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 10, 1997,
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 year 2000 Annual Meeting of Stockholders.
B. Approval of a Stock Incentive Plan. To approve the 1998 Stock
Incentive Plan as described in the accompanying Proxy Statement.
C. Other Business. To transact such other business as may properly come
before the meeting, and all adjournments or postponements thereof.
The Board of Directors has fixed the close of business on July 7, 1997
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 postage prepaid envelope.
By order of the Board of Directors
July 17, 1997 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 10, 1997, 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 18, 1997.
Proxies are solicited so that each stockholder may have an opportunity
to vote on all matters that 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 on a returned proxy, 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.
The Company will reimburse such brokerage firms, custodians, nominees
and fiduciaries for reasonable out-of-pocket expenses incurred by them.
1.Voting Securities and Record Date
The Company has only one class of stock outstanding, $.25 par value
Common Stock. Stockholders are entitled to vote at the Annual Meeting
if they owned Company stock on the record date. On the record date,
July 7, 1997, there were outstanding 9,117,229 shares.
In the election of Directors, each stockholder has the right to cumulate
votes and cast as many votes as are equal to the number of Directors to
be elected at this meeting (four), multiplied by the number of shares
owned by the stockholder. These votes may be cast all for one candidate
or be distributed among as many candidates as the stockholder sees fit.
If you wish to cumulate votes, rather than vote your shares equally for
all of the candidates, write the number of votes you wish to cast for
each candidate next to that person's name on the proxy card. On all
other matters which come before the meeting, each share is entitled to
one vote.
2.Security Ownership of Certain Beneficial Owners and Management
The following persons are known to own beneficially more than 5% of the
outstanding voting securities of the Company as of July 7, 1997:
Name and Address Amount and Nature Percent
Title of Class of Beneficial Owner of Beneficial Ownership of Class
$.25 Par Value Fluke Capital and 956,396 10.5
Common Stock Management Services Company
11400 S.E. 6th, Suite 230
Bellevue, Washington 98004
$.25 Par Value ICM Asset Management, Inc. 776,453 8.5
Common Stock 601 W. Main Ave., Suite 600
Spokane, WA 99201
$.25 Par Value Oppenheimer & Co., Inc. 492,522 5.4
Common Stock Two World Trade Center, 34th Floor
New York, NY 10048
$.25 Par Value David L. Babson & Co., Inc. 478,222 5.2
Common Stock One Memorial Drive
Cambridge, MA 02142
The following tabulation sets forth, as of July 7, 1997, the number 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:
Number of Shares Percent of
Beneficially Owned Class
Philip M. Condit 4,099 (1) -
John D. Durbin 5,511 (2) -
David L. Fluke 1,023,754 (3)(4) 10.8
John M. Fluke, Jr. 1,003,573 (4) 10.6
David E. Katri 30,974 (5) .3
Robert S. Miller, Jr. 2,780 (6) -
Sally G. Narodick 1,871 (7) -
William H. Neukom 1,976 (8) -
William G. Parzybok, Jr. 146,237 (9) 1.5
N. Stewart Rogers 6,055 (3)(10) -
Richard W. Van Saun 19,612 (11) .2
Ronald R. Wambolt 22,156 (12) .2
James E. Warjone 4,105 (3) -
George M. Winn 51,854 (13) .5
All Directors & executive
officers as a group (24 persons) 1,463,781 (14) 15.4
(1) Includes 99 shares credited to his account pursuant to the Deferred
Compensation Plan for Directors and 3,200 shares issuable pursuant to
options within 60 days after the record date of July 7, 1997.
(2) Includes 1,511 shares credited to his account pursuant to the
Deferred Compensation Plan for Directors and 3,400 shares issuable
pursuant to options within 60 days after the record date of July 7,
1997.
(3) Includes 4,000 shares issuable pursuant to options within 60 days
after the record date of July 7, 1997.
(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 956,396 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 2,379 shares credited to his account pursuant to the
Executive Deferred Compensation Plan, 22 shares credited to his account
pursuant to the Deferred Compensation Plan for Directors, 280 shares
held by an Individual Retirement Account (IRA), 184 shares held by his
spouse's IRA and 25,690 shares issuable pursuant to options within 60
days after the record date of July 7, 1997.
(6) Includes 180 shares credited to his account pursuant to the
Deferred Compensation Plan for Directors and 1,600 shares issuable
pursuant to options within 60 days after the record date of July 7,
1997.
(7) Includes 871 shares credited to her account pursuant to the
Deferred Compensation Plan for Directors and 1000 shares held by an IRA.
(8) Includes 1,476 shares credited to his account pursuant to the
Deferred Compensation Plan for Directors and 500 shares issuable
pursuant to options within 60 days after the record date of July 7,
1997.
(9) Includes 4,547 shares credited to his account pursuant to the
Executive Deferred Compensation Plan, 352 shares credited to his
account pursuant to the Deferred Compensation Plan for Directors, 200
shares held in a trust of which Mr. Parzybok is a co-trustee and 135,250
shares issuable pursuant to options within 60 days after the record date
of July 7, 1997.
(10) Includes 718 shares in trusts for which Mr. Rogers is trustee and
as to which he has voting and investment power.
(11) Includes 15,190 shares issuable pursuant to options within 60 days
after the record date of July 7, 1997.
(12) Includes 19,910 shares issuable pursuant to options within 60 days
after the record date of July 7, 1997.
(13) Includes 49,625 shares issuable pursuant to options within 60 days
after the record date of July 7, 1997.
(14) Includes 377,225 shares issuable pursuant to options within 60
days after the record date of July 7, 1997. 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, four Directors out of a total of twelve Directors are
to be elected by the holders of the Common Stock at this Annual Meeting.
Four Directors will serve three-year terms expiring at the year 2000
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 62, has been a Director of the Company since 1990. He
has been a principal of Olympic Capital Partners since 1996 and 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 UTILX
Corp. and Puget Sound Energy Inc.
JOHN M. FLUKE, JR.
Mr. John Fluke, age 54, 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.
DAVID E. KATRI
Mr. Katri, age 47, became President, Chief Operating Officer of the
Company in April, 1997. He was Executive Vice President, Chief
Operating Officer from November, 1996 to April, 1997. He previously
served as Vice President, Corporate Marketing from 1995 to November,
1996; as a Vice President of the Company and General Manager of the
Verification Tools Division from 1992 to 1995; and as Vice President of
the Company and Group Manager of the Manufacturing/R&D Group from 1991
to 1992. Mr. Katri serves on the Executive Committee of the Board.
N. STEWART ROGERS
Mr. Rogers, age 67, 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 Royal Pakhoed N.V., U.S. Bancorporation and VWR Scientific Products
Corp.
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. The notice must contain certain information about
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 2, 1997, which was the last day
that such nominations could be made.
The Directors whose terms expire at the 1998 Annual Meeting are as
follows:
SALLY G. NARODICK
Ms. Narodick, age 52, has been a Director of the Company since February,
1996. She served as Chairman of the Board and Chief Executive Officer
of Edmark Corporation from 1989 until 1996 when Edmark Corporation was
acquired by IBM Corporation. She now is an Educational Technology
Consultant with the Consumer Division of IBM Corporation. Ms. Narodick
serves on the Audit and Finance Committees of the Board. She is also a
Director of PENWEST, Ltd. and Puget Sound Energy Inc.
WILLIAM G. PARZYBOK, JR.
Mr. Parzybok, age 55, 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 54, 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 53, has been a Director of the Company since 1982. He
previously served as President of the Company from 1982 until April,
1997, as Chief Operating Officer of the Company from 1982 until
November, 1996, and as Chief Executive Officer of the Company from 1987
to 1991. Mr. Winn serves on the Executive Committee of the Board.
The Directors whose terms expire at the 1999 Annual Meeting are as
follows:
PHILIP M. CONDIT
Mr. Condit, age 55, has been a Director of the Company since 1987. He
has served as Chairman of the Board of The Boeing Company since
February, 1997 and as Chief Executive Officer since 1996. He previously
served as President of The Boeing Company from 1992 until 1996, as
Executive Vice President of Boeing Commercial Airplane Group from 1986
until 1992 and held the additional position of General Manager, 777
Division from 1990 until 1992. Mr. Condit serves on the Compensation,
Executive and Nominating Committees of the Board. He is also a Director
of Nordstrom, Inc.
DAVID L. FLUKE
Mr. David Fluke, age 49, 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 55, has been a Director of the Company since 1993. He
is Vice Chairman of the Board of Morrison Knudsen Corp. and served as
Chairman of the Board of Morrison Knudsen Corp. from 1995 until 1996.
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, Inc., Federal-Mogul Corp., Morrison
Knudsen Corp., Pope & Talbot, Inc., Symantec Corporation, and Waste
Management, Inc.
WILLIAM H. NEUKOM
Mr. Neukom, age 55, has been a Director of the Company since 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.
4.Board Structure
During the fiscal year ended April 25, 1997 (fiscal 1997), there were
five 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 1997.
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;
reviews and approves all stock based programs and awards; and reviews
and approves all significant changes to employee benefit programs. The
Compensation Committee met three times during fiscal 1997.
The Executive Committee, consisting of Messrs. Condit, Katri, 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 four times during fiscal 1997.
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 one time during fiscal 1997.
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 did not meet during fiscal 1997.
5.Compensation of Directors
In fiscal 1997, the Company paid each non-employee Director an annual
retainer of $16,000 plus $1,000 for each Board meeting attended. Non-
employee Directors receive $850 for each Executive Committee meeting
attended and $800 for attendance at all other Committee meetings.
Employee Directors receive no annual retainer or Committee meeting fees
but do receive $1000 for each Board meeting attended. The Compensation
Committee annually reviews the Board of Director compensation. Based
upon survey information of comparably sized companies in the industry,
the Committee adjusts the Directors compensation, when appropriate, to
keep it competitive.
The annual retainer has been increased to $18,000 for fiscal 1998 with
one-third of this annual retainer to be paid in restricted stock (unless
the Director has elected to defer his annual retainer pursuant to the
Deferred Compensation Plan for Directors and elects to have such
deferral invested in Company stock). Any future increase in the annual
retainer, when established by the Compensation Committee, will also be
paid in restricted stock until half of the annual retainer is ultimately
paid in restricted stock. The Company's current stock incentive
programs do not allow the issuance of restricted stock to Directors.
The 1998 Stock Incentive Plan, which is described below in this Proxy
Statement, would allow the issuance of restricted stock to Directors.
Until the new plan is approved by the stockholders, the annual retainer
must continue to be paid in cash. As described below in the
Compensation Committee Report on Executive Compensation, the Board
adopted a stock ownership guideline for the Directors which is 3 to 5
times the annual retainer fee with a five year window in which to
achieve such guidelines.
The Directors may, prior to each fiscal year, elect to defer their
annual retainer and/or meeting fees pursuant to the Deferred
Compensation Plan for Directors. The Directors have two investment
alternatives and may elect to defer all to one account or may split the
deferral between the two accounts. Such deferrals may be credited
either to a Stock Account which is payable in Company stock or to a Cash
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 retainer 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 $36.25 per share in fiscal 1997.
6.Compensation of Executive Officers
The individuals named in the following table were the Company's five
most highly compensated executive officers during the fiscal year ended
April 25, 1997.
<TABLE>
Summary Compensation Table
<CAPTION>
Annual Compensation Long-Term Compensation
Other Securities
Annual Under- All Other
Compen- Lying Compen-
Name and Year Salary Bonus sation Options sation
Principal Position ____ ($) ($)<F1> ($)<F2> (#) ($)<F3>
<S> <C> <C> <C> <C> <C> <C>
William G. Parzybok, Jr. 1997 $415,394 $329,248 -- 80,000 $94,210
Chairman of the Board 1996 390,000 312,704 -- 30,000 86,400
Chief Executive Officer 1995 344,154 273,425 -- 23,000 94,700
and Director
George M. Winn 1997 322,002 213,994 -- 0 89,730
President and 1996 322,005 218,090 -- 20,000 72,121
Director 1995 307,693 203,497 -- 20,000 84,801
David E. Katri 1997 180,931 131,725 -- 50,000 38,970
Executive Vice President, 1996 160,014 92,344 -- 8,000 34,103
Chief Operating Officer 1995 148,353 75,951 -- 6,000 32,002
Richard W. Van Saun 1997 190,812 111,709 -- 27,500 41,330
Senior Vice President 1996 184,038 99,686 -- 7,000 39,148
Group Manager, 1995 175,948 100,669 -- 7,000 37,676
Industrial Group
Ronald R. Wambolt 1997 184,036 102,981 -- 0 48,850
Senior Vice President 1996 184,038 99,686 -- 7,000 39,148
Worldwide Marketing, 1995 175,948 100,171 -- 7,000 37,676
Sales & Service
<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
Canada employees based upon pre-tax earnings of the U.S. and Canadian operations. Each
employee's share of the profit sharing bonus is based upon the percentage relationship of
the employee's base earnings paid during the bonus period to the total base earnings paid
during the bonus period 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% 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 1997, the contribution to the Supplemental Retirement Income
Plan for each of the individuals listed in the table were as follows: Mr. Parzybok,
$88,200; Mr. Winn, $83,720; Mr. Katri, $36,960; Mr. Van Saun, $40,320; and Mr. Wambolt,
$47,840. Each of the individuals listed in the table received a matching contribution of
$1,010 to their 401(k) account in fiscal 1997 and Messrs. Parzybok and Winn each received
$5,000 and Mr. Katri received $1,000 in Director's fees.
</FN>
</TABLE>
Option Grants in the Last Fiscal Year
<TABLE>
<CAPTION>
Number of Percentage of Potential Realizable Value at
Securities Total Options Assumed Annual Rates
Underlying Granted Exercise of of Stock Price Appreciation
Options to Employees Base Price Expiration for Option Term<F1>
Name Granted (#) in Fiscal Year ($/Sh) Date 5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C>
William G. Parzybok, Jr. 50,000 <F2> 10.2% $38.4375 4/29/01 $ 0 $ 0
30,000 <F3> 6.1% $45.1875 4/24/07 860,790 2,181,420
George M. Winn 0 - - - - -
David E. Katri 30,000 <F2> 6.1% $38.4375 4/29/01 0 0
20,000 <F3> 4.1% $45.1875 4/24/07 573,860 1,454,280
Richard W. Van Saun 20,000 <F2> 4.1% $38.4375 4/29/01 0 0
7,500 <F3> 1.5% $45.1875 4/24/07 215,198 545,355
Ronald R. Wambolt 0 - - - - -
<FN>
<F1>Potential realizable values are based on assumed compound annual appreciation rates specified
by the SEC. These increases are based on speculative assumptions and are not intended to forecast
possible future appreciation, if any, of the Company's stock price.
<F2>The options are granted at 100% of the market value on the date of grant and are 50%
exercisable after three years only if the stock price exceeds $66, an additional 25% if the stock
price exceeds $72, and the final 25% if the stock price exceeds $78.
<F3>The options are granted at 100% of the market value on the date of grant and are exercisable
40% after one year, an additional 30% after three years and the final 30% after five years.
</TABLE>
<TABLE>
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values
<CAPTION>
Number of Securities Value of Unexercised
Shares Value Underlying Unexercised in-the-Money Options
Acquired on Realized Options at Fiscal Year-End (#) at Fiscal Year-End($)<F1>
Name Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
William G. Parzybok, Jr. 0 0 128,800 139,700 $2,665,138 $1,069,644
George M. Winn 0 0 68,475 47,700 1,356,392 606,075
David E. Katri 0 0 23,890 65,210 438,368 394,301
Richard W. Van Saun 2,700 $60,750 20,030 45,170 282,467 358,083
Ronald R. Wambolt 0 0 17,750 17,670 338,884 211,052
<FN>
<F1>This amount represents the difference between 1) the fair market value of the securities
underlying the options at fiscal year end (April 25, 1997) based upon the closing price of the
Company's stock on the New York Stock Exchange on that date of $45.625 per share and 2) the
aggregate exercise price of those unexercised options which have an exercise price below the
fiscal year end market price.
</FN>
</TABLE>
<TABLE>
Pension Plan With Supplemental Equalization
<CAPTION>
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
<S> <C> <C> <C> <C> <C>
$125,000 $14,178 $21,266 $28,355 $35,444 $42,533
$150,000 17,511 26,266 35,022 43,777 52,533
$175,000 20,844 31,266 41,688 52,111 62,533
$200,000 24,178 36,266 48,355 60,444 72,533
$225,000 27,511 41,266 55,022 68,777 82,533
$250,000 30,394 45,591 60,788 75,985 91,182
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 $160,000. 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, 6 years; Mr. Winn,
28 years; Mr. Katri, 20 years; Mr. Van Saun, 27 years; and Mr. Wambolt, 16 years.
</TABLE>
Retention Arrangements
The Company has employment agreements with Messrs. Parzybok, Winn, and
Van Saun which are cancelable by the Board upon three-years notice.
During the term of the agreement each will hold his current executive
officer position (Mr. Van Saun 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, $450,000; Mr. Winn,
$322,000; and Mr. Van Saun, $205,000. 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; and Mr. Van Saun, $128,000. The
base salary shall be reviewed at least annually by the Board of
Directors and may be adjusted upwards as appropriate.
Messrs. Parzybok, Winn, and Van Saun 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 him and his spouse until age 65 or until
Medicare-eligible, whichever comes first; and, for Mr. Winn only, 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 exercisability and
expiration terms of the option.
Under the agreements, the Company may terminate Messrs. Parzybok's,
Winn'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. The agreements contain non-competition provisions during
the period of payment of severance benefits. If terminated without
cause on July 7, 1997, the following maximum severance benefits would be
payable; cash compensation, Mr. Parzybok, $2,072,526; Mr. Winn,
$1,594,881; Mr. Van Saun, $862,862; estimated variable compensation, Mr.
Parzybok, $54,000; Mr. Winn, $32,200; Mr. Van Saun, $18,450;
contribution to the supplemental retirement program, Mr. Parzybok,
$94,500; Mr. Winn, $67,620; Mr. Van Saun, $43,050; 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 7, 1997, the following severance
benefits would be payable to Mr. Katri; full base salary for the minimum
90 day period between the notice of termination and the termination
date, $60,000; a lump sum payment as severance pay equal to three times
annual cash compensation which is the average annual cash compensation
over the three year period prior to termination, $789,318; contribution
to the supplemental retirement program, $50,400; 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. 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.
During fiscal 1997, the Committee established stock ownership guidelines
for the Directors, officers and senior managers of the Company. The
Committee wanted to emphasize the alignment with the interests of the
stockholders and the importance of having a significant direct financial
interest in the performance of the Company's stock. The guidelines
establish target ranges. The target ranges are as follows: Directors -
3 to 5 times the Board's annual retainer; CEO - 3 to 5 times base
salary; COO - 2 to 3 times base salary; vice presidents - 1 to 2 times
base salary; and senior managers - .5 to 1 times base salary with a five
year window in which to achieve such targets.
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, were grandfathered as performance-based
compensation until the first annual meeting after December 31, 1996.
The Board has adopted a new 1998 Stock Incentive Plan, described below,
which is being presented to the stockholders for approval. The proposed
Plan includes the appropriate limitations which would qualify future
stock options as performance-based compensation. 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, if deemed appropriate.
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 include more
broadly based industrial companies. All of the surveys 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, 1996. After
reviewing the competitive base salary data and the Executive Committee's
performance evaluation of Mr. Parzybok, the Committee approved a fiscal
1997 salary increase for Mr. Parzybok of $30,000. This adjustment
increased his base salary to $420,000, 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 of base salary 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% of the targeted payout based upon performance
to the established goals. Approximately 25 other senior managers of the
Company also participate in this program.
The fiscal 1997 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 four other performance categories on the other
axis. The four other annual performance categories for fiscal 1997
were: 1) new products, 2) quality and customer satisfaction, 3)
marketing, sales and distribution strategy, and 4) people and
organizational development. Each of these categories had a number of
specific goals, some quantitative and others more subjective. Each of
the four categories was equally weighted and the composite score used on
the axis was the simple average score of the four major categories as
evaluated and scored by this Committee. The Company achieved a score of
120% 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
120% on the corporate matrix, he received a variable compensation payout
of $302,410 which was 72% of his fiscal 1997 base salary.
Profit Sharing Bonus
The Profit Sharing Bonus Plan provides for semi-annual cash payments to
all employees in the U.S. and Canada based upon the pre-tax earnings of
the U.S. and Canadian operations. Each employee's share of the bonus is
based upon the percentage relationship of the employee's base earnings
paid during the bonus period to the total base earnings paid during the
bonus period of all the employees included in the plan. Mr. Parzybok
received $26,838 pursuant to this plan which paid approximately
$4,334,000 to Fluke employees in fiscal 1997.
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 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.
In fiscal 1997, the Compensation Committee made a supplemental stock
option grant to certain of the executive officers. The special grant
was intended to ensure the retention of these officers during the
significant executive leadership transition which would occur over the
next five years and would also create stretch performance goals that
would only reward significantly improving stockholder value. The
options would only be exercisable if both the vesting and performance
targets were achieved. The options have a three year vesting term and
50% of the options become exercisable when the stock price exceeds $66,
an additional 25% become exercisable when the stock price exceeds $72,
and the final 25% become exercisable when the stock price exceeds $78.
These options have a term of five years with an additional 90 days
within which the options may be exercised. These stock options would
become immediately exercisable upon a change of control of the Company
without regard to the achievement of the stock performance goals.
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, under 6. Compensation of Executive
Officers, describes the stock option grants made to Mr. Parzybok in
fiscal 1997.
Respectfully submitted,
THE COMPENSATION COMMITTEE
Philip M. Condit, Chairman
John D. Durbin
David L. Fluke
John M. Fluke, Jr.
Robert S. Miller, Jr.
8.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
<F1>. 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, 1996 and 1997
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.
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
9/25/92 $100.00 $100.00 $100.00
4/30/93 91.45 107.86 111.66
4/29/94 99.00 113.60 130.57
4/28/95 144.21 133.44 186.04
4/26/96 140.59 173.76 248.21
4/25/97 166.81 217.43 343.59
[FN]
<F1> Assumes $100 invested on September 25, 1992 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.
[/FN]
9.Section 16(a) Beneficial Ownership Reporting Compliance
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 1997 fiscal year (April 27, 1996 -
April 25, 1997). 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 1997 all of these reports were timely filed
except Mr. Katri was late in filing a Form 4 involving the accquisition
of 42 shares in February, 1997 and Mr. Rowan was late in filing a Form 4
involving the acquisition of 364 shares in December, 1996 and 383 shares
in February, 1997.
10.Proposal for Approval of the 1998 Stock Incentive Plan.
Management will present at the meeting a proposal to approve the
adoption of the 1998 Stock Incentive Plan (the "Plan") which was adopted
by the Board of Directors on June 17, 1997 and is recommended by the
Board of Directors for approval by the stockholders. The Plan would
authorize the Board, through its Compensation Committee, to issue stock
options, stock appreciation rights ("SARs"), restricted stock, or
performance awards to individuals whose ability and special efforts will
contribute materially to the success of the Company.
The Board of Directors considers this Plan to be an important part of
the overall management compensation package that keeps the Company
competitive with other companies in the electronics industry. The Board
believes that a direct financial interest by an individual in the
success of the Company and the growth in value of its stock is to the
advantage of the Company and its stockholders.
The following is a general description of the terms of the Plan. The
actual Plan document is set forth in the Appendix to this Proxy
Statement.
Description of the Plan
This Plan is to replace the 1988 Stock Incentive Plan which will have
utilized all of its authorized shares by the end of this 1998 fiscal
year (April, 1998). This Plan is similar to the previous plan approved
by the stockholders but:
1) is expanded to include the possibility of issuing freestanding SARs
and performance awards,
2) allows Directors to become Participants in the Plan so that part of
their annual retainer fee may be paid in restricted stock (see
discussion under 5. Compensation of Directors), and
3) includes the limitation terms required by Section 162 (m) of the
Internal Revenue Code (the "Code") (i.e., limitation on the number of
shares to be issued any individual and definition of "outside director"
who may authorize grants under the Plan) so as to include compensation
paid under this Plan as performance-based compensation and not subject
to the $1 million income tax deductibility limitation.
During the ten fiscal years of the previous plan, the Committee has
granted, with one exception, only nonqualified stock options with an
exercise price of 100% of the fair market value of the shares on the
date of grant. The only exception was the use of approximately 40,000
shares of restricted stock for the retention of new personnel in
acquisitions. As discussed above in the Compensation Committee Report
on Executive Compensation, the Board utilizes the nonqualified stock
option program as the only long term incentive plan for the executive
officers and senior management of the Company. It is its current
intention to continue with this nonqualified stock option program. As
discussed above, restricted stock will be utilized in the future to pay
part of the Directors' annual retainer.
The other alternatives under the Plan provide flexibility in case of
future changes in the tax laws or other competitive circumstances. In
addition to nonqualified stock options and restricted stock, the Plan
permits the Company to issue: (a) "incentive stock options" meeting the
requirements of Section 422 of the Code, (b) freestanding and tandem
SARs, and (c) performance awards.
The Plan authorizes the Compensation Committee of the Board of Directors
(the "Committee") (comprised entirely of non-employee Directors) to
grant stock options, SARs, restricted stock, or performance awards to
any officer, Director, employee or other significant service provider of
the Company or any of its subsidiaries. Directors may not be granted
incentive stock options or performance awards under the Plan. The Plan
does allow the granting of restricted stock, nonqualified stock options
and SARs to Directors. The Committee selects eligible individuals and
determines whether stock options, SARs, restricted stock, or performance
awards will be utilized, the amount of the grant, and all of the terms
and conditions of the grant.
The shares to be granted under the Plan may be either unissued shares or
shares reacquired by the Company. The maximum number of shares to be
granted under the Plan is 1,500,000 shares. If any shares of Common
Stock subject to any award or to which an award relates are not
purchased or are forfeited, or if any such award terminates without the
delivery of shares or other consideration, the shares previously used
for such awards become available for future awards under the Plan.
The term of the Plan is ten years from the adoption of the Plan by the
Board. Assuming that the Plan is approved at the Annual Meeting, grants
under the Plan may not be made after June 17, 2007 although any award
granted prior to that date may be exercised or paid after the
termination date of the Plan.
The Plan may be terminated at any time by the Board of Directors. The
terms of the Plan may generally be amended by the Compensation Committee
without further stockholder approval or ratification. However,
stockholder approval would be required for amendments related to: 1) a
change in the maximum number of shares to be issued under the Plan, 2)
an extension of the maximum period for exercise of an option or SAR
under the Plan, 3) an extension of the term of the Plan, 4) a reduction
of the minimum price at which options may be granted under the Plan, or
5) a change in the class of eligible Participants under the Plan.
The exercise price per share under any stock option or the grant price
of any SAR or performance award, if denominated in shares, cannot be
less than 100% of the fair market value of the Company's Common Stock on
the date of the grant of such option, SAR, or performance award. For
purposes of the Plan, the fair market value of shares of Common Stock on
a given date shall be the average between the highest and lowest quoted
selling price for the Common Stock on the New York Stock Exchange. The
Plan also provides that no options or SARs may be repriced without
stockholder approval.
Stock options issued under the Plan may be either nonqualified stock
options or incentive stock options. No individual may be awarded stock
options or SARs for more than 200,000 shares of Common Stock during any
three year period of the Plan. A stock option or SAR may not be
exercisable prior to six months following the date of grant, or
exercisable more than ten years after the date of grant. Payment of the
exercise price of an option may be in cash, in shares of the Company's
Common Stock having a fair market value on the date the option is
exercised equal to the aggregate exercise price, or a combination of
cash and shares.
SARs may be issued either as freestanding SARs or as tandem SARs which
would be issued in connection with stock options under the Plan and
cover the same shares and be subject to the same terms and conditions as
the related stock option. The holder of a freestanding SAR may exercise
a SAR by following the procedures established in the terms and
conditions of the SAR. The value of the freestanding SAR on the
exercise date will be an amount equal to the excess of the fair market
value of one share of Common Stock over the grant price per share times
the number of shares covered by the SAR. The holder of a tandem SAR may
exercise a SAR by first surrendering to the Company the unexercised
related stock option. The value of the tandem SAR on the exercise date
will be an amount equal to the excess of the fair market value of one
share of Common Stock over the option price per share times the number
of shares covered by the option which is surrendered. The payment will
be made either in cash or in shares of Common Stock valued at fair
market value on the date of exercise, rounded up to the next full share.
The holder of restricted stock may have all of the rights of a
stockholder of the Company, including the right to vote the shares
subject to the restricted stock award and to receive any dividends with
respect thereto, or such rights may be restricted. Restricted stock may
not be transferred by the holder until the restrictions established by
the Committee lapse. Upon termination of the holder's employment during
the restriction period, restricted stock shall be forfeited, unless the
Committee determines otherwise. If the Participant is a Director,
shares would be canceled if the Director voluntarily terminates as a
Director prior to the expiration of the Director's elected term of
office or if the Director was removed from office for cause and by
stockholder vote pursuant to the Company's Articles of Incorporation.
Performance awards may be used to create either annual or long term
incentives. The Committee has the discretion to establish the
individuals who will participate, the nature of the awards, the length
of the measurement period, what performance criteria to measure and how
that performance will be measured, the maximum awards to individuals, as
well as the right to make any adjustments to the performance targets
which may be necessary. The total amount of an award during any
measurement period may not exceed 200% of a Participant's base salary
during that same measurement period. Performance targets may be
established which measure specific performance by individuals, by
divisions or units, or by the whole corporation. Performance goals must
be objective financial goals but may be anything deemed appropriate by
the Committee. Such performance measures may include, without
limitation, specified levels of earnings per share from continuing
operations, operating income, revenues, return on operating assets,
return on equity, stockholder return, achievement of cost control,
working capital turns, cash flow, net income, economic value added,
stock price of the Company, or attainment of specified levels of
performance under one or more of the measures described above relative
to the performance of other corporations. These awards may be payable
either in cash, shares, or a combination of cash and shares.
Performance awards may also be established in which the Committee
requires the payment of a purchase or exercise price.
No award granted under the Plan may be assigned, transferred, pledged or
otherwise encumbered by the individual to whom it is granted, other than
by will, by designation of a beneficiary, or by the laws of descent and
distribution. Each award is exercisable, during such individual's
lifetime, only by such individual, or, if permissible under applicable
law, by such individual's guardian or legal representative. At the
discretion of the Committee, however, a grant or award agreement may
permit transferability by a Participant solely to members of the
Participant's immediate family or trusts or partnerships for the benefit
of such persons.
In the event of any change in the Common Stock through reorganization,
recapitalization, reclassification, stock dividend of ten percent or
greater, stock split, amendment to the Articles of Incorporation of the
Company, or reverse stock split, the Board shall make an appropriate and
proportionate adjustment in the number of shares subject to an option
without any change in the aggregate purchase price of the shares subject
to the option but with a corresponding adjustment to the exercise price
per share and in the number of shares covered by an outstanding SAR or
performance award denominated in shares.
In the case of a merger, consolidation or plan of exchange, or a sale of
all, or substantially all, of the assets of the Company, or a
liquidation or dissolution of the Company, any stock option, SAR, or
performance award shall terminate unless provision is made for a
substitution of such awards by the successor corporation. If no
provision for substitution is made, then all options, SARs, or
performance awards shall become exercisable prior to the effective date
of any such transaction.
Upon the occurrence of a Change of Control, all outstanding options,
SARs, or performance awards, if applicable, would become immediately
exercisable in full for the remainder of their terms and the
transferability restrictions on all outstanding restricted stock grants
or performance awards, if applicable, would automatically lapse. All
performance awards would be considered to be earned and payable in full
and any performance award or freestanding SAR payable in cash will be
paid as promptly as practicable.
Federal Income Tax Consequences Relating to the Plan
Under current provisions of the Code and applicable regulations, the
grant of an option or an SAR does not result in any taxable income to
the recipient. When an incentive stock option is exercised, the holder
of the option generally will have no taxable income (except that a
liability may arise pursuant to the alternative minimum tax), and the
Company will not be entitled to a tax deduction.
When a non-qualified stock option is exercised, the holder of the option
will realize ordinary taxable income, measured by the difference between
the option exercise price and the fair market value of the Common Stock
at the time of exercise. The Company is entitled to a tax deduction in
the same amount and at the same time as the holder realizes taxable
income.
The tax consequences to an individual upon the disposition of shares
acquired through the exercise of an option depends on how long the
shares have been held. Generally there will be no tax consequences to
the Company in connection with the disposition of shares acquired under
an option, except for certain disqualifying dispositions of incentive
stock options if they have not been held for the required holding
period.
Upon exercising an SAR, the cash or fair market value of the Common
Stock received is taxable to the recipient as ordinary income and is tax
deductible by the Company.
Unless a special election is made pursuant to the Code, the holder of a
restricted stock grant must recognize ordinary income equal to the fair
market value of the shares of Common Stock received at the time when the
shares become transferable or not subject to a substantial risk of
forfeiture. The Company is entitled at that time to a tax deduction for
the same amount.
Performance awards are taxable to an individual upon payment. The cash
or fair market value of the Common Stock received is taxable to the
recipient as ordinary income and is tax deductible by the Company.
Vote Required and Board Recommendation
Approval requires the affirmative vote of a majority of the shares of
Common Stock represented at the meeting. The Board has adopted the
Plan and recommends that you vote FOR this proposal.
11.Independent Public Accountants
The Company has selected Ernst & Young, independent public accountants,
to continue as the Company's auditors for fiscal 1998. 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 2, 1997 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
21, 1998 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 25, 1997.
By order of the Board of Directors
Douglas G. McKnight
Vice President, General Counsel
and Corporate Secretary
Everett, Washington
APPENDIX
FLUKE CORPORATION
1998 STOCK INCENTIVE PLAN
Article 1. Establishment and Purposes
1.1 Establishment of the Plan. Fluke Corporation (the "Company") hereby
establishes a plan to be known as the Fluke Corporation 1998 Stock
Incentive Plan (the "Plan") as set forth in this document. The Plan
permits the grant of Nonqualified Stock Options, Incentive Stock
Options, Restricted Stock, Stock Appreciation Rights, and Performance
Awards. The Plan shall become effective upon adoption by the Board of
Directors and by approval of the stockholders of the Company.
1.2 Purpose of the Plan. The purpose of the Plan is to promote the
success and enhance the value of the Company by linking the personal
interests of the Participants to those of the Company's stockholders,
and by providing Participants with an incentive for outstanding
performance. The Plan further strengthens the Company's ability to
attract and retain officers, Directors, employees, and other persons
providing significant services to the Company and its subsidiaries whose
ability and special efforts will contribute materially to the success of
the Company.
Article 2. Definitions
2.1 Definitions. Unless otherwise required by the context, the
following terms when used in the Plan shall have the meanings set forth
in this Section 2.1:
(a)"Board" means the Board of Directors of the Company.
(b)"Change of Control" of the Company, as used in this Plan, means and
shall be deemed to occur:
(i) upon the date the Company is informed by receiving a report on
Schedule 13D under the Securities Exchange Act of 1934 (the "Exchange
Act") or similar report that any person (as such term is used in
Sections 13(d) and 14(d)(2) of the Exchange Act), together with such
person's Affiliates and Associates (as defined in Rule 12b-2 of the
Exchange Act), is or has become the "beneficial owner" (as defined in
Rule 13d-3 of the Exchange Act) directly or indirectly, of securities of
the Company representing 25% or more of the combined voting power of the
Company's then outstanding securities. A person shall not be deemed to
beneficially own securities acquired pursuant to the Employee Stock
Purchase Plan of the Company or other plans generally applicable to
employees, officers or Directors of the Company. There will not be a
Change of Control as the result of an acquisition of securities by the
Company, which by reducing the number of shares outstanding, increases
the proportionate number of shares beneficially owned by any person to
25% or more of the securities of the Company then outstanding. However,
that if a person becomes the beneficial owner of 25% or more of the
securities of the Company then outstanding by reason of share purchases
by the Company and shall, after such share purchases by the Company,
become the beneficial owner of any additional securities of the Company,
then a Change of Control will occur unless such person disposes of such
additional securities of the Company within 10 days, or
(ii) upon the first purchase of the Company's Common Stock pursuant to
a tender or exchange offer (other than a tender or exchange offer made
by the Company) seeking to acquire securities representing 25% or more
of the combined voting power of the Company's then outstanding
securities, or
(iii) upon the first date on which Continuing Directors, as defined in
Article VI of the Company's Articles of Incorporation, cease for any
reason to constitute at least a majority of the Board of Directors.
(c)"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and the temporary or final regulations adopted pursuant to the
Code.
(d)"Committee" means the Compensation Committee of the Board of
Directors.
(e)"Common Stock" means the Common Stock of the Company, $.25 par value.
(f)"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
(g)"Fair Market Value" as applied to a specific date, means the average
between the highest and lowest quoted selling prices at which the
Company's Common Stock was sold on such date as reported in the New York
Stock Exchange Composite Transactions by The Wall Street Journal on such
date or such other report as the Committee may select, or if no Company
Common Stock was traded on such date, on the next preceding day on which
the Company Common Stock was so traded. Notwithstanding the foregoing,
upon the exercise, during the thirty (30) day period following a Change
of Control, of a tandem stock appreciation right which is granted in
connection with an option, Fair Market Value on the date of exercise
shall be deemed to be the greater of (i) the highest price per share of
the Company Common Stock as reported in the New York Stock Exchange
Composite Transactions by The Wall Street Journal or such other report
as the Committee may select during the sixty (60) day period ending on
the day preceding the date of exercise of the tandem stock appreciation
right, or (ii) if the Change of Control is one described in Clause (ii)
of Section 2.1(b) or a transaction described in Section 5.2(b), the
highest price per share paid for the Company's Common Stock in
connection with such Change of Control.
(h)"Incentive Stock Option" or "ISO" means an option to purchase shares,
granted under Article 6, which meets the requirements of an Incentive
Stock Option as defined in Section 422A of the Code, as in effect at the
time of grant of such option, or any statutory provision that may
hereafter replace such section.
(i)"Nonqualified Stock Option" or "NQSO" means an option to purchase
shares, granted under Article 6, which is not intended to be an
Incentive Stock Option.
(j)"Option Price" means the price per share of Common Stock at which an
option is exercisable.
(k)"Participant" means an individual who is selected by the Committee to
participate in the Plan pursuant to Article 4.
(l)"Performance Award" means an award granted under Article 10.
(m)"Permanent Disability" means when a Participant shall be found, upon
the basis of medical evidence satisfactory to the Committee, that the
Participant is prevented, whether due to physical or mental condition,
from engaging in further comparable employment by the Company or any of
its Subsidiaries and that such disability will be permanent and
continuous during the remainder of the Participant's life.
(n)"Restricted Stock" means a grant of shares granted under Article 9.
(o)"Stock Appreciation Right" or "SAR" means an award of rights granted
under Article 8.
(p)"Subsidiary" means an entity that is designated by the Committee as a
subsidiary for purposes of this Plan and that is a corporation (or other
form of business association that is treated as a corporation for tax
purposes) of which shares (or other ownership interests) having more
than 50% of the voting power are owned or controlled, directly or
indirectly, by the Company so as to qualify as a "subsidiary
corporation" (within the meaning of Code Section 424(f)).
Article 3. Administration
3.1 The Committee. The Plan shall be administered by the Compensation
Committee of the Board. No Director shall serve as a member of the
Committee unless at the time of his appointment and service he shall be
a "Non-Employee Director," as defined in Rule 16b-3 of the General Rules
and Regulations under the Exchange Act, and shall be an "outside
director" for purposes of Section 162 (m)(4) of the Code.
3.2 Authority of the Committee. The Committee shall have full authority
to construe and interpret the Plan, to establish, amend and rescind
rules and regulations relating to the Plan, to select persons eligible
to participate in the Plan, to grant NQSOs or ISOs, Restricted Stock,
SARs and/or Performance Awards thereunder, to administer the Plan, to
make recommendations to the Board, to take all such steps and make all
such determinations in connection with the Plan as it may deem necessary
or advisable, which determination shall be final and binding upon all
Participants.
Article 4. Eligibility
4.1 Eligible Individuals. To be eligible for selection by the Committee
to participate in the Plan, an individual must be an officer, Director,
employee, or other person providing significant services to the Company,
or of any Subsidiary, as of the date on which the Committee grants to
such individual a NQSO, ISO, Restricted Stock, SAR, or Performance
Award, and who in the judgment of the Committee holds a position of
responsibility and is able to contribute substantially to the Company's
continued success. Each chosen individual is hereinafter referred to as
a "Participant". A non-employee Director may not be granted an ISO or
a Performance Award pursuant to this Plan.
Article 5. Shares Available and Certain Adjustments
5.1 Maximum Number of Shares. Subject to Section 5.2(a), the maximum
number of shares for which stock options, Restricted Stock grants, SARs
and Performance Awards denominated in shares may at any time be granted
under the Plan is 1,500,000 shares of Common Stock, from shares
repurchased by the Company or out of the authorized but unissued shares
of the Company, or partly out of each, as shall be determined by the
Board of Directors. Upon the expiration, cancellation or termination in
whole or in part of (a) unexercised NQSOs or ISOs, (b) Restricted Stock
grants reverting to the Company, (c) shares of Common Stock covered by a
NQSO or ISO, or portion thereof, which are surrendered upon exercise of
a tandem SAR, (d) unexercised tandem SARs, and (e) unearned Performance
Awards denominated in shares, shares of Common Stock which were subject
thereto shall again be available under the Plan.
5.2 Certain Adjustments.
(a) In the event of any change in the Common Stock through
reorganization, recapitalization, reclassification, stock dividend of
ten percent or greater, stock split, amendment to the Articles of
Incorporation of the Company, or reverse stock split, the Board shall
make an appropriate and proportionate adjustment in the number of shares
of Common Stock subject to a NQSO, ISO, or Performance Award denominated
in shares without any change in the aggregate purchase price of the
shares subject to such NQSO, ISO, or Performance Award denominated in
shares but with corresponding adjustment to the exercise price per share
and in the number of shares covered by outstanding NQSOs, ISOs, SARs or
Performance Awards denominated in shares.
(b) Upon the effective date of a merger, consolidation or plan of
exchange (other than a merger, consolidation or plan of exchange
involving the Company in which the holders of voting securities of the
Company immediately prior to such transaction own at least 50% of the
voting power of the outstanding securities of the surviving corporation
or a parent of the surviving corporation after such transaction), or a
sale of all or substantially all the assets of the Company, or a
liquidation or dissolution of the Company, the Plan and any NQSO or ISO,
SAR, or Performance Award theretofore granted hereunder shall terminate,
unless provisions be made in writing in connection with such transaction
for the continuance of the Plan and for the assumption of options, SARs,
or Performance Awards theretofore granted, or the substitution for such
options, SARs, or Performance Awards with new options, SARs, or
Performance Awards covering the shares of a successor corporation, or a
parent, affiliate or subsidiary thereof, with appropriate adjustments as
to number and kind of shares and prices thereof, in which event the Plan
and the options, SARs, or Performance Awards granted under it, or the
new options, SARs, or Performance Awards substituted therefor, shall
continue in the manner and under the terms so provided.
(c) If provision is not made pursuant to the preceding Section 5.2(b) in
connection with such a transaction for the continuance of the Plan and
for the assumption of options, SARs, or Performance Awards denominated
in shares, or the substitution for such options, SARs, or Performance
Awards denominated in shares of new options, SARs, or Performance Awards
denominated in shares covering the shares of a successor employer
corporation or a parent, affiliate or subsidiary thereof, then each
Participant under the Plan shall be entitled, prior to the effective
date of any such transaction, to purchase the full number of shares
under the option or Performance Award which the Participant otherwise
would have been entitled to purchase during the remaining term of such
option or Performance Award denominated in shares, if applicable, and to
exercise any SAR or Performance Award denominated in shares, if
applicable, for the full number of shares under the SAR or Performance
Award to which the Participant otherwise would have been entitled to
acquire upon such exercise during the remaining term of such SAR or
Performance Award denominated in shares, if applicable, without regard
to any limitation on exercise which may be contained therein.
(d) Upon the occurrence of a Change of Control (unless the Board shall
consist of a majority of Continuing Directors, as defined in Article VI
of the Company's Articles of Incorporation, and the Board shall
determine otherwise by notice to Participants prior to or within 30 days
after such Change of Control), all outstanding options, SARs, or
Performance Award, if applicable, shall become immediately exercisable
in full for the remainder of their terms, and the transferability
restrictions on all outstanding Restricted Stock grants or Performance
Award, if applicable, shall automatically lapse. All Performance Awards
shall be considered to be earned and payable in full and any deferral or
other restriction shall lapse. Any Performance Award or freestanding
SAR payable in cash shall be paid as promptly as is practicable.
Adjustments under this Section shall be made by the Board, whose
determination as to what adjustments shall be made, and the extent
thereof, shall be final, binding, and conclusive. No fractional share of
Common Stock shall be issued under the Plan or any such adjustment.
Article 6. Grant of Options
6.1 Committee Determination of Option Grant. Options may be granted in
such number and at such times during the term of this Plan as the
Committee shall determine, taking into account the duties of the
respective individuals, their present and potential contributions to the
success of the Company, and such other factors as the Committee shall
deem relevant in accomplishing the purposes of the Plan. The granting
of an option shall take place when the Committee by resolution, written
consent or other appropriate action determines to grant such an option
to a particular Participant at a particular price. Each option shall be
evidenced by a written instrument delivered by or on behalf of the
Company containing provisions not inconsistent with the Plan and such
other or additional terms as the Committee may approve.
6.2 Type of Option. An option granted under the Plan may be either a
NQSO or an ISO, as designated by the Committee and as indicated in the
option agreement.
Article 7. Terms and Conditions of Options
7.1 Grant of an ISO. Each provision of the Plan and each ISO granted
hereunder shall be construed so that such option shall qualify as an
ISO, and any provision thereof that cannot be so construed shall be
disregarded. ISOs, in addition to complying with the other provisions
of the Plan relating to options generally, shall be subject to the
following conditions:
(a) Only officers and other employees of the Company, or of any
Subsidiary are eligible to be granted ISOs.
(b) Except as provided in paragraph (c), the option price of the ISOs
shall be 100% of the Fair Market Value of the stock on the date of
grant.
(c) An officer or other employee must not, at the time an ISO is
granted, own stock representing more than ten percent of the voting
power of all classes of stock of the Company or of a Subsidiary. This
requirement is deemed waived if (i) the Option Price of the ISO to be
granted is at least 110% of the Fair Market Value of the stock subject
to the option, determined at the time the option is granted, and (ii)
the option is not exercisable more than five years from the date the
option is granted.
(d) The aggregate Fair Market Value (determined at the time of the grant
of the option) of the stock with respect to which ISOs are exercisable
for the first time by an officer or other employee during any calendar
year may not exceed $100,000.
(e) Any other terms and conditions will be added which the Committee
determines, upon advice of counsel, must be imposed for the option to be
an ISO.
(f) During a Participant's lifetime, the option may be exercisable only
by the Participant and options shall not be transferable, other than by
will or the laws of descent and distribution.
7.2 General Terms of Option Grants. Except as otherwise provided in
Section 7.1, all ISOs and NQSOs under the Plan shall be granted subject
to the following terms and conditions:
(a) The option price per share shall be determined by the Committee at
the time of grant. The option price may not be less than 100% of the
Fair Market Value of the shares covered by the option on the date the
option is granted. Options may not be repriced without stockholder
approval.
(b) Options shall be exercisable at such time and under such conditions
as set forth in the option grant however an option may not be
exercisable prior to six months following the date of grant, or
exercisable more than ten years after the date of grant.
(c) Shares of Common Stock covered by an option may be purchased at one
time or in such installments over the balance of the option period as
may be provided in the option grant. Any shares not purchased on the
applicable installment date may be purchased at one time or in such
installments over the balance of the option period as may be provided in
the option grant. Any shares not purchased on the applicable
installment date may be purchased thereafter at any time prior to the
final expiration of the option. To the extent that the right to
purchase shares has accrued thereunder, options may be exercised from
time to time by written notice to the Corporate Secretary of the Company
stating the number of shares with respect to which the option is being
exercised.
(d) The purchase price of shares of Common Stock covered by an option
and any related taxes to be withheld, if applicable, shall be paid in
full to the Company upon the exercise of the option either (i) in cash
or check, or (ii) by delivery at Fair Market Value, of Common Stock
already owned by the Participant, or any combination of cash and Common
Stock. The Fair Market Value of such Common Stock as delivered shall be
valued as of the day prior to delivery. A Participant shall have none
of the rights of a stockholder until the shares of Common Stock are
issued.
(e) The Committee shall determine, with respect to each option, the
nature and extent of the restrictions, if any, to be imposed on the
shares of Common Stock which may be purchased thereunder including, but
not limited to, restrictions on the transferability of such shares
acquired through the exercise of such options for such periods as the
Committee may determine and, further, that in the event a Participant's
employment by the Company, or a Subsidiary, terminates during the period
in which such shares are nontransferable, the Participant shall be
required to sell such shares back to the Company at such prices as the
Committee may specify in the option.
(f) During a Participant's lifetime, the option may be exercisable only
by the Participant and options shall not be transferable, other than by
will or the laws of descent and distribution. In the event of death of
a Participant, the option may be exercisable only by the Participant's
legal representative or beneficiaries, as provided in Section 7.2(j).
At the discretion of the Committee, however, an option agreement may
permit the transferability of an option by a Participant solely to
members of the Participant's immediate family or trusts or partnerships
for the benefit of such persons.
(g) Upon the termination of a Participant's service for any reason
other than retirement, Permanent Disability or death, any option held by
such Participant shall be exercisable only to the extent that it was
then exercisable (unless the Committee shall determine in a particular
case that specific limitations and restrictions of the option shall not
apply), and such option shall expire, unless it sooner expires under
Section 7.2(b) or its terms, three (3) months after termination of
service, unless extended by special action of the Committee. Leaves of
absence for such periods and purposes conforming to the personnel policy
of the Company, or of its Subsidiaries as applicable, shall not be
deemed terminations or interruptions of employment. In case of an ISO,
a leave of absence of no more than ninety (90) days (or, if longer,
where a Participant's right to reinstatement by the Company is
guaranteed by statute or by contract) approved in writing by the Board
of Directors shall not be deemed a termination of a Participant's
employment with or contract to provide services to the Company.
(h) Upon the termination of a Participant's service due to retirement,
any option held by such Participant shall become exercisable in full
(unless the Committee shall determine otherwise), and such option shall
expire, unless it sooner expires under Section 7.2(b) or its terms,
thirty six (36) months after such Participant's retirement from the
Company or any Subsidiary (three (3) months if the option is an ISO).
(I) Upon the termination of a Participant's service due to Permanent
Disability, any option held by such Participant shall become exercisable
in full (unless the Committee shall determine otherwise), and such
option shall expire, unless it sooner expires under Section 7.2(b) or
its terms, twelve (12) months after such termination of service.
(j) Upon the death of a Participant, whether during a period of service
or during the three (3), twelve (12) or thirty six (36) month period, as
the case may be, referred to in Section 7.2(h) or 7.2(i), any option
held by such Participant shall become exercisable in full (unless the
Committee shall determine otherwise), and such option shall expire,
unless it sooner expires under Section 7.2(b) or its terms, twelve (12)
months after the date of death (three (3) months if the option is an
ISO).
Article 8. Stock Appreciation Rights
8.1 Grant of SARs. The Committee may grant freestanding SARs, tandem
SARs or any combination of these forms of SARs to any Participant at any
time, in such number, and under such terms and conditions as shall be
determined by the Committee. The grant price of freestanding SARs may
not be less than 100% of the Fair Market Value of the shares covered by
the SAR on the date the SAR is granted. In the case of a NQSO, tandem
SARs may be granted either at the time of the grant of such option or at
any time thereafter during the term of the option. In the case of an
ISO, tandem SARs may be granted only at the time of the grant of such
option. Tandem SARs shall cover the same shares covered by the options
(or such lesser number of shares of Common Stock as the Committee may
determine) and shall, except as provided in Section 8.4 hereof, be
subject to the same terms and conditions as the related options
including without limitation Section 5.2 of this Plan, and such further
terms and conditions not inconsistent with the Plan as shall from time
to time be determined by the Committee. SARs may not be repriced
without stockholder approval.
8.2 Exercise of Freestanding SARs. Each freestanding SAR shall entitle
the holder of the SAR to receive from the Company an amount equal to the
excess of the Fair Market Value of one share of Common Stock on the date
the right is exercised over the grant price per share times the number
of shares covered by the SAR. Payment shall be made either in cash or
in shares of Common Stock valued at Fair Market Value as of the date the
right is exercised rounded up to next full share. Freestanding SARs may
be exercised from time to time upon actual receipt by the Company of
written notice stating the number of shares of Common Stock with respect
to which the SAR is being exercised. Such exercise shall be subject to
the terms and conditions as established for such SAR by the Committee.
8.3 Exercise of Tandem SARs. Each tandem SAR shall entitle the holder
to receive from the Company an amount equal to the excess of the Fair
Market Value of one share of Common Stock on the date the right is
exercised over the Option Price per share times the number of shares
covered by the option, or portion thereof, which is surrendered. The
option which is surrendered must be exercisable at the time of such
surrender. Payment shall be made either in cash or in shares of Common
Stock valued at Fair Market Value as of the date the right is exercised
rounded up to next full share. Tandem SARs may be exercised from time
to time upon actual receipt by the Company of written notice stating the
number of shares of Common Stock with respect to which the SAR is being
exercised and the surrender of the related option.
8.4 Terms of the SAR.
(a) The right of a Participant to exercise a tandem SAR shall be
canceled if and to the extent the related option is exercised. To the
extent that a SAR is exercised, the related option shall be deemed to
have been surrendered, unexercised.
(b) A holder of SARs shall have none of the rights of a stockholder
until shares of Common Stock are issued, if any, pursuant to the
exercise of such rights.
(c) SARs may not be sold, transferred, pledged, assigned, levied upon,
or otherwise alienated or hypothecated, other than by will or by
application of the laws of descent and distribution. A Participant's
rights under the Plan shall be exercisable during the Participant's
lifetime only by the Participant or upon the Participant's death by the
Participant's beneficiary. At the discretion of the Committee, however,
a SAR Agreement may permit the transferability of a SAR by a Participant
solely to members of the Participant's immediate family or trusts or
partnerships for the benefit of such persons.
Article 9. Restricted Stock Grants
9.1 Grant of Restricted Stock. The Committee may make grants of
Restricted Stock in such number and at such times as the Committee shall
determine. The Committee may make Restricted Stock grants to any
Participant. The Restricted Stock grants shall take place when the
Committee by resolution, written consent or other appropriate action,
establishes a Restricted Stock grant date, the Participants who will
receive such grants, and the number of granted shares for each
Participant.
9.2 Issuance of Restricted Stock. Stock certificates representing the
number of restricted shares granted to each Participant shall be issued
as soon as practical after the date of grant in the name of the
Participant. Such Participant will be entitled to all cash dividends
paid on the shares and will be able to vote such shares during the
restricted period when the shares are not vested, unless such rights are
restricted by the terms and conditions of the grant. The restricted
shares will be retained in the safekeeping of the Company and the shares
will be physically delivered to the Participant only upon their vesting
and the removal of the transferability restriction. Each Participant
agrees to be bound by the terms and conditions of the grant as
determined by the Committee. Such shares shall bear a legend
restricting transferability in accordance with the terms of the grant.
After the date of grant, any stock splits or stock dividends paid on the
shares would be subject to the same transferability restrictions as the
underlying shares upon which they were paid. Shares subject to
restrictions under the Plan may not be sold, given, assigned, pledged,
levied upon, nor may the shares or any interest in the shares be
transferred in any fashion. Any attempt to so transfer the shares or
any interest shall be void, and shall subject the shares to return to
the Company. At the discretion of the Committee, however, a Restricted
Stock agreement may permit the transferability of Restricted Stock by a
Participant solely to members of the Participant's immediate family or
trusts or partnerships for the benefit of such persons.
9.3 Lapse of Restrictions. Restrictions on the shares will lapse over a
period of time or in compliance with the conditions as established by
the Committee or pursuant to any waiver of conditions by the Committee.
The Committee shall establish a procedure for the removal of the legend
from certificates representing shares no longer subject to the
restrictions.
9.4 Automatic Lapse of Restrictions. Restrictions shall automatically
lapse upon the retirement, death, or Permanent Disability of a
Participant.
9.5 Termination. If a Participant's service with the Company or any of
its subsidiaries is terminated for any reason (other than retirement,
death or Permanent Disability), any shares still subject to the
restrictions will be canceled by the Company unless the Committee
expressly waives the cancellation provision for such Participant. If
the Participant is a Director, shares would be canceled if the Director
voluntarily terminates as a Director prior to expiration of such
Director's elected term of office or if the Director was removed from
office for cause and by stockholder vote pursuant to the Company's
Articles of Incorporation. A leave of absence approved in writing by
the Committee shall not constitute a termination of service. Cash paid
in lieu of fractional shares and cash dividends paid upon shares granted
under this Plan shall not be subject to any transferability restrictions
or reversion to the Company.
Article 10. Performance Awards
10.1 Grant of Performance Awards. The Committee shall determine the
number, amount and timing of Performance Awards granted to each
Participant. The Committee may grant Performance Awards to Participants
either alone or in conjunction with other awards under the Plan. Such
Performance Awards may take the form determined by the Committee,
including without limitation, cash, Common Stock, performance units and
performance shares, or any combination thereof. The Committee may
attach one or more restrictions to such Performance Awards and all
Performance Awards terms will be confirmed in a Performance Award
Agreement.
10.2 Performance Goals.
(a) The Committee shall establish performance goals which, depending on
the extent to which they are met, will determine the number and/or value
of Performance Awards that will be paid out to the Participants.
Performance goals are based on the attainment of one or more of the
following: specified levels of earnings per share from continuing
operations, operating income, revenues, return on operating assets,
return on equity, stockholder return(based upon appreciation in stock
price) and/or stockholder return (based upon appreciation in stock price
and dividend growth), achievement of cost control, working capital
turns, cash flow, net income, economic value added, stock price of the
Company, or attainment of specified levels of performance under one or
more of the measures described above relative to the performance of
other corporations. The performance goals are intended to qualify under
Section 162(m)(4)(c) of the Code and shall be set by the Committee
within the time period prescribed by Section 162(m) of the Code.
(b) The Committee shall have the authority at any time to make
adjustments to the performance goals for any outstanding Performance
Awards which the Committee deems necessary or desirable.
(c) Performance periods shall, in all cases, be a minimum of one year.
10.3 Value of Performance Units/Shares.
(a) Each performance unit shall have an initial value that is
established by the Committee at the date of grant.
(b) Each performance share shall have an initial value equal to the Fair
Market Value of the Common Stock on the date of grant.
10.4 Earning and Payment of Performance Awards. After the applicable
performance period has ended, the holder of a Performance Award shall be
entitled to receive the payout earned by such Participant over the
performance period, to be determined as a function of the extent to
which the corresponding performance goals have been achieved. Payment
of earned Performance Awards shall be made in accordance with the terms
and conditions prescribed or authorized by the Committee.
10.5 Per Person Limitation on Amount of Award. The total amount of a
Performance Award during any measurement period may not exceed 200% of a
Participant's base salary during that same measurement period.
10.6 Nontransferability. Performance Awards may not be sold,
transferred, pledged, assigned, levied upon, or otherwise alienated or
hypothecated, other than by will or by application of the laws of
descent and distribution. A Participant's rights under the Plan shall
be exercisable during the Participant's lifetime only by the Participant
or upon the Participant's death by the Participant's beneficiary. At
the discretion of the Committee, however, an Award Agreement may permit
the transferability of a Performance Award by a Participant solely to
members of the Participant's immediate family or trusts or partnerships
for the benefit of such persons.
10.7 Termination.
(a) Except to the extent otherwise provided in the applicable
Performance Award agreement, if any, upon a Participant's termination of
employment for any reason during the performance period or before any
applicable performance goals are satisfied, the right to the units
and/or shares covered by the Performance Award shall be forfeited by the
Participant.
(b) In the event that a Participant's employment is terminated (other
than for cause), or in the event a Participant retires, the Committee
shall have the discretion to waive, in whole or in part, any or all
remaining payment limitations with respect to any or all of such
Participant's Performance Awards.
Article 11. Regulatory Approvals and Listing
11.1 Investment Representation. The Committee shall have the right to
require that each Participant or other person who shall exercise an
option, receive a Restricted Stock grant, exercise a SAR or receive
shares pursuant to a Performance Award under the Plan, and each person
into whose name shares of Common Stock shall be issued pursuant to the
exercise of an option, Restricted Stock grant, SAR or Performance Award
represent and agree that any and all shares of Common Stock purchased
pursuant to this Plan are being purchased for investment and not with a
view to the distribution or resale thereof and that such shares will not
be sold except in accordance with such restrictions or limitations as
may be set forth in the option, Restricted Stock grant, SAR, or
Performance Award. This Section 11.1 shall be inoperative during any
period of time when the Company has obtained all necessary or advisable
approvals from governmental agencies and has completed all necessary or
advisable registrations or other qualifications of shares of Common
Stock as to which options, Restricted Stock grants, SARs, or Performance
Awards may from time to time be granted as contemplated in Section 11.2
hereof.
11.2 Registration and Listing. No shares shall be issued and delivered
pursuant to this Plan unless and until, in the opinion of counsel for
the Company, any applicable registration requirements of the Securities
Act of 1933, as amended, any applicable listing requirements of any
national securities exchange on which stock of the same class is then
listed, and any other requirements of law or of any regulatory bodies
having jurisdiction over such issuance and delivery, shall have been
fully complied with.
Article 12. Term of the Plan
12.1 Term of the Plan. This Plan shall be void unless it is approved by
the stockholders of the Company within 12 months after the date the Plan
is adopted by the Board of Directors. Subject to such approval,
options, Restricted Stock grants, SARs and Performance Awards may be
granted pursuant to the Plan from time to time within the period
commencing with and ending ten (10) years after the earlier of the
adoption of the Plan by the Board of Directors or the approval of the
Plan by the stockholders. Options, SARs and Performance Awards granted
under the Plan may extend beyond that date and the terms and conditions
of the Plan shall continue to apply to such grants and to shares of
Common Stock acquired upon exercise of such grants.
Article 13. General Provisions
13.1 Per Person Limitation on Number of Shares. The number of shares of
Common Stock with respect to which options, Restricted Stock grants,
SARs, or Performance Awards may be granted under the Plan to an
individual Participant in any three year period beginning with the
adoption of the Plan by the Board through the end of the term of the
Plan shall not exceed 200,000 shares, subject to adjustment as provided
in Section 5.2.
13.2 No Right to Continued Employment. Nothing contained in the Plan,
or in any option, Restricted Stock grant, SAR or Performance Award
granted pursuant to the Plan, shall confer upon any employee any right
with respect to continuance of employment by the Company or a
Subsidiary, nor interfere in any way with the right of the Company or a
Subsidiary to terminate the employment of such employee at any time with
or without cause.
13.3 Right to Withhold Taxes. Appropriate provision shall be made for
all taxes including any tax imposed by Code Section 4999, required to be
withheld in connection with options, Restricted Stock grants, SARs or
Performance Awards under the applicable laws or regulations of any
governmental authority, whether federal, state or local and whether
domestic or foreign. The Company may withhold such taxes or may require
a Participant to pay such taxes in connection with such grant or
exercise.
Article 14. Amendment, Termination or Discontinuance of the Plan
14.1 Right to Amend. Subject to Section 14.2, the Committee may from
time to time make such amendments to the Plan as it may deem proper and
in the best interest of the Company without further approval of the
Board of Directors or stockholders of the Company, including, but not
limited to, any amendment necessary to ensure that the Company may
obtain any regulatory approval referred to in Section 11 hereof;
provided, however, that no change in any option, Restricted Stock grant,
SAR or Performance Award theretofore granted may be made without the
consent of the Participant which would impair the right of the
Participant to acquire or retain Common Stock which he may have acquired
as a result of the Plan.
14.2 Amendments Requiring Stockholder Approval. The Committee may not
amend the Plan without the approval of the stockholders of the Company
if such amendment relates to (a) an increase in the maximum number of
shares of the Company subject to the Plan, except as permitted by
Section 5.2, (b) an extension of the period for the exercise of an
option or a SAR beyond the limit set forth in Section 7.2(b),
(c) an extension to the term of the Plan, (d) a reduction in the option
price at which options may be granted under the Plan, or (e) a change in
the class of eligible Participants.
14.3 Termination of the Plan. The Board of Directors may at any time
suspend the operation of or terminate the Plan with respect to any
shares of the Company's Common Stock not at the time subject to option
or grant. Termination shall not affect any right to repurchase shares
or the forfeitability of shares issued under the Plan.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
FLUKE CORPORATION
For the Annual Meeting of Stockholders - September 10, 1997
The undersigned hereby appoints WILLIAM G. PARZYBOK, JR., GEORGE M. WINN
and DAVID E. KATRI 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 10, 1997 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 3.To transact such other business as may
properly come before the meeting and all
Nominees: adjournments or postponements thereof.
For three year terms
expiring at the 2000
Annual Meeting If no specification is made with respect
John D. Durbin hereto, such shares will be voted FOR
David E. Katri the election of these Directors, FOR the
John M. Fluke, Jr. approval of the 1998 Stock Incentive Plan and
N. Stewart Rogers either for or against such other matters
as may properly come before the meeting
FOR WITHHELD or any adjournment or postponement
thereof, as the above named proxies may
determine.
For, except vote is withheld
for the following MARK HERE
nominee(s): FOR ADDRESS
CHANGE AND
NOTE AT LEFT
2. Approval of the 1998 Stock
Incentive Plan.
FOR AGAINST ABSTAIN
Sign exactly as the name appears on your stock
certificate. When signing as attorney,
executor, adminstrator, guardian or coporate
official, please give your full title as such.
Signature:
Date:
Signature:
Date:
