committee believes
that base salary needs to be reasonably competitive so places the mid-
point of the salary range for each executive position at the median base
salary for similar positions as established through the evaluation of
the surveys. The individual executive officer's placement within the
salary range is dependent upon experience, ability and contribution to
the value of the Company.
The Chairman/CEO and the President/COO recommend to the Committee the
annual base salary adjustment for each of the executive officers based
upon their evaluation of the current job performance of each officer.
The Committee does its own evaluation of the performance of the
Chairman/CEO and the President/COO and makes the final decision as to
all executive officers' base salary adjustments.
The Committee reviewed Mr. Parzybok's base salary in May, 1993. Based
upon the salary survey information which indicated that Mr. Parzybok's
salary was below market and based upon his individual performance during
the prior year, the Committee favored a salary increase. Mr. Parzybok
requested that no salary increase be made in light of (1) the recent
employee reductions at the Company, (2) the fact that no profit-sharing
bonus or variable compensation was paid for the seven month transition
period of fiscal 1993 because of financial performance, and (3) the
Company's projected financial performance for fiscal 1994 (the decision
was made by the Board, based upon management's recommendation, to
maintain the Company's investment level in new product programs - at a
time of reduced revenues due to poor worldwide economic conditions).
The Committee acceded to his request to forego a salary increase for
fiscal 1994.
ANNUAL VARIABLE COMPENSATION
The Committee establishes a percentage of each executive officer's base
salary as an annual variable compensation target which is payable in
cash based upon performance to annual goals approved by the Committee.
The percentage is established through the evaluation of the compensation
surveys discussed above and varies by executive officer position from
40% to 60%. The Committee intentionally places a greater portion of the
executive officers' total compensation package at risk than is typical
of the surveyed companies so that the total cash compensation for the
executive officers will be above average if they achieve or exceed their
annual performance goals and below average if they miss them.
The performance goals for the Chairman of the Board/CEO, the
President/COO and the Vice President, Chief Financial Officer are based
100% on the achievement of corporate goals. The other executive
officers are measured 75% on the achievement of corporate goals and 25%
on goals for their functional area. Many of the performance goals are
quantitative (Net revenues, net income, earnings per share, revenue from
new products, etc.) and are objectively measurable. However, the
Committee believes that some of the more qualitative issues (people
development, development or completion of strategic initiatives, total
quality commitment focused on customer satisfaction, etc.) are also
important to the long term success of the Company and includes some
specific qualitative factors in the annual performance goals. Although
the measurement of such qualitative factors is inherently more
subjective, the Committee believes that these factors significantly
contribute to optimizing stockholder value over the longer term. The
actual payout of the annual variable compensation which is determined by
the Committee can vary from 0% to 200% based upon performance to the
established goals. Approximately 20 other senior managers of the Company
also participate in this program.
The fiscal 1994 performance goals were recommended by management and
approved by the Executive Committee prior to the beginning of the fiscal
year. The goals were established with earnings per share as one axis on
a corporate matrix and five other performance categories on the other
axis. The five other annual performance categories for fiscal 1994 were
new products, the Philips acquisition, Total Quality Commitment (TQC),
people development, and sales and distribution strategy. Each of these
categories had a number of a specific goals, some quantitative and
others more subjective. Each of the five categories was equally
weighted and the composite score used on the axis was the simple average
score of the five major categories as evaluated and scored by this
Committee. The Company achieved a score of 80% on the corporate matrix.
Mr. Parzybok's annual variable compensation target is 60% of base salary
and, as noted above, his variable compensation is based 100% on the
achievement of corporate goals. Since the Company achieved a score of
80% on the corporate matrix, he received a variable compensation payout
of $149,760 which was 48% of his fiscal 1994 base salary.
PROFIT-SHARING BONUS
The profit-sharing bonus plan provides for semi-annual cash payments to
all U.S. and certain foreign employees (depending on local compensation
policies) based upon 14% of the adjusted pretax earnings of the U.S.
operations and the foreign subsidiaries included in the plan, computed
without reduction for certain employee benefit plans. If after-tax
earnings fall below 6% of revenues, payment of the profit sharing bonus
is at management's discretion. Each employee's share of the profit-
sharing bonus is based upon the percentage relationship of the
employee's base earnings to the total base earnings of all the employees
included in the plan. Mr. Parzybok received $6,142 pursuant to this plan
which paid $1,295,241 to Fluke employees in fiscal 1994.
STOCK OPTION PLAN
Each executive officer (as well as approximately 20 senior managers)
receives an annual grant of non-qualified stock options which is
approved by the Committee. The number of option shares granted for each
executive officer position is based upon a competitive target rate for
long term compensation established through the evaluation of the
competitive survey data discussed above. The competitive target rate is
based upon the projected value of the stock option over the life of the
grant with an assumed average annual stock appreciation rate of 11%.
The annual grants to executive officers are subject to a plus or minus
adjustment of as much as 50% based upon individual contribution to the
Company.
The annual stock option grant is the only long-term portion of the
executive officer compensation program. The Committee believes that it
is important that a significant element of each executive officer's
total compensation is directly related to stockholder value. The
executive officer should share with all stockholders in the reward for
actions which maximize stockholder value over the long term.
All of the non-qualified stock options have historically been issued at
100% of the fair market value of the stock on the date of grant and only
have value if the Company's stock price increases. For the last five
annual grants, the shares have been exercisable 40% after one year of
grant, an additional 30% after three years and the final 30% becomes
exercisable after five years from the grant date. Prior grants were
usually exercisable in total after one year. The term of the grants has
been ten years. As discussed above under "Retention Arrangements", all
stock options would become immediately exercisable upon a change of
control of the Company.
Stock options, over the last three years, have been granted to over 400
employees at the Company. There are approximately 1,100,000 stock
options currently outstanding at the Company. Other than the annual
grants to the executive officers and senior managers and Outside
Directors, the granting of stock options is not done according to any
fixed annual schedule although there are stock option grants typically
made to other key contributors at some time during the fiscal year. The
table above describes the stock option grant made to Mr. Parzybok in
fiscal 1994.
Respectfully submitted,
THE COMPENSATION COMMITTEE
Philip M. Condit, Chairman
John D. Durbin
Robert S. Miller, Jr.
<PAGE>
9. STOCK PERFORMANCE GRAPH
The following graph indicates the performance of the cumulative total
return to stockholders of the Company's Common Stock (including
reinvested dividends) during the previous five fiscal years in
comparison to the cumulative total return on the Standard & Poor's 500
Stock Index and the Standard & Poor's High Technology Composite Index
(1). In November 1992, the Board of Directors changed the Company's
fiscal year from one ending on the last Friday in September to one
ending on the last Friday in April. Fiscal 1994 was a full fiscal year
which ended on the last Friday in April. Fiscal 1993 was a seven-month
transition period ending on April 30, 1993. The previous fiscal years
19901992 were full years which ended on the last Friday in September.
Fluke S&P 500 S&P High
Date Corporation Index Tech Index
---- ----------- ----- ----------
9/29/89 $100.00 $100.00 $100.00
9/28/90 $ 46.02 $ 85.92 $ 90.76
9/27/91 $ 87.17 $105.44 $119.04
9/25/92 $118.63 $107.40 $132.20
4/30/93 $110.37 $119.82 $141.41
4/29/94 $119.48 $140.10 $148.94
(1) Assumes $100 invested on September 29, 1989 in Fluke Corporation
Common Stock, the Standard & Poor's 500 Stock Index and the Standard &
Poor's High Technology Composite Index and assumes the reinvestment of
all dividends as they were paid.
10. COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF
1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Directors and officers of the Company and persons who own more than ten
percent of the Company's Common Stock to file reports of ownership and
any subsequent changes in the ownership of the Company's Common Stock
with the Securities and Exchange Commission ("the SEC") and the American
Stock Exchange. The Company is required to disclose in this proxy
statement any late filings during the 1994 fiscal year (May 1, 1993 -
April 29, 1994). To the Company's knowledge, based on its review of the
copies of such reports furnished to the Company in accordance with SEC
regulations and on written representations that no other reports were
required, during fiscal 1994 all of these reports were timely filed with
the following exception. Mr. Van Saun was one month late in filing a
Form 4 reporting the sale of 2,000 shares of Company stock.
11. INDEPENDENT PUBLIC ACCOUNTANTS
The Company has selected Ernst & Young, independent public accountants,
to continue as the Company's auditors for fiscal 1995. Representatives
from Ernst & Young are expected to be present at the Annual Meeting of
Stockholders to make a statement if they so desire and to respond to
appropriate questions.
12. PROPOSALS OF STOCKHOLDERS
Under the Company's Bylaws, stockholders seeking to propose business to
be conducted at the Annual Meeting must give written notice to the
Corporate Secretary of the Company no later than the time that
stockholder Director nominations must be received. The notice must
contain certain information as to the proposal and the stockholder,
including the share ownership of the stockholder and any financial
interest in the proposal. Any proposal not made in compliance with the
Bylaws may be rejected by the Board. No stockholder proposals for the
Annual Meeting were received by the Company prior to July 6, 1994 which
was the last day that such proposals could be made.
Proposals of stockholders intended to be presented at the next Annual
Meeting of Stockholders must be received by the Company prior to April
15, 1995 for inclusion in the proxy statement and form of proxy.
13. OTHER BUSINESS
The Company knows of no other business to be presented at the meeting.
If any other business properly comes before the meeting, it is intended
that the shares represented by proxies will be voted with respect
thereto in accordance with the best judgment of the persons named in the
accompanying form of proxy.
Upon written request from any person solicited herein addressed to the
Corporate Secretary of the Company at its principal offices, the Company
will provide, at no cost, a copy of the Form 10-K Annual Report filed
with the Securities and Exchange Commission for the fiscal year ended
April 29, 1994.
By order of the Board of Directors
Douglas G. McKnight
Vice President, General Counsel
and Corporate Secretary
Everett, Washington
<PAGE>
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
FLUKE CORPORATION
For Annual Meeting of Stockholders September 14, 1994
The undersigned hereby appoints WILLIAM G. PARZYBOK, JR. AND GEORGE M.
WINN, and each of them with full power of substitution, proxies of the
undersigned at the Annual Meeting of Stockholders of Fluke Corporation,
to be held in the Auditorium at the corporate headquarters of Fluke
Corporation, 6920 Seaway Boulevard, Everett, Washington, on Wednesday,
September 14, 1994 at 5:00 p.m., and at all adjournments or
postponements thereof, and hereby authorizes them to represent and to
vote all of the shares of the undersigned as fully as the undersigned
could do if personally present. Said proxies are herein specifically
authorized to vote the shares of the Company which the undersigned is
entitled to vote in the election of Directors and to vote said shares
upon such other matters as may properly come before the Meeting or any
adjournment or postponement thereof, as the above named proxies shall
determine.
The shares represented by the Proxy will be voted or not voted on the
matters set forth in accordance with the specifications indicated
therein.
---------------
- - --
CONTINUED AND TO BE SIGNED ON REVERSE SIDE /SEE REVERSE
SIDE/
----------------
- - -
<PAGE>
----- Please mark
/ X / votes as in
- - ----- this example.
1. Election of Directors
Nominees: For three year terms expiring at the 1997 Annual Meeting:
John D. Durbin, John M. Fluke, Jr., N. Stewart Rogers, Stephen C.
Tumminello.
FOR WITHHELD
------- --------
/ / / /
------- --------
For: except vote withheld from the following nominee(s):
------
/ /
- - ------ -------------------------------
2. To transact such other business as may properly come before the
meeting and all adjournments or postponements thereof.
If no specification is made with respect hereto, such shares will be
voted FOR the election of these Directors and either for or against such
other matters as may properly come before the meeting or any adjournment
or postponement thereof, as the above named proxies may determine.
MARK HERE -----------
FOR ADDRESS / /
CHANGE AND / /
NOTE AT LEFT -----------
Sign exactly as name appears on your Signature: _________ Date_______
stock certificate. When signing as
attorney, executor, administrator,
guardian or corporate official, please Signature: _________ Date ______
give your full title as such.
