SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No.__)
Filed by the Registrant [X] Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to S.240.14a-11(c) or S.240.14a-12
GenRad, Inc.
(Name of Registrant as Specified In Its Charter)
GenRad, Inc.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
================================================================================
<PAGE>
GenRad, Inc.
300 Baker Avenue
Concord, Massachusetts 01742-2174
Notice of Annual Meeting of Shareholders
to be held on May 8, 1997
The Annual Meeting of Shareholders of GenRad, Inc. (the "Company") will be
held on Thursday, May 8, 1997 at 11:00 a.m. at the Westford Regency Hotel, 219
Littleton Road, Westford, Massachusetts, for the following purposes:
1. To elect James F. Lyons, Adriana Stadecker and Lowell B. Hawkinson to
the Board of Directors to serve as Class I Directors for three-year
terms.
2. To consider and act upon a proposal to amend the Company's 1991 Equity
Incentive Plan (the "Incentive Plan") by increasing the number of
shares of Common Stock available for issuance under the Incentive Plan
by 2,000,000 shares.
3. To consider and act upon a proposal to amend the Incentive Plan by
limiting the number of shares of Common Stock available for issuance to
any participant in any one year to 500,000 shares.
4. To consider and act upon such other business as may properly come
before said Annual Meeting or any adjournment thereof.
Shareholders of record at the close of business on March 19, 1997 will be
entitled to notice of and to vote at said Annual Meeting.
By Order of the Board of Directors
Walter A. Shephard, Clerk
April 7, 1997
- --------------------------------------------------------------------------------
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE TO
ASSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF MAILED IN
THE UNITED STATES.
- --------------------------------------------------------------------------------
<PAGE>
GenRad, Inc.
300 Baker Avenue
Concord, Massachusetts 01742-2174
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
May 8, 1997
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of GenRad, Inc. ("GenRad" or the "Company"), 300 Baker
Avenue, Concord, Massachusetts 01742-2174, of proxies in the enclosed form to be
voted at the Annual Meeting of Shareholders of GenRad, to be held on Thursday,
May 8, 1997 at 11:00 a.m. at the Westford Regency Hotel, 219 Littleton Road,
Westford, Massachusetts, and at any adjournment or adjournments thereof (the
"Meeting"), for the purposes stated in the accompanying Notice of Meeting.
Any person giving a Proxy may revoke it at any time prior to its being
voted by filing written notice with the Secretary of GenRad, by executing and
delivering a Proxy bearing a later date, or by attending the Meeting and voting
in person. If the Proxy is properly executed and is not revoked, it will be
voted at the Meeting in the manner specified. If no instructions are specified,
the shares represented by the Proxy will be voted for the election of the
nominees to the Board of Directors listed below and for the approval of Items 2
and 3 in the Notice of Meeting.
The Annual Report of GenRad for the fiscal year ended December 28, 1996 and
this Proxy Statement were first distributed or mailed to shareholders on or
about April 7, 1997.
Voting Securities
GenRad's Common Stock, $1 par value, is the only class of voting securities
outstanding and entitled to be voted at the Meeting. The Board of Directors has
fixed March 19, 1997 as the record date for determining shareholders who are
entitled to notice of and to vote at the Meeting. At the close of business on
such record date, there were outstanding 26,225,152 shares of Common Stock. Each
share is entitled to one vote. A majority of the issued and outstanding shares
constitutes a quorum.
<PAGE>
Certain Shareholders
The following table sets forth, as of March 19, 1997, the beneficial
ownership of the Company's outstanding Common Stock of (i) each person known by
the Company to own beneficially more than 5% of the Company's outstanding Common
Stock, (ii) each executive officer named in the Summary Compensation Table below
and (iii) all directors and executive officers as a group:
<TABLE>
<CAPTION>
Number of Shares
of Common Stock
Beneficially Percent
Name of Beneficial Owner Owned(1) of Class
- ------------------------ ---------------- --------
<S> <C> <C>
Morgan Stanley Group Inc. 2,015,734(2) 7.7%
1251 Avenue of the Americas
New York, New York 10020
Group including 2,011,000(3) 7.7%
Athena Partners, L.P.
32 East 57th Street
New York, New York 10022
Regan Partners, L.P.
6 East 43rd Street
New York, New York 10017
Munn, Bernhard & Associates, Inc. 1,853,187(4) 7.1%
6 East 43rd Street
New York, New York 10017
James F. Lyons 857,260(5) 3.3%
Sarah H. Lucas 185,789(6) *
Paul H. Geere 112,667(7) *
Kevin R. Cloutier 50,000(8) *
Michael W. Schraeder 45,627(9) *
Daniel F. Harrington 192 *
All Directors and Executive Officers as a Group 1,380,885(10) 5.3%
</TABLE>
* Less than 1%.
(1) The number of shares beneficially owned by each director and executive
officer is determined under rules promulgated by the Securities and Exchange
Commission ("SEC"), and the information is not necessarily indicative of
beneficial ownership for any other purpose. Under such rules, beneficial
ownership includes any shares as to which the individual has sole or shared
voting power or investment power and also any shares which the individual has
the right to acquire within 60 days of March 19, 1997 through the exercise of
any stock option or other right. The inclusion herein of such shares, however,
does not constitute an admission that the named shareholder has a direct or
indirect pecuniary interest in such shares. Unless otherwise indicated, each
person or entity named in the table has sole voting power and investment power
(or shares such power with his or her spouse) with respect to all shares of
Common Stock listed as owned by such person or entity.
(2) The information reported is based on an amended Schedule 13G, dated
February 13, 1997, filed with the SEC by Morgan Stanley Group Inc. ("Morgan
Stanley") and Morgan Stanley Asset Management Limited ("Morgan Stanley
Management"). Morgan Stanley is a parent holding company of Morgan Stanley
Management, a registered investment advisor. Morgan Stanley shares dispositive
power with respect to 2,015,734 shares of Common Stock and shares voting power
with respect 1,874,834 shares of Common Stock. Morgan Stanley Management shares
dispositive power with respect to 1,858,276 shares of Common Stock and shares
voting power with respect to 1,718,876 shares of Common Stock.
(3) The information reported is based on a Schedule 13D, dated January 7,
1995, filed with the SEC by Athena Partners, L.P. ("Athena"), Lenore Robins, Lee
R. Robins, Regan Partners, L.P. ("Regan Partners") and Basil P. Regan and
information obtained from the aforementioned shareholders. Lenore Robins and Mr.
Regan are the general partners of Athena. Mr. Regan is the sole general partner
of Regan Partners. Amount set forth includes
2
<PAGE>
444,500 shares of Common Stock with respect to which Athena has sole voting and
dispositive power, 91,400 shares of Common Stock with respect to which Lee R.
Robins, individually and as trustee of various trusts, has sole voting and
dispositive power, 1,200 shares of Common Stock with respect to which Lenore
Robins has sole voting and dispositive power, and 1,474,000 shares of Common
Stock with respect to which Mr. Regan, individually and as the sole general
partner of Regan Partners, has sole voting and dispositive power. In addition,
as general partners of Athena, Lenore Robins and Mr. Regan share voting and
dispositive power with respect to the 444,500 shares of Common Stock owned by
Athena.
(4) The information reported is based on an amended Schedule 13G, dated
February 7, 1997, filed with the SEC by Munn, Bernhard & Associates, Inc., a
registered investment adviser ("MBA"), which has shared dispositive power, but
no voting power with respect to the indicated shares. Amount shown does not
include shares of Common Stock held by certain individuals affiliated with MBA
who disclaim membership in a group with MBA.
(5) Amount shown includes options to purchase 600,000 shares of Common
Stock.
(6) Amount shown includes options to purchase 184,650 shares of Common
Stock.
(7) Amount shown includes options to purchase 112,500 shares of Common
Stock.
(8) Amount shown reflects options to purchase 50,000 shares of Common
Stock.
(9) Amount shown includes options to purchase 45,000 shares of Common
Stock.
(10) See notes (5) through (9) above and notes (3) and (4) on page 6.
Solicitation
GenRad will bear the entire cost of preparing, assembling, printing and
mailing this Proxy Statement, the enclosed Proxy and any additional material
which may be furnished to shareholders. Further solicitation of Proxies may be
made by telephone or other communication. Brokers, custodians and fiduciaries in
whose names Common Stock is held will be requested to forward Proxy soliciting
material to the beneficial owners of such stock and GenRad will reimburse them
for this service. GenRad has retained Georgeson & Company Inc. as proxy
solicitor to aid in the solicitation of Proxies at an estimated cost of $6,000.
Votes Required
The affirmative vote of the holders of a plurality of the votes cast at the
Meeting is required for the election of directors. The affirmative vote of the
holders of a majority of the shares of Common Stock present or represented at
the Meeting and voting on a matter is required for the approval of Items 2 and 3
and any other matters to be voted upon. In addition, the New York Stock Exchange
("NYSE") requires that the total votes cast with respect to Items 2 and 3
represent at least a majority of the outstanding shares of Common Stock.
Shares of Common Stock represented by executed Proxies received by the
Company will be counted for purposes of establishing a quorum at the Meeting,
regardless of how or whether such shares are voted on any specific proposal.
With respect to the required vote on any particular matter other than Items 2
and 3, abstentions will not be treated as votes cast or as shares present or
represented and voting. With respect to the required vote on Items 2 and 3,
abstentions will be treated as shares that are present and entitled to vote for
purposes of determining the number of shares that are present and entitled to
vote, but will not be counted as a vote in favor of the matter. Accordingly, an
abstention from voting on Items 2 and 3 has the same effect as a vote against
the matter. If a broker or nominee holding stock in "street name" indicates on
the Proxy that it does not have a discretionary authority to vote as to Items 2
and 3, those shares will not be considered as present and entitled to vote with
respect to each such matter. Accordingly, "broker non-votes" on each such matter
will not be counted as votes cast in determining approval of any such matter.
ITEM 1
ELECTION OF DIRECTORS
Pursuant to Section 50A of Massachusetts General Laws Chapter 156B, the
Company has a classified Board of Directors consisting of three Class I
Directors, three Class II Directors and two Class III Directors. The Class I,
Class II and Class III Directors will serve until the Annual Meetings of
Shareholders to be held in 1997, 1998 and 1999, respectively, and until their
respective successors are duly elected and qualified. Under Massachusetts law,
the Board of Directors may be expanded, and vacancies and newly created
directorships may be filled, only by a majority vote of the remaining directors.
At each Annual Meeting of Shareholders, directors are elected for a full term of
three years to succeed those whose terms are expiring. At the Meeting, the
shareholders will elect three Class I Directors, whose terms will extend until
the 2000 Annual Meeting.
3
<PAGE>
The nominees for Class I Directors, James F. Lyons, Adriana Stadecker and
Lowell B. Hawkinson, were nominated by the Board of Directors in March 1997.
Shares represented by all Proxies received by the Board of Directors and
not so marked as to withhold authority to vote for any individual nominee will
be voted (unless one or more nominees are unable or unwilling to serve) for the
election of the three nominees for Class I Directors. The Board of Directors
knows of no reason why any such nominee should be unable or unwilling to serve,
but if such should be the case, the persons named in the Proxy may vote the
Proxy for the election of a substitute.
Nominees for Director and Continuing Directors
The following table sets forth certain information about each nominee for
director and each member of the Board of Directors whose term expires in 1998 or
1999.
<TABLE>
<CAPTION>
Number of
Year Shares of
Became a Common Stock
Director of Beneficially Percent
Biographical Summaries of Nominees and Directors the Company Owned(1) of Class
------------------------------------------------ ----------- ------------ --------
<S> <C> <C> <C>
Nominees for Director Whose Terms Will Expire in 2000
(Class I Directors)
James F. Lyons, 62, President and Chief Executive Officer, GenRad, Inc.,
Concord, Massachusetts 1993 857,260(2) 3.3%
Mr. Lyons has been President and Chief Executive Officer of the
Company since July 1993. From January 1992 to July 1993, he was
President and Chief Executive Officer of Harry Gray Associates, a
management consulting and investment company.
Adriana Stadecker, 50, President, EPIC International, Newton Centre,
Massachusetts 1994 22,000(3)(4) *
Ms. Stadecker was Founder and has been President of EPIC
International since July 1994. From October 1992 through June 1994,
Ms. Stadecker was responsible for Executive Operations at Digital
Equipment Corporation. She became Vice President of this department
in January 1993. From January 1991 through September 1992, Ms.
Stadecker was Group Human Resource Manager, Worldwide Manufacturing
and Logistics at Digital Equipment Corporation.
Lowell B. Hawkinson, 54, Chairman of the Board and Chief Executive
Officer, Gensym Corporation, Cambridge, Massachusetts 1995 18,000(3)(4) *
Mr. Hawkinson has been Chairman and Chief Executive Officer of
Gensym Corporation, a software company, since September 1986.
4
<PAGE>
Number of
Year Shares of
Became a Common Stock
Director of Beneficially Percent
Biographical Summaries of Nominees and Directors the Company Owned(1) of Class
------------------------------------------------ ----------- ------------ --------
<S> <C> <C> <C>
Directors Whose Terms Will Expire in 1998 (Class II Directors)
William S. Antle, III, 52, Chairman, President and Chief Executive
Officer, Oak Industries, Inc., Waltham, Massachusetts 1995 18,000(3)(4) *
Mr. Antle has been Chairman, President and Chief Executive Officer of
Oak Industries, Inc., a provider of components and controls for
leading manufacturers in a range of industries, since December 1989.
Mr. Antle is a director of Oak Industries, Inc. and New England
Investment Co.
Richard G. Rogers, 64, President, Tokyo Electron America, Austin, Texas 1995 22,000(3)(4) *
Mr. Rogers has been President of Tokyo Electron America, a company that
imports fabrication equipment for use by U.S. semiconductor
manufacturers, since March 1994. From November 1991 to December 1993, he
was President and Chief Executive Officer of Electronic Associates Inc.,
an electronic contract manufacturing company, located in West Long
Branch, New Jersey.
Ed Zschau, 57, Senior Lecturer of Business Administration, Harvard
University, Cambridge, Massachusetts 1995 16,500(3)(4) *
Mr. Zschau has been a Senior Lecturer of Business Administration at
Harvard University since February 1996. From April 1993 to July 1995, Mr.
Zschau was General Manager, Storage System Division at IBM Corporation.
From July 1988 to April 1993, Mr. Zschau was Chairman and Chief Executive
Officer of Censtor Corp., a company that researches and develops magnetic
recording components for disk drives. Mr. Zschau is a director of Identix,
Incorporated and Censtor Corp.
Directors Whose Terms Will Expire in 1999 (Class III Directors)
William G. Scheerer, 59 President, Performance QUEST LLC, Morganville,
New Jersey 1988 14,850(3)(4) *
Mr. Scheerer has been President of Performance QUEST LLC since
January 1997. From February 1996 to September 1996 he was
Infrastructure Operations Vice President at Lucent Technologies.
From January 1994 to February 1996 he was Quality, Engineering,
Software & Technologies (QUEST Partnership) Vice President at AT&T
Bell Laboratories. From January 1993 to January 1994 he was the
Executive Director, Quality, Engineering, Software & Technologies at
AT&T Bell Laboratories. From May 1990 through December 1992, Mr.
Scheerer was Executive Director, Quality Technologies &
International Planning at AT&T Bell Laboratories. Mr. Scheerer is a
director of LeCroy Corp.
5
<PAGE>
Number of
Year Shares of
Became a Common Stock
Director of Beneficially Percent
Biographical Summaries of Nominees and Directors the Company Owned(1) of Class
------------------------------------------------ ----------- ------------ --------
<S> <C> <C> <C>
Russell A. Gullotti, 54, Chairman, President and Chief Executive
Officer, National Computer Systems, Inc., Eden Prairie, Minnesota 1995 18,000(3)(4) *
Mr. Gullotti has been President and Chief Executive Officer of
National Computer Systems, Inc. since October 1994 and Chairman of
the Board since May 1995. From January 1994 until October 1994, he
was President, Americas Area, at Digital Equipment Corporation. From
1982 to January 1994, Mr. Gullotti held senior executive positions
in sales and marketing services and administration at Digital
Equipment Corporation. Mr. Gullotti is a director of MTS Systems
Corporation.
</TABLE>
- ----------------
*Less than 1%.
(1) Share ownership information is as of March 19, 1997. Each person has sole
voting and investment power (or such power shared only with a spouse) unless
otherwise indicated.
(2) Amount shown includes options to purchase 600,000 shares of Common Stock.
(3) Includes for the following persons options to purchase the indicated number
of shares of Common Stock: Ms. Stadecker (17,500 shares), Mr. Antle (15,000
shares), Mr. Gullotti (15,000 shares), Mr. Hawkinson (15,000 shares), Mr.
Rogers (15,000 shares), Mr. Zschau (15,000 shares) and Mr. Scheerer (10,000
shares).
(4) Includes 1,500 shares of restricted stock issued on each of August 31, 1994
and 1995 and August 30, 1996 to each of Mr. Scheerer and Ms. Stadecker,
1,500 shares of restricted stock issued on each of August 31, 1995 and
August 30, 1996 to each of Messrs. Antle, Gullotti, Hawkinson and Rogers and
1,500 shares of restricted stock issued on August 30, 1996 to Mr. Zschau.
These shares may not be transferred prior to the earlier to occur of (i) the
first, second and third anniversaries of the respective dates of grant, each
with respect to one-third of the shares, (ii) the resignation of the
director from the Board of Directors with the consent of the majority of the
members of the Board, or the death or disability of the director, or (iii) a
change in control of the Company. Further, if a director resigns from the
Board of Directors or refuses to stand for re-election without the consent
of the majority of the members of the Board prior to the date upon which the
restrictions on transfer lapse, the director forfeits to the Company all
shares of restricted stock issued to such director during the year preceding
such resignation or refusal.
Further Information Regarding the Board of Directors and Certain Executive
Officers
The Compensation Committee of the Board reviews and makes recommendations
to the Board on matters relating to employee compensation and benefits,
determines the compensation of officers and other key employees and administers
the Company's 1982 Stock Option Plan, 1991 Equity Incentive Plan and Employee
Stock Purchase Plan. The members are Richard G. Rogers (Chair), Adriana
Stadecker and William S. Antle III. The Corporate Governance Committee of the
Board articulates matters which should be raised to the Board and defines the
Board's accountability. The members are Adriana Stadecker (Chair), William G.
Scheerer and Lowell B. Hawkinson. The Audit Committee of the Board reviews and
monitors the Company's financial reporting and accounting practices, and works
with representatives of the Company's independent auditors in establishing the
scope of the audit and conducting an independent review of the audit after its
completion. The members are William S. Antle III (Chair), Russell A. Gullotti
and Ed Zschau. The Technology and Quality Committee of the Board periodically
reviews issues concerning product technology with the Company's technical
management and reports its assessments to the Board. The members are William G.
Scheerer (Chair), Lowell B. Hawkinson and Ed Zschau.
In 1996 the Board of Directors met 11 times, its Audit Committee met three
times, its Compensation Committee met two times, its Corporate Governance
Committee met three times and its Technology and Quality Committee met four
times. All directors attended at least 75% of the meetings of the Board and of
all meetings of the committees of the Board on which they served.
Section 16(a) Beneficial Ownership Reporting Compliance
Michael W. Schraeder filed a Form 5 with the SEC on March 7, 1997 with
respect to one transaction and Kevin R. Cloutier filed a Form 5 with the SEC
with respect to one transaction on March 11, 1997.
6
<PAGE>
COMPENSATION OF EXECUTIVES AND DIRECTORS
Summary Compensation Table
The following table sets forth certain information for the past three
fiscal years with respect to the annual and long-term compensation of the
Company's Chief Executive Officer and certain other highly compensated executive
officers of the Company during the most recent fiscal year (such executive
officers are sometimes collectively referred to in this Proxy Statement as the
"named executive officers"):
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation Awards
------------------------------------ --------------------
Other Annual Securities All Other
Salary Bonus Compensation Underlying Compensation
Name and Principal Position(A) Year(B) ($)(C) ($)(D) ($)(E) Options(#)(F) $(G)
- ------------------------------------ ------- --------- --------- ------------ --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
James F. Lyons 1996 $357,504 $178,752 $1,378 -- $ 8,750
President, Chief 1995 357,504 160,162 4,411 350,000 8,125
Executive Officer 1994 341,616 98,314 -- -- 3,625
Kevin R. Cloutier 1996 137,504 162,195 -- 150,000 4,750
Vice President, General Manager 1995 -- -- -- -- --
Electronic Manufacturing Systems 1994 -- -- -- -- --
Paul H. Geere 1996 161,128 115,187 -- 250,000 19,607
Vice President, Managing Director 1995 -- -- -- -- --
Advanced Diagnostic Solutions 1994 -- -- -- -- --
Sarah H. Lucas 1996 191,664 100,000 3,367 150,000 8,750
Vice President, Chief Strategic 1995 155,434 83,200 -- 50,000 8,125
Officer 1994 139,874 50,000 -- 100,000 --
Michael W. Schraeder 1996 158,334 131,483 -- 155,000 4,750
Vice President, Worldwide Sales 1995 -- -- -- -- --
and Service 1994 -- -- -- -- --
Daniel F. Harrington 1996 158,229 87,500 1,091 170,000 3,712
Vice President, Chief Financial 1995 -- -- -- -- --
Officer and Secretary 1994 -- -- -- -- --
</TABLE>
(A) Mr. Cloutier joined the Company in June 1985, and became an executive
officer in October 1996. Mr. Geere joined the Company in January 1995, and
became an executive officer in May 1996. Mr. Schraeder joined the Company
in September 1980, and became an executive officer in October 1996. Mr.
Harrington joined the Company in April 1995, and became an executive
officer in February 1996. Mr. Harrington's employment with the Company
terminated in December 1996.
(B) Compensation paid by the Company to Messrs. Cloutier, Geere, Schraeder and
Harrington for fiscal years during which they did not serve as executive
officers is not shown. All compensation paid to Messrs. Cloutier, Geere,
Schraeder and Harrington by the Company in any capacity during the 1996
fiscal year, the year in which they became executive officers, is shown.
(C) Mr. Geere's salary is calculated on the basis of an annual average
conversion rate of $1:(pound).64 between the U.S. dollar and the British
pound during the 1996 fiscal year.
(D) For Messrs. Schraeder and Cloutier, the amounts shown include commissions
in the amount of $81,483 and $62,193, respectively, paid by the Company.
(E) The amounts shown represent the dollar value of the difference between the
price paid by the named executive officer for Common Stock under the
Company's Employee Stock Purchase Plan and the fair market value of such
stock at the date of purchase.
(F) Options to purchase 170,000 shares granted to Mr. Harrington expired upon
the termination of his employment with the Company.
(G) For Messrs. Schraeder, Cloutier and Harrington, the amounts shown
constitute payments by the Company under its 401(k) plan. The amount shown
for Mr. Lyons and Ms. Lucas in 1996 is composed of payments of $4,000 for
estate planning services and $4,750 under GenRad's 401(k) plan. The amount
shown for Mr. Geere represents a car and gasoline allowance paid by the
Company.
7
<PAGE>
Employment Agreements
The Company has entered into an employment agreement with Mr. Geere dated
November 13, 1994 which is terminable upon three months' notice. Under the
employment agreement Mr. Geere is entitled to receive a base salary, a bonus of
up to 20% of his base salary, reimbursement for his automobile expenses and
other standard benefits available to employees of GenRad in the United Kingdom.
Option Grants in Last Fiscal Year
The following table sets forth certain information regarding options
granted during the fiscal year ended December 28, 1996 by the Company to each of
the named executive officers:
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Rates of
Stock Price
Appreciation
for Option
Individuals Grants Term (A)
-------------------------------------------------------------------------- ----------------------
Number of % of Total
Securities Options
Underlying Granted to Exercise
Options Employees or
Granted in Fiscal Base Expiration
Name (#)(B) Year Price ($/Sh) Date 5%($) 10%($)
- ---- ---------- --------- ------------ ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
James F. Lyons -- -- % $ -- -- $ -- $ --
Kevin R. Cloutier 50,000 2.4% 16.375 6/10/06 514,907 1,304,876
100,000 5.0% 18.375 10/29/06 1,155,594 2,928,502
Paul H. Geere 250,000 12.4% 12.50 3/15/06 1,965,295 4,980,445
Sarah H. Lucas 150,000 7.4% 12.50 3/15/06 1,179,177 2,988,267
Michael W. Schraeder 155,000 7.7% 18.375 10/29/06 1,790,705 4,538,713
Daniel F. Harrington 150,000 7.4% 12.50 12/13/96 -- --
- --------------------
</TABLE>
(A) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on assumed rates of stock appreciation of 5% and 10% compounded
annually from the date the respective options were granted to their
expiration date. Actual gains, if any, on stock appreciation exercises will
depend on the future performance of the Common Stock and the date on which
the options are exercised. Amounts shown assume that all options vest in
accordance with terms of each executive officer's own stock option
agreement. The Company has not granted stock appreciation rights to date.
(B) Options to purchase 170,000 shares granted to Mr. Harrington expired upon
the termination of his employment with the Company in December 1996.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following table sets forth the aggregate dollar value of all options
exercised and the total number of unexercised options held on December 28, 1996
by each of the named executive officers:
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised In-the-Money Options
Options at FY-End(#) at FY-End ($)(B)
------------------------------- -------------------------------
Shares Acquired Value Realized
Name on Exercise(#) ($)(A) Exercisable Unexercisable Exercisable Unexercisable
- ---- -------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James F. Lyons -- $ -- 850,000 -- $14,806,250 $ --
Kevin R. Cloutier -- -- 50,000 150,000 769,375 775,000
Paul H. Geere -- -- 50,000 250,000 791,250 2,593,750
Sarah H. Lucas -- -- 147,150 150,000 2,538,693 1,556,250
Michael W. Schraeder -- -- 45,000 155,000 776,875 697,000
Daniel F. Harrington 30,000 423,125 -- -- -- --
</TABLE>
(A) Value is calculated based on the difference between the option exercise
price and the closing market price of the Common Stock on the date of
exercise multiplied by the number of shares to which the exercise relates.
(B) The closing price for the Company's Common Stock on the NYSE on December
28, 1996, the last business day of fiscal 1996, was $22.875. Value is
calculated on the basis of the difference between the option exercise price
and $22.875 multiplied by the number of shares of Common Stock underlying
the option.
8
<PAGE>
Pension Plan
GenRad has a defined benefit pension plan designed to provide retirement
benefits for employees in the United States and incidental benefits to their
beneficiaries. On January 31, 1995, the Company closed the Pension Plan to new
participants and ceased all benefit accruals. Only two executive officers, James
F. Lyons and Kevin R. Cloutier, qualify for participation in the Pension Plan
based upon at least one qualified year of service prior to January 31, 1995.
Their annual benefits under the plan have been frozen at approximately $120 and
$8,375, respectively, assuming vesting of the benefits after their five years of
service and retirement at age 65.
Compensation of Directors
Directors who are not employees of GenRad currently receive an annual grant
in August of 2,500 restricted shares of the Company's Common Stock. Directors
who are not employees of GenRad also receive a fee of $750 for each directors'
meeting attended. Non-employee directors who serve as committee chair of the
Audit Committee, the Compensation Committee, the Corporate Governance Committee
or the Technology and Quality Committee receive a fee of $1,000 for attending
each committee meeting. Non-employee directors who are members of the Audit
Committee, the Compensation Committee, the Corporate Governance Committee and
the Technology and Quality Committee receive a fee of $750 for attending each
committee meeting. Directors are also reimbursed for any expenses attendant to
Board membership.
Pursuant to the 1991 Directors' Stock Option Plan, each non-employee
director is granted an option to purchase 2,500 shares of the Company's Common
Stock each year on the fifth business day following the release of annual
earnings. The option exercise price for options granted under the 1991
Directors' Stock Option Plan is equal to the closing price per share of the
Company's Common Stock on the date of grant ($10.625 in 1996). Each option
may be exercised at any time, in whole or in part, prior to the fifth
anniversary of the date of grant. Also pursuant to the 1991 Directors' Stock
Option Plan, each non-employee who becomes a director is granted options to
purchase 10,000 shares of the Company's Common Stock on the day that he or she
becomes a director. The option exercise price for these options is equal to the
closing price per share of the Company's Common Stock on the date of grant. Each
option may be exercised at any time, in whole or in part, prior to the fifth
anniversary of the date of grant.
Board Compensation Committee Report on Executive Compensation
The Compensation Committee of the Company's Board of Directors is
responsible for establishing compensation policies with respect to the
Company's executive officers, including the Chief Executive Officer and the
other named executive officers, and setting the compensation for these
individuals. The Compensation Committee consists of the three nonemployee
directors listed below.
The Compensation Committee seeks to achieve three broad goals in connection
with the Company's executive compensation programs and decisions regarding
individual compensation. First, the Compensation Committee structures executive
compensation programs in a manner that the Committee believes will enable the
Company to attract and retain key executives. Second, the Compensation Committee
establishes compensation programs that are designed to reward executives for the
achievement of specified business objectives of the Company. By tying
compensation in part to particular goals, the Compensation Committee believes
that a performance-oriented environment is created for the Company's executives.
Finally, the Company's executive compensation programs are intended to provide
executives with an equity interest in the Company so as to link a portion of the
compensation of the Company's executives with the performance of the Company's
Common Stock.
The compensation programs for the Company's executives established by the
Compensation Committee consist of three elements tied to the foregoing
objectives: base salary; annual cash bonus; and stock-based equity incentives,
primarily participation in the Company's 1991 Equity Incentive Plan. In
establishing base salaries for executives, the Compensation Committee monitors
standards at comparable companies, particularly those that are in the same
industry as the Company or related industries and/or are located in the same
general geographical area as the Company, considers historic salary levels of
the individual and the nature of the individual's responsibilities, and compares
the individual's base salary with that of other executives of the Company. To
the extent determined appropriate, the Compensation Committee also considers
general conditions and the Company's financial performance in establishing base
salaries of executives. In deciding to award options, the Compensation Committee
also considers the number of options outstanding or previously granted and the
aggregate size of current awards.
9
<PAGE>
On July 7, 1993, Mr. Lyons became the Company's Chief Executive Officer. In
determining his compensation arrangements in 1996, the Compensation Committee
followed the policies set forth above. First, Mr. Lyons' base compensation was
established to match median levels for Chief Executive Officers of electronics
companies of comparable size. His base salary was increased by 10% in 1994 and
maintained at the same level in 1995 and 1996. Second, consistent with the goal
to reward for the accomplishment of the Company objectives, Mr. Lyons received
incentive compensation equal to 45% of his base compensation in 1995 and 50% of
his base compensation in 1996 as a result of the Company's achievement of its
objectives. Finally, the stock options granted to Mr. Lyons in 1993 and 1995,
particularly its vesting provisions which are tied to increases in the trading
price of the Company's Common Stock on the New York Stock Exchange, was intended
to link the rewards of the Chief Executive Officer to those of the Company's
shareholders. Mr. Lyons did not receive a grant of stock options in 1996.
Section 162(m) of the Internal Revenue Code (the "Code"), enacted in 1993,
generally disallows a tax deduction to public companies for compensation over $1
million paid to the corporation's Chief Executive Officer and four other most
highly compensated executive officers. Qualifying performance-based compensation
will not be subject to the deduction limit if certain requirements are met.
Where possible, the Company tries to maintain the deductibility of compensation
paid to the Company's executive officers. Hence, in Item 3 of the accompanying
Notice of Meeting, the Board of Directors proposes to amend the Incentive Plan
to specify the maximum number of shares that can be awarded under the plan in
order to comply with certain requirements of Section 162(m) of the Code.
Richard G. Rogers, Chair
Adriana Stadecker
William S. Antle
10
<PAGE>
Stock Performance Chart
The following chart and table compare the yearly percentage change in the
cumulative total shareholder return on the Company's Common Stock during the
five years ended December 31, 1996 with the total return on the S&P High
Technology Composite Index and the S&P 500 Composite Index. The comparison
assumes $100 was invested on December 31, 1991 in the Company's Common Stock and
in each of the foregoing indices and assumes reinvestment of dividends.
[Stock Performance Line Chart]
[Plot Points:]
S&P High Technology
GenRad, Inc. Composite Index S&P 500 Composite Index
1991 $ 100 100 100
1992 $ 228 104 108
1993 $ 278 128 118
1994 $ 267 149 120
1995 $ 433 215 165
1996 $1033 305 203
ITEMS 2 AND 3
PROPOSALS TO AMEND THE 1991 EQUITY INCENTIVE PLAN
In the opinion of the Board of Directors, the future success of the Company
depends, in large part, on its ability to attract, retain and motivate key
employees with experience and ability. Under the Incentive Plan, the Company is
currently authorized to make awards of restricted stock and to grant incentive
and non-statutory stock options to employees, officers and employee directors
of, and consultants and advisers to, the Company to purchase up to 6,250,000
shares of Common Stock. Currently, there are approximately 227 participants in
the Incentive Plan. On March 19, 1997, options to purchase 3,326,196 shares of
Common Stock were outstanding under the Incentive Plan and 241,679 shares were
available for future grants under the Incentive Plan. Accordingly, the Board of
Directors has adopted, subject to shareholder approval, amendments (the
"Incentive Plan Amendments") to the Incentive Plan increasing the number of
shares of Common Stock available for issuance under the Incentive Plan by
2,000,000 shares.
In Item 2 of the accompanying Notice of Meeting, the Board of Directors
proposes to amend the Incentive Plan by increasing the number of shares of
Common Stock available for issuance under the Incentive Plan by 2,000,000
shares. The 2,000,000 shares will be issued by the Compensation Committee in its
discretion under the Incentive Plan. All of such options will be granted with
exercise prices equivalent to the market prices of the Company's Common Stock on
the dates of grant.
In Item 3 of the accompanying Notice of Meeting, the Board of Directors
proposes to amend the Incentive Plan by limiting the number of shares of Common
Stock available for issuance to any participant in any one year to 500,000
shares. Section 162(m) of the Code generally disallows a tax deduction to public
companies for compensation over $1 million paid to the corporation's Chief
Executive Officer and four other most highly
11
<PAGE>
compensated executive officers. Qualifying performance-based compensation is not
subject to the deduction limit if certain requirements are met. In order for
compensation under the Incentive Plan to comply with such requirements, the
Incentive Plan must state the maximum number of shares with respect to which
options or rights may be granted during a specified period to any participant.
Under the transition rules applicable to Section 162 (m), the Company was not
required to amend the Incentive Plan to comply with the above-stated requirement
until the 1997 Annual Meeting of Shareholders.
Future issuances under the Incentive Plan are subject to the discretion of
the Compensation Committee. Therefore, it is impossible to indicate the specific
awards that will be granted to or benefits that will be received by any
individual participant or any group of participants under the Incentive Plan.
The following table, however, provides certain information about issuance of
options under the Incentive Plan to the named executive officers, all current
executive officers as a group, all current directors who are not executive
officers as a group and all employees, including employees who are not executive
officers, as a group during the fiscal year ended December 28, 1996.
1991 EQUITY INCENTIVE PLAN
<TABLE>
<CAPTION>
Dollar Number of Shares
Name and Position Value($)(A) of Common Stock
- ----------------- ----------- ----------------
<S> <C> <C>
James F. Lyons, President, Chief Executive Officer $ -- --
Kevin R. Cloutier, Vice President, General Manager Electronic Manufacturing Systems -- 150,000
Paul H. Geere, Vice President, Managing Director Advanced Diagnostic Solutions 218,750 250,000
Sarah H. Lucas, Vice President, Chief Strategic Officer 131,250 150,000
Michael W. Schraeder, Vice President, Worldwide Sales and Service -- 155,000
Daniel F. Harrington, Vice President, Chief Financial Officer and Secretary 148,750 170,000
Executive Officer Group (six persons) 498,750 875,000
Non-Executive Officer Director Group (seven persons) -- --
Non-Executive Officer Employee Group (thirty eight persons) 966,411 1,145,146
</TABLE>
- ------------------
(A) Value is calculated on the basis of the positive difference between the
option exercise price and $13.375, the closing price for the Company's
Common Stock on the NYSE on March 19, 1997, multiplied by the number of
option shares.
The following is a summary of the material provisions of the Incentive Plan
and is qualified in its entirety by reference to the complete text of the
Incentive Plan which has been filed with the SEC and is available from the
Company upon request to the Secretary of the Company:
Eligibility
All key employees of the Company are eligible to receive incentive stock
options, non-statutory stock options and awards of restricted stock under the
Incentive Plan. Outside consultants and advisors to the Company are eligible to
receive non-statutory options and awards of restricted stock. As of March 19,
1997, there were approximately 227 participants in the Incentive Plan.
Administration
The Incentive Plan is administered by the Compensation Committee of the
Board of Directors, consisting of Messrs. Rogers and Antle and Ms. Stadecker.
Stock Options
The Compensation Committee designates the optionee, date of grant and term
of each option, except that no incentive stock option can have a term exceeding
10 years (five years in the case of a 10% shareholder). The exercise price of
options is determined by the Compensation Committee, but may not be less than
100% (110% in the case of a 10% shareholder) of the fair market value on the
date of grant for incentive stock options. Under Section 422 of the Code, to the
extent that the aggregate fair market value of stock with respect to which
incentive stock options are exercisable for the first time by any individual
during any calendar year exceeds $100,000, such options will be treated as
non-statutory options. Payment of the option exercise price may be made in cash,
shares of Common Stock, a combination of cash or stock or by any other method
(including delivery of a promissory note payable on terms specified by the
Compensation Committee) approved by the Compensation Committee consistent with
Section 422 of the Code and Rule 16b-3 under the Securities Exchange Act of 1934
("Rule 16b-3"). While the Company may grant options which
12
<PAGE>
are exercisable at different times or within different periods, it is
anticipated that options granted generally will be exercisable on a cumulative
basis with respect to 25% of the shares after one year from the date of grant
and an additional 75% per year thereafter. Options are not assignable or
transferable except by will or the laws of descent and distribution or, in the
case of non-statutory options, pursuant to a qualified domestic relations order.
The Compensation Committee will determine the length of time during which an
optionee may exercise his or her option following the termination of employment
(which may not exceed three months in the case of incentive stock options) and
upon death or disability (which may not exceed one year in the case of incentive
stock options).
The Compensation Committee, in its sole discretion, may include additional
provisions in any option granted under the Incentive Plan, including without
limitation restrictions on transfer, repurchase rights, commitments to pay cash
bonuses, to make, arrange for or guaranty loans or to transfer other property to
optionees upon exercise of options, or such other provisions as shall be
determined by the Compensation Committee so long as not inconsistent with the
Incentive Plan. The Compensation Committee generally, in its sole discretion,
may also accelerate or extend the date or dates on which all or any particular
option or options granted under the Incentive Plan may be exercised.
Restricted Stock Awards
Restricted stock awards entitle the recipient to purchase Common Stock from
the Company under terms which provide for vesting over a period of time and a
right of repurchase of unvested stock when the recipient's relationship with the
Company terminates. The Compensation Committee selects the recipients of
restricted stock awards and determines (i) the number of shares of Common Stock
to be issued and sold to the recipient, (ii) the price of the stock, which can
be less than the fair market value, and (iii) the vesting schedule for such
shares. While the Company may make awards of restricted stock which vest at
different times or within different periods, it is anticipated that awards
generally will vest on a cumulative basis with respect to 33-1/3% of the shares
after one year from the date of award and an additional 33-1/3% per year
thereafter. The recipient may not sell, transfer or otherwise dispose of such
stock until it vests. Upon termination of the recipient's relationship with the
Company, the Company will be entitled to repurchase those shares which are not
vested on the termination date at a price equal to their original purchase
price.
Cancellation and New Grant of Options
The Compensation Committee, with the consent of the affected option holder,
may at any time cancel any or all outstanding options under the Incentive Plan
and grant in substitution therefor new options under the Incentive Plan covering
the same or different numbers of shares of Common Stock. Such new options shall
have an exercise price per share determined by the Compensation Committee, but
not less than 100% (110% in the case of a 10% shareholder) of fair market value
on the date of the new grant in the case of incentive stock options. The Company
anticipates that in most cases the option price in effect under any such new
grant will be less than the option price which would have been payable under the
cancelled options since the new grant is likely to arise in situations where the
exercise price of existing options exceeds the market price and new options are
granted at lower prices to restore an incentive to recipients of such options.
Under the Incentive Plan, an exchange program such as that described above would
not require shareholder approval.
Mergers and Change in Control
In the event of a consolidation or merger or sale of all or substantially
all of the assets of the Company, the Compensation Committee, in its discretion,
may take one or more of the following actions: (i) provide that outstanding
options shall be assumed, or equivalent options shall be substituted, by the
acquiring corporation, (ii) upon written notice to optionees, provide that all
unexercised options will terminate unless exercised within a specific time,
(iii) in the event of a merger in which cash payments are paid to shareholders,
make or provide for a cash payment to optionees equal to the difference between
the cash payment payable in the merger per share of Common Stock and the
exercise price per share, multiplied by the number of shares subject to each
outstanding option, and (iv) provide that all or any outstanding options shall
become exercisable in full and all restrictions on outstanding awards of
restricted stock shall terminate.
Notwithstanding any other provision of the Incentive Plan, in the event of
a "Change in Control of the Company," as defined in the Incentive Plan, the
exercise dates of all options then outstanding shall be accelerated in full, any
restrictions on exercising outstanding options issued pursuant to the Incentive
Plan shall terminate and
13
<PAGE>
any restrictions on and rights of the Company to repurchase shares covered by
outstanding awards of restricted stock issued pursuant to the Incentive Plan
shall terminate.
Amendment and Termination of the Plan
The Compensation Committee at any time may amend or modify the terms of the
Incentive Plan in any respect except that the Compensation Committee may not
adopt any amendment requiring shareholder approval under Section 422 of the Code
without the approval of the shareholders of the Company.
Withholding Taxes
Subject to the approval of the Company, a participant may elect to satisfy
federal, state or local withholding tax requirements incurred in connection with
the exercise of an option or purchase of shares subject to a restricted stock
award, in whole or in part, by (i) causing the Company to withhold shares of
Common Stock which would otherwise be issued pursuant to the exercise of an
option or the purchase of shares subject to an award, or (ii) delivering to the
Company shares of Common Stock already owned by the optionee.
Federal Income Tax Consequences
The following is a summary of the federal income tax treatment of incentive
stock and non-statutory options and restricted stock awards.
Non-Statutory Stock Options. No taxable income is recognized by the
optionee upon the grant of a non- statutory stock option. The optionee must
recognize as ordinary income in the year in which the option is exercised the
amount by which the fair market value of the purchased shares on the date of
exercise exceeds the option price. However, special rules may apply to persons
required to file reports under Section 16(b) of the Securities Exchange Act of
1934 as a consequence of the interaction of Section 83 of the Code and Rule
16b-3. Subject to Section 162(m) of the Code, the Company will be entitled to a
business expense deduction equal to the amount of ordinary income recognized by
the optionee. Any additional gain or any loss recognized by the optionee upon
the subsequent disposition of the purchased shares will be a capital gain or
loss, and will be a long-term gain or loss if the shares are held for more than
one year.
Incentive Stock Options. As in the case of non-statutory options, no
taxable income is recognized by the optionee upon the grant of an incentive
stock option. However, unlike non-statutory options, no taxable income is
recognized by the optionee upon the exercise of an incentive stock option, and
no corresponding expense deduction is available to the Company. Generally, if an
optionee holds shares acquired upon the exercise of an incentive stock option
until the later of (i) two years from the grant of the option and (ii) one year
from the date of transfer of the purchased shares to him or her (the "Statutory
Holding Period"), any gain recognized by the optionee on a subsequent sale of
the shares will be treated as long-term capital gain. The federal income tax
effect on the holder of incentive stock options is to defer, until the purchased
shares are sold, taxation of any increase in the shares' value from the time of
grant to the time of exercise.
If the optionee sells shares acquired upon the exercise of an incentive
stock option prior to the expiration of the Statutory Holding Period, he or she
will recognize taxable income at ordinary income tax rates in an amount equal to
the lesser of (i) the value of the shares on the date of exercise less the
option price; or (ii) the amount realized on the date of sale less the option
price. Subject to Section 162(m), the Company will be entitled to a
corresponding business expense deduction.
For purposes of the "alternative minimum tax" applicable to individuals,
the exercise of an incentive stock option is treated in the same manner as the
exercise of a non-statutory stock option. Thus, in the year of option exercise
an optionee must generally include in his or her alternative minimum taxable
income the difference between the exercise price and the fair market value of
the purchased shares on the date of exercise. The alternative minimum tax is
imposed upon an individual's alternative minimum taxable income at rates of 26%
to 28%, but only to the extent that such tax exceeds the taxpayer's regular
income tax liability for the taxable year.
Restricted Stock Awards. If a restricted stock award is subject to
forfeiture provisions and restrictions on transfer (a "Restricted Award"),
neither the Company nor the recipient of the award will realize any federal tax
consequences at the time such award is made under the Incentive Plan unless the
recipient makes an election under Section 83(b) of the Code. If the recipient of
a Restricted Award makes a Section 83(b) election within 30 days
14
<PAGE>
of the date of an award, or if the recipient receives an award that is not
subject to forfeiture provisions and restrictions on transfer, he or she will
recognize ordinary income, for the year in which the award is received, in an
amount equal to the difference between the fair market value of the Common Stock
at the time the award is made and the purchase price paid for the Common Stock.
If such election is made and the recipient subsequently forfeits some or all of
the Common Stock, he or she will not be entitled to any tax refund. If a Section
83(b) election is not made with respect to a Restricted Award, the recipient
will recognize ordinary income, in the first taxable year in which the rights of
the recipient are either transferable or are not subject to a substantial risk
of forfeiture, in an amount equal to the difference between the fair market
value of the Common Stock at that time and the original purchase price for the
shares. Subject to Section 162(m), the Company will be entitled to deduct, as
compensation expense, the same amount as the recipient must include as ordinary
income. Such deduction will be allowed in the Company's tax year which includes
the last day (generally December 31) of the recipient's tax year in which the
recipient is required to include the amount in income. When the recipient sells
the shares, he or she will recognize capital gain at the time of sale equal to
the difference between his or her basis (the price paid for the shares plus any
taxed amount) and the sale price.
Compensation Deduction. Section 162(m) provides a $1 million limit for
deductions of the Company with respect to compensation of the Company's Chief
Executive Officer and four other most highly compensated executive officers.
Stock options (whether qualified or non-qualified) will be excluded from this
limitation provided that the exercise price of the option is equal to the fair
market value of the Company's shares subject to the option on the date of grant,
and certain other requirements, relating to the composition of the Compensation
Committee and shareholder approval of the Incentive Plan, are met. Further, the
compensation element of grants of restricted stock is not excluded from this
limitation. Therefore, it is possible that at a future point in time the
Company's deduction for executive compensation could be subject to the $1
million limitation.
Board Recommendation
The Board of Directors believes that approval of the proposed Incentive
Plan Amendments are in the best interests of the Company and its shareholders
and recommends a vote "FOR" the proposals contained in Items 2 and 3 of the
accompanying Notice of Meeting.
SELECTION OF AUDITORS
The Board of Directors has selected Price Waterhouse LLP, independent
public accountants, as independent auditors of GenRad for the fiscal year ending
January 3, 1998. Price Waterhouse LLP originally was engaged by the Board of
Directors as of April 1, 1995.
On March 22, 1995, GenRad notified Arthur Andersen LLP of its dismissal as
GenRad's independent auditors effective April 1, 1995. This action was
approved by the Audit Committee and the Board of Directors. During the two
consecutive fiscal years ending December 31, 1994, and the subsequent interim
period (the first fiscal quarter of 1995), there were no disagreements with
Arthur Andersen LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure which, if not
resolved to the satisfaction of Arthur Anderson LLP, would have caused it to
make a reference to the subject matter of such disagreement in connection
with its audit reports. Arthur Andersen LLP's report on the Financial
Statements of GenRad for the two consecutive fiscal years ended December 31,
1994 did not contain an adverse opinion or a disclaimer of opinion nor were
the reports qualified or modified as to uncertainty, audit scope or
accounting principles.
GenRad has been advised by Price Waterhouse LLP that representatives will
be present at the Meeting, and will have the opportunity to make a statement if
they so desire as well as be available to respond to appropriate questions.
SHAREHOLDER PROPOSALS
Shareholder proposals for inclusion in proxy materials for the 1998 Annual
Meeting of Shareholders must be submitted in writing by December 3, 1997 to the
Secretary of the Company, 300 Baker Avenue, Concord, Massachusetts 01742-2174.
15
<PAGE>
OTHER BUSINESS
The Board of Directors knows of no business which will be presented for
consideration at the Meeting other than as stated in the Notice of Meeting. If
any other business properly comes before the Meeting, it is the intention of the
persons named in the enclosed Proxy to vote or otherwise act in accordance with
their judgment on such matters.
Walter A. Shephard, Clerk
April 7, 1997
- --------------------------------------------------------------------------------
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING, PLEASE SEND IN YOUR
PROXY WITHOUT DELAY. PROMPT RESPONSE IS HELPFUL AND YOUR COOPERATION WILL BE
APPRECIATED. ANY SHAREHOLDER GIVING A PROXY MAY REVOKE AT ANY TIME IF IT HAS
NOT BEEN VOTED.
- --------------------------------------------------------------------------------
16
<PAGE>
GenRad Choice Investment Plan
300 Baker Avenue
Concord, Massachusetts 01742-2174
NOTICE TO PARTICIPANTS OF THE GENRAD CHOICE INVESTMENT PLAN
OF THE ANNUAL MEETING OF GENRAD SHAREHOLDERS
The GenRad Choice Investment Plan ("ChIP") provides that The Vanguard Group
of Investment Companies ("Vanguard"), as Trustee of ChIP, will follow the voting
instructions of the ChIP Participants with respect to any voting rights
pertaining to their respective interests in shares of GenRad, Inc. Common Stock
held in ChIP Parts I and II.
The Annual Meeting of Shareholders of GenRad, Inc. ("GenRad" or the
"Company") will be held on Thursday, May 8, 1997 at 11:00 a.m. at the Westford
Regency Hotel, 219 Littleton Road, Westford, Massachusetts, and at any
adjournment or adjournments thereof (the "Meeting"), for the following purposes:
1. To elect James F. Lyons, Adriana Stadecker and Lowell B. Hawkinson to
the Board of Directors to serve as Class I Directors for three-year
terms.
2. To consider and act upon a proposal to amend the Company's 1991 Equity
Incentive Plan (the "Incentive Plan") by increasing the number of
shares of Common Stock available for issuance under the Incentive Plan
by 2,000,000 shares.
3. To consider and act upon a proposal to amend the Incentive Plan by
limiting the number of shares of Common Stock available for issuance to
any participant in any one year to 500,000 shares.
4. To consider and act upon such other business as may properly come
before said Annual Meeting or any adjournment thereof.
The attached Proxy Statement describes the matters to be acted upon at the
meeting and contains information required to be disclosed in connection with the
solicitation of Proxies for the meeting. The enclosed Voting Instruction Card
identifies the number of shares of GenRad Common Stock that you may direct the
Trustee to vote.
Please complete, date and sign the Voting Instruction Card and return it to
the Bank of Boston, the Company's Transfer Agent (the "Bank"), P.O. Box 1628,
Boston, Massachusetts 02105 on or before May 6, 1997 in the envelope provided.
The Trustee has provided the Bank with a ballot executed in blank. The Bank will
tabulate the total from the Voting Instruction Cards it receives and will enter
these totals on the ballot. This ballot will then be tabulated by the Bank with
all other ballots cast at the Meeting.
Most of the ChIP Participants who are entitled to direct the voting of
shares of GenRad Common Stock held by ChIP are also shareholders of GenRad. A
duplicate copy of the Company's 1996 Annual Report (the "Annual Report") is,
therefore, not enclosed with this notice if you are also a shareholder. If, for
any reason, you have not received an Annual Report, or if you wish to have an
additional copy, please write to GenRad at the above address; call GenRad at
(508) 287-7222; or stop in at GenRad's Clerk's Office in Concord, Massachusetts,
and a copy will be provided to you.
The number of shares indicated on the enclosed Voting Instruction Card is
the total number represented by your allocations to the GenRad Stock Fund in
ChIP Part I (Profit Sharing Trust account) and Part II (employee contribution
account). If you have any questions about the manner in which this number was
computed, or about any other matter in this notice, please contact GenRad's
Human Resources Department at (508) 287-7467.
All ChIP participants are extended a cordial invitation to attend the
Meeting.
GenRad, Inc.
By: Walter A. Shephard, Clerk
April 7, 1997
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED VOTING INSTRUCTION CARD AND
MAIL IT PROMPTLY IN THE ENVELOPE PROVIDED.
<PAGE>
DETACH HERE GEN EP
P
R
O
X
Y
GenRad, Inc.
300 Baker Avenue, Concord, MA 01742-2174
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned appoints James F. Lyons, Sarah H. Lucas and Paul Pronsky, Jr.
And each or any of them as proxies with full power of substitution to vote as
designated herein all shares of stock which the undersigned would be entitled to
vote if personally present at the Annual Meeting of Shareholders of Genrad, Inc.
to be held on Thursday, May 8, 1997 at 11:00 a.m. at the Westford Regency Hotel,
219 Littleton Road, Westford, Massachusetts, and any adjournment or adjournments
thereof (the "Meeting"). The undersigned acknowledges receipt of the Company's
Proxy Statement dated April 7, 1997 (the "Proxy Statement"). The proxies are
further authorized to vote, in their discretion, upon such other business as may
properly come before the Meeting.
Please return this card in the enclosed postage paid envelope to The First
National Bank of Boston, P.O. Box 1628, Boston, Massachusetts 02106.
(Continued, and to be Signed on Reverse Side)
SEE REVERSE
SIDE
<PAGE>
DETACH HERE GEN EP
VOTING INSTRUCTIONS VOTING INSTRUCTIONS
P
R
O
X
Y
GenRad Choice Investment Plan
The undersigned directs the Trustee of the GenRad Choice Investment Plan
("ChIP") to vote as designated herein the shares represented by the
undersigned's fractional interest in the total shares of GenRad, Inc. Common
Stock held by ChIP at the Annual Meeting of Shareholders of Genrad, Inc. to be
held on Thursday, May 8, 1997 at 11:00 a.m. at the Westford Regency Hotel, 219
Littleton Road, Westford, Massachusetts, and any adjournment or adjournments
thereof (the "Meeting"). The undersigned acknowledges receipt of the Company's
Proxy Statement dated April 7, 1997 (the "Proxy Statement"). The proxies are
further authorized to vote, in their discretion, upon such other business as may
properly come before the Meeting.
Please return this card in the enclosed postage paid envelope to The First
National Bank of Boston, P.O. Box 1628, Boston, Massachusetts 02106.
(Continued, and to be Signed on Reverse Side)
SEE REVERSE
SIDE
<PAGE>
DETACH HERE GEN, GF2 EF
Please mark votes as in this example. [x]
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED IN FAVOR OF THE PROPOSALS SET
FORTH BELOW.
1. To elect James F. Lyons, Adriana Stadecker and Lowell B. Hawkinson to the
Board of Directors to serve as Class I Directors for three-year terms.
FOR WITHHELD
[ ] [ ]
[ ]-----------------
For all nominees except as noted above.
2. To consider and act upon a proposal to amend the Company's 1991 Equity
Incentive Plan (the "Incentive Plan") by increasing the number of shares of
Common Stock available for issuance under the Incentive Plan by 2,000,000
shares.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. To consider and act upon a proposal to amend the Incentive Plan by limiting
the number of shares of Common Stock available for issuance to any
participant in any one year to 500,000 shares.
MARK HERE
FOR ADDRESS
CHANGE AND
NOTE AT LEFT [ ]
Signature: ___________ Date: _______ Signature: ________________ Date: _________
