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 11, 1996,
at 5:00 p.m. for the following purposes:
A. Election of Directors. To elect one Director to serve a two-year
term expiring at the 1998 Annual Meeting of Stockholders and to elect
four Directors to serve three-year terms expiring at the 1999 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 8, 1996 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
July 18, 1996 Douglas G. McKnight
Everett, Washington Vice President, General Counsel
and Corporate Secretary
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 11, 1996, 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 July 19, 1996.
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, by telephone or by facsimile. 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 8, 1996, there
were outstanding 8,695,563 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 8, 1996:
Name and Address Amount and Nature Percent
Title of Class of Beneficial Owner of Beneficial Ownership of Class
$.25 Par Value Fluke Capital and 1,145,396 13.2
Common Stock Management Services Company
11400 S.E. 6th, Suite 230
Bellevue, Washington 98004
$.25 Par Value Philips Electronics N.V. 888,144 10.2
Common Stock P.O. Box 218
5600 MD Eindhoven
The Netherlands
$.25 Par Value ICM Asset Management, Inc. 664,960 7.6
Common Stock 601 W. Main Ave., Suite 600
Spokane, WA 99201
$.25 Par Value David L. Babson & Co., Inc. 550,720 6.3
Common Stock One Memorial Drive
Cambridge, MA 02142
The following tabulation sets forth, as of July 8, 1996, 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
Philip M. Condit 3,500 (1) -
John D. Durbin 4,518 (2) -
David L. Fluke 1,212,254 (3)(4) 13.4
John M. Fluke, Jr. 1,192,073 (4)(5) 13.2
David E. Katri 21,183 (6) .2
Robert S. Miller, Jr. 2,100 (7) -
Sally G. Narodick 281 (8) -
William H. Neukom 874 (9) -
William G. Parzybok, Jr. 111,854 (10) 1.2
N. Stewart Rogers 6,122 (3)(11) -
Richard W. Van Saun 24,653 (12) .3
Ronald R. Wambolt 14,243 (13) .2
James E. Warjone 3,605 (3) -
George M. Winn 61,334 (14) .7
All Directors & executive
officers as a group (20 persons) 1,582,169 (15) 17.5
(1) Includes 2,700 shares issuable pursuant to options within 60 days
after the record date of July 8, 1996.
(2) Includes 1,018 shares held in trust pursuant to the Deferred
Compensation Plan for Directors and 2,900 shares issuable pursuant to
options within 60 days after the record date of July 8, 1996.
(3) Includes 3,500 shares issuable pursuant to options within 60 days
after the record date of July 8, 1996.
(4) Includes 9,453 shares in trust for Mr. David Fluke, of which Mr.
John Fluke and Mrs. Virginia Fluke Gabelein are co-trustees; 9,452
shares in trust for Mr. John Fluke, of which Mr. David Fluke and Mrs.
Virginia Fluke Gabelein are co-trustees, 9,453 shares in trust for Mrs.
Virginia Fluke Gabelein, of which Mr. David Fluke and Mr. John Fluke are
co-trustees; and 1,145,396 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.
(5) Includes 7,900 shares issuable pursuant to options within 60 days
after the record date of July 8, 1996.
(6) Includes 18,890 shares issuable pursuant to options within 60 days
after the record date of July 8, 1996.
(7) Includes 1,100 shares issuable pursuant to options within 60 days
after the record date of July 8, 1996.
(8) Includes 281 shares held in trust pursuant to the Deferred
Compensation Plan for Directors.
(9) Includes 874 shares held in trust pursuant to the Deferred
Compensation Plan for Directors.
(10) Includes 121 shares held in trust pursuant to the Deferred
Compensation Plan for Directors, 200 shares held in a trust of which Mr.
Parzybok is a co-trustee and 108,100 shares issuable pursuant to options
within 60 days after the record date of July 8, 1996.
(11) 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.
(12) Includes 17,230 shares issuable pursuant to options within 60 days
after the record date of July 8, 1996.
(13) Includes 12,250 shares issuable pursuant to options within 60 days
after the record date of July 8, 1996.
(14) Includes 52,075 shares issuable pursuant to options within 60 days
after the record date of July 8, 1996.
(15) Includes 322,135 shares issuable pursuant to options within 60
days after the record date of July 8, 1996. For purposes of computing
the percent of class only, such shares are deemed outstanding. The
shares described in footnote (4) 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 and the Bylaws which provide that new Directors elected
to fill vacancies on the Board due to an increase in the size of the
Board may only serve until the next Annual Meeting at which Directors
are to be elected, five Directors out of a total of eleven 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. Effective January 15, 1996, the two Philips
designee Directors resigned from the Board. Philips indicated that it
was satisfied being a passive investor and no longer desired to exercise
its right under the acquisition documents to nominate Directors to the
Company's Board.
One Director will serve a two-year term expiring at the 1998 Annual
Meeting and four Directors will serve three-year terms expiring at the
1999 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:
For a two-year term expiring at the 1998 Annual Meeting:
SALLY G. NARODICK
Ms. Narodick, age 51, has been a Director of the Company since February,
1996. She has been Chairman of the Board and Chief Executive Officer of
Edmark Corporation since 1989. Ms. Narodick serves on the Audit and
Finance Committees of the Board. She is also a Director of Edmark
Corporation, PENWEST, Ltd. and Washington Energy Co.
Four Directors will serve three-year terms expiring at the 1999 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:
For three year terms expiring at the 1999 Annual Meeting:
PHILIP M. CONDIT
Mr. Condit, age 54, has been a Director of the Company since 1987. He
has been Chief Executive Officer since 1996 and 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 Compensation, Executive 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 48, 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 Compensation and
Nominating Committees of the Board. He is the brother of John M. Fluke,
Jr., a Director of the Company.
ROBERT S. MILLER, JR.
Mr. Miller, age 54, has been a Director of the Company since 1993. He
currently is the Chairman of the Board of Morrison Knudsen Corporation,
a position he has held since April, 1995. 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, Executive, and
Nominating Committees of the Board. He is also a Director of Coleman
Company, Federal-Mogul Corporation, MK Rail Corporation, Morrison
Knudsen Corporation, Pope & Talbot and Symantec.
WILLIAM H. NEUKOM
Mr. Neukom, age 54, has been a Director of the Company since January,
1995. He has been Senior Vice President, Law & Corporate Affairs of
Microsoft Corporation since 1994. He previously served as Vice
President, Law & Corporate Affairs of Microsoft Corporation since 1985.
Mr. Neukom serves on the Audit and Finance Committees of the Board.
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 3, 1996, which was
the last day that such nominations could be made.
The Directors whose terms expire at the 1997 Annual Meeting are as
follows:
JOHN D. DURBIN
Mr. Durbin, age 61, has been a Director of the Company since 1990. He
has been Managing Partner of John Durbin & Associates since 1971. He
also served as the Chairman and President of Hostar International Inc.
from 1988 until his retirement in 1995. Mr. Durbin serves on the
Compensation and Nominating Committees of the Board. He is also a
Director of Puget Sound Power and Light Company.
JOHN M. FLUKE, JR.
Mr. John Fluke, age 53, 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 Compensation 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 66, 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 served as Senior Vice President of Univar Corporation from
1971 until his retirement in 1991. Mr. Rogers serves on the Audit,
Executive, and Finance Committees of the Board. He is also a Director
of PENWEST, Ltd., U.S. Bancorporation, Univar Corporation and VWR
Scientific Products Corp.
The Directors whose terms expire at the 1998 Annual Meeting are as
follows:
WILLIAM G. PARZYBOK, JR.
Mr. Parzybok, age 54, 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 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 53, has been a Director of the Company since 1987. He
is Chairman and General Partner of Port Blakely Tree Farms, L.P., a
position he has held since 1980. He serves on the Audit, Executive and
Finance Committees of the Board.
GEORGE M. WINN
Mr. Winn, age 52, 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.
4. Board Structure
During the fiscal year ended April 26, 1996 (fiscal 1996), there were
four meetings of the Board of Directors. Each of the incumbent
Directors 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 Audit Committee, a
Compensation Committee, an Executive Committee, a Finance Committee and
a Nominating Committee.
The Audit Committee consists of four non-employee Directors, Ms.
Narodick and Messrs. Neukom, Rogers 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 1996.
The Compensation Committee consists of five non-employee Directors,
Messrs. Condit, Durbin, David Fluke, John Fluke 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 1996.
The Executive Committee, consisting of Messrs. Condit, Miller, Parzybok,
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 1996.
The Finance Committee consists of four non-employee Directors, Ms.
Narodick and Messrs. Neukom, Rogers and Warjone. 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 1996.
The Nominating Committee consists of five non-employee Directors,
Messrs. Condit, Durbin, David Fluke, John Fluke and Miller. 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 three times during fiscal 1996.
5. Compensation of Directors
The Company pays each non-employee Director an annual fee of $16,000
plus $1,000 for each Board meeting attended. Non-employee Directors
receive a fee of $850 for each Executive Committee meeting attended and
$800 for attendance at all other Committee meetings. Employee Directors
receive no annual or Committee meeting fees but do receive $1000 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 90 day Treasury bill rate in effect at the
beginning of the Plan year.
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 fee 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 500 shares at $39.9375 per share in fiscal 1996.
6. Compensation of Executive Officers
The individuals named in the following table were the Company's five
most highly compensated executive officers during the fiscal year ended
April 26, 1996.
<TABLE>
Summary Compensation Table
<CAPTION>
Annual Compensation Long-Term Compensation
Other Securities
Annual Under All Other
Compen- Lying Compen-
Name and Year Salary Bonus sation Options sation
Principal Position ____ ($) ($)<F1> ($)<F2> (#) ($)<F3>
<S> <C> <C> <C> <C> <C> <C>
William G. Parzybok, Jr. 1996 $390,000 $312,704 -- 30,000 $86,400
Chairman of the Board 1995 344,154 273,425 -- 23,000 94,700
Chief Executive Officer 1994 310,800 155,902 -- 31,500 84,500
and Director
George M. Winn 1996 322,005 218,090 -- 20,000 72,121
President, Chief 1995 307,693 203,497 -- 20,000 84,801
Operating Officer 1994 293,872 123,810 -- 20,500 75,100
and Director
Richard W. Van Saun 1996 184,038 99,686 -- 7,000 39,148
Senior Vice President 1995 175,948 100,669 -- 7,000 37,676
General Manager, 1994 167,865 58,789 -- 7,200 34,500
Service Tools Division
Ronald R. Wambolt 1996 184,038 99,686 -- 7,000 39,148
Senior Vice President 1995 175,948 100,171 -- 7,000 37,676
Worldwide Marketing, 1994 168,014 62,693 -- 7,200 34,500
Sales & Service
David E. Katri 1996 160,014 92,344 -- 8,000 34,103
Vice President, 1995 148,353 75,951 -- 6,000 32,002
Corporate Marketing 1994 138,118 47,953 -- 6,000 28,500
<FN>
<F1> 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 pre-tax 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.
<F2> Does not include perquisites which total the lesser of $50,000 or
10% of the total of annual salary and bonus.
<F3> Includes an annual accrual of 21% (20% in fiscal 1994) 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). This column also
includes the Company's matching contributions to the individual's 401(k)
account and Directors fees. For fiscal 1996, the contribution to the
Supplemental Retirement Income Plan for each of the individuals listed
in the table were as follows: Mr. Parzybok, $81,900; Mr. Winn, $67,621;
Mr. Van Saun, $38,648; Mr. Wambolt, $38,648; and Mr. Katri, $33,603.
Each of the individuals listed in the table received a matching
contribution of $500 to their 401(k) account in fiscal 1996 and Messrs.
Parzybok and Winn each received $4,000 in Director's fees.
</TABLE>
Option Grants in the Last Fiscal Year
<TABLE>
<CAPTION>
Number of
Securities Percentage of
Underlying Total Options Grant Date
Options Granted Exercise of Present
Granted to Employees Base Price Expiration Value
(#) <F1> in Fiscal Year ($/Sh) Date ($)<F2>
<S> <C> <C> <C> <C> <C>
William G. Parzybok, Jr. 30,000 10.7% $38.8125 4/25/06 $468,600
George M. Winn 20,000 7.1% $38.8125 4/25/06 312,400
Richard W. Van Saun 7,000 2.5% $38.8125 4/25/06 109,340
Ronald R. Wambolt 7,000 2.5% $38.8125 4/25/06 109,340
David E. Katri 8,000 2.8% $38.8125 4/25/06 124,960
<FN>
<F1> The options are granted at 100% of the market value on the date of
grant and are exercisable 40% after one year, an additional 30% after
three years and the final 30% after five years.
<F2> Valued using the Black-Scholes valuation method with the following
assumptions: volatility: 20%; term of the option: 10 years; rate of
annual dividend increase: 5%; and risk-free rate: 7%.
</TABLE>
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values:
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Value Options at Fiscal in-the-money Options
Acquired on Realized Year-End (#) at Fiscal Year-End($) <F1>
Name Exercise(#) ($) Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
William G. Parzybok, Jr. 0 0 105,100 83,400 $1,588,600 $516,994
George M. Winn 37,325 $887,522 52,075 64,100 676,302 405,038
Richard W. Van Saun 14,800 288,425 17,230 23,170 149,486 146,271
Ronald R. Wambolt 38,280 793,099 12,250 23,170 171,966 146,271
David E. Katri 0 0 18,890 20,210 245,149 104,582
<FN>
<F1> This amount represents the aggregate market value at fiscal year end (April 26, 1996)
based upon the closing price of the Company's stock on the New York Stock Exchange on that
date of $38.75 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.
Years of Credited Service
Highest Five Year
Average Cash
Compensation 10 Years 15 Years 20 Years 25 Years 30 Years
$125,000 $14,221 $21,332 $28,443 $35,553 $42,664
$150,000 17,555 26,332 35,109 43,886 52,664
$175,000 20,888 31,332 41,776 52,220 62,664
$200,000 24,221 36,332 48,443 60,553 72,664
$225,000 27,555 41,332 55,109 68,886 82,664
$250,000 29,607 44,411 59,215 74,018 88,822
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 increased by 1% (from 20% to 21%) 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: Mr. Parzybok,
5 years; Mr. Winn, 27 years; Mr. Van Saun, 26 years; Mr. Wambolt, 15
years; and Mr. Katri, 19 years.
Retention Arrangements
The Company has employment agreements with Messrs. Parzybok, Winn, Van
Saun and Wambolt which are cancelable by the Board upon three-years
notice. During the term of the agreement each will hold their current
executive officer position (Messrs. Van Saun and Wambolt may be assigned
to serve in another capacity) and will receive the following base salary
(the current base salary as of the record date): Mr. Parzybok,
$420,000; Mr. Winn, $322,000; Mr. Van Saun, $192,000; and Mr. Wambolt,
$184,000. Such annual base salary may be reduced but only in an amount
not to exceed the average percentage reduction that is applied to all
the Company's other executive officers and in no case shall be reduced
below the following base salary: Mr. Parzybok, $250,000; Mr. Winn,
$246,000; Mr. Van Saun, $128,000; and Mr. Wambolt, $134,000. The base
salary shall be reviewed at least annually by the Board of Directors and
may be adjusted upwards as appropriate.
Messrs. Parzybok, Winn, Van Saun and Wambolt must give 60 days notice to
the Company in the case of a voluntary resignation. Upon voluntary
resignation the following benefits, if applicable, will be provided to
Messrs. Parzybok and Winn: status as an employee will be maintained for
a maximum of 18 months if such bridging period allows him to qualify for
early or normal retirement under the Company's pension plan; if he
qualifies for early or normal retirement under the Company's pension
plan (including the bridging period if applicable), health and dental
coverage will be provided for he and his spouse until age 65 or until
Medicare-eligible, whichever comes first; and he will be given the
choice of having all outstanding stock options (i) become immediately
exercisable and have a term of one year in which to exercise such
options, or (ii) remain subject to all of the original terms of the
stock option agreements including the expiration term of the option and
any exercisability limitations.
Under the agreements, the Company may terminate Messrs. Parzybok's,
Winn's, Van Saun's or Wambolt'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. The agreements contain non-competition provisions during
the period of payment of severance benefits. If terminated without
cause on July 8, 1996, the following maximum severance benefits would be
payable; cash compensation, Mr. Parzybok, $1,798,185; Mr. Winn,
$1,480,167; Mr. Van Saun, $786,995; Mr. Wambolt, $790,550; estimated
variable compensation, Mr. Parzybok, $50,400; Mr. Winn, $32,200; Mr. Van
Saun, $17,280; Mr. Wambolt, $16,560; contribution to the supplemental
retirement program, Mr. Parzybok, $88,200; Mr. Winn, $67,620; Mr. Van
Saun, $40,320; Mr. Wambolt, $38,640; 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. Katri
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 8, 1996, 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.
Katri, $44,000; 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. Katri, $441,822;
contribution to the supplemental retirement program, Mr. Katri, $36,960;
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
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. 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 $8.9 million for such services and facilities lease rent
during fiscal 1996. In addition, the Company purchased $18.5 million of
component parts and finished goods from Philips during fiscal 1996. 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 1997 fiscal year.
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 mean 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 the compensation survey data and their evaluation of the current
job performance of each officer. The Executive Committee of the Board
does the performance evaluation of the Chairman/CEO and the
President/COO which is communicated to the Committee. The Committee,
based upon the compensation survey data and the performance evaluations,
makes the final decision as to all executive officers' base salary
adjustments.
The Committee reviewed Mr. Parzybok's base salary in June, 1995. As in
1994, the compensation survey information indicated that Mr. Parzybok's
base salary was below the market mean. After reviewing the competitive
base salary data and the Executive Committee's performance evaluation of
Mr. Parzybok, the Committee approved a fiscal 1996 salary increase for
Mr. Parzybok of $40,000. This adjustment increased his base salary to
$390,000, which is approximately the survey mean base salary for his
position.
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 (earnings per share, revenue from new products, etc.) and
are objectively measurable. However, the Committee believes that some
of the more qualitative issues (people and organizational 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 25 other senior managers of the Company also
participate in this program.
The fiscal 1996 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 1996 were
quality and customer satisfaction, sales and distribution strategy, new
products, people and organizational development, and information and
communication systems. Each of these categories had a number of
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
125% 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
125% on the corporate matrix, he received a variable compensation payout
of $292,500 which was 75% of his fiscal 1996 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 pre-tax 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 $20,204 pursuant to this
plan which paid approximately $3,398,000 to Fluke employees in fiscal
1996.
Stock Option Plan
Each executive officer (as well as approximately 25 senior managers)
receives an annual grant of non-qualified stock options which is
approved by the Committee. The number of option shares granted for the
long-term compensation of each executive officer position is based upon
a competitive target range of shares established through the evaluation
of the competitive survey data discussed above. The annual grants to
executive officers are also 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. The first two option
grants under this program in 1988 and 1989 were exercisable in total
after one year. Since 1989, the annual stock option grants have been
exercisable 40% after one year from the date of grant, an additional 30%
after three years and the final 30% becomes exercisable after five years
from the grant date. All of the grants have had a term of ten years.
As discussed above under "Retention Arrangements", all stock options
would become immediately exercisable upon a change of control of the
Company.
Other than the annual grants to the executive officers, 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 Company personnel at some time during
the fiscal year. The table above describes the stock option grant made
to Mr. Parzybok in fiscal 1996.
Respectfully submitted,
THE COMPENSATION COMMITTEE
Philip M. Condit, Chairman
John D. Durbin
David L. Fluke
John M. Fluke, Jr.
Robert S. Miller, Jr.
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, 1995, and 1996 were
full fiscal years which ended on the last Friday in April. Fiscal 1993
was a seven-month transition period ending on April 30, 1993. Fiscal
1992 was a full fiscal year which ended on the last Friday in September.
Insert Graph Here for Printer
Add below data for EDGAR filing but not for printed proxy:
Fluke S&P 500 S&P High
Date Corporation Index Tech Index
9/27/91 $100.00 $100.00 $100.00
9/25/92 136.10 111.05 101.86
4/30/93 126.63 118.79 113.64
4/29/94 137.08 125.11 132.87
4/28/95 199.68 146.96 189.33
4/26/96 194.67 191.36 252.59
(1) Assumes $100 invested on September 27, 1991 in Fluke Corporation
Common Stock, the Standard & Poor's 500 Stock Index and the Standard &
Poor's High Technology Composite Index and 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 New York
Stock Exchange. The Company is required to disclose in this proxy
statement any late filings during the 1996 fiscal year (April 29, 1995 -
April 26, 1996). 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 1996 all of these reports were timely filed
except Fluke Capital and Management Services Company ("FCM"), Mr. David
Fluke and Mr. John Fluke were 29 days late in filing a Form 4 involving
the sale of 50,000 shares by FCM in August, 1995 and Philips Electronic
N.V. was 17 days late in filing a Form 4 involving the sale of 250,000
shares in June, 1995.
11. Independent Public Accountants
The Company has selected Ernst & Young, independent public accountants,
to continue as the Company's auditors for fiscal 1997. 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 3, 1996 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 March
22, 1997 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 26, 1996.
By order of the Board of Directors
Douglas G. McKnight
Vice President, General Counsel
and Corporate Secretary
Everett, Washington
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
FLUKE CORPORATION
For the Annual Meeting of Stockholders - September 11, 1996
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 11, 1996 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 and any
adjournment or postponement thereof, as the above named proxies shall
determine.
The shares represented by this 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
Please mark
vote as in
this example
1. Election of Directors 2.To transact such other business
as may properly come before the
meeting and all adjournments or
postponements thereof.
Nominees:
For a two year term expiring at If no specification is made with
the 1998 Annual Meeting: respect hereto, such shares will
be voted FOR the election of
Sally G. Narodick these Directors, and either for
or against such other matters as
may properly come before the
For three year terms expiring at meeting or any adjournment or
the 1999 Annual Meeting: postponement thereof, as the
above named proxies may
Philip M. Condit determine.
David L. Fluke
Robert S. Miller, Jr. MARK HERE FOR ADDRESS
William H. Neukom CHANGE AND NOTE AT LEFT
FOR WITHHELD
Sign exactly as the name appears
on your stock certificate. When
signing as attorney, executor,
For, except vote is withheld for administrator, guardian or
the following nominee(s): corporate official, please give
your full title as such.
Signature:
Date:
Signature:
Date:
