GENRAD INC, DEF 14A, 1998-04-13

GENRAD INC
DEF 14A, 1998-04-13
INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS

Previous: GENERAL ELECTRIC CAPITAL CORP, 424B3, 1998-04-13

Next: GOLDEN ENTERPRISES INC, 10-Q, 1998-04-13

SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT

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
[X] Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2))

[X] Definitive Additional Materials

[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

GenRad, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other than the Registrant)

Payment of Filing Fee (Check the appropriate box)

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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:

- --------------------------------------------------------------------------------

<PAGE>

[ ] 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.
7 Technology Park Drive
Westford, Massachusetts 01886-0033

Notice of Annual Meeting of Shareholders
to be held on May 14, 1998

The Annual Meeting of Shareholders of GenRad, Inc. (the "Company") will be
held on Thursday, May 14, 1998 at 11:00 a.m. at the BankBoston Auditorium, 100
Federal Street, Boston, Massachusetts, for the following purposes:

1. To elect William S. Antle III, Richard G. Rogers and Ed Zschau to the
Board of Directors to serve as Class II 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 500,000
shares.

3. To consider and act upon a proposal to amend the Company's 1991
Directors' Stock Option Plan (the "1991 Director Plan") by increasing the
number of shares of Common Stock available for issuance under the 1991
Director Plan by 50,000 shares.

4. To consider and act upon a proposal to amend the Company's 1994 Director
Restricted Stock Plan (the "1994 Director Plan") by increasing the number
of shares of Common Stock available for issuance under the 1994 Director
Plan by 50,000 shares.

5. 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 25, 1998 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 13, 1998

|------------------------------------------------------------------------------|
| 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.

7 Technology Park Drive
Westford, Massachusetts 01886-0033

PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
May 14, 1998

This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of GenRad, Inc. ("GenRad" or the "Company"), 7
Technology Park Drive, Westford, Massachusetts 01886-0033, of proxies in the
enclosed form to be voted at the Annual Meeting of Shareholders of GenRad, to
be held on Thursday, May 14, 1998 at 11:00 a.m. at the BankBoston Auditorium,
100 Federal Street, Boston, Massachusetts, and at any adjournment 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 Clerk 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, 3 and 4 in the Notice of Meeting.

The Annual Report of GenRad for the fiscal year ended January 3, 1998 and
this Proxy Statement were first distributed or mailed to shareholders on or
about April 13, 1998.

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 25, 1998 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 27,549,236 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 25, 1998, certain information
regarding the beneficial ownership of the Company's outstanding Common Stock by
(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. All information with respect to beneficial ownership by the
Company's directors, officers or beneficial owners has been furnished by the
respective director, officer or beneficial owner, as the case may be. The
number of shares set forth below includes shares beneficially owned by spouses
and minor children; the named persons disclaim any beneficial interest in the
shares so included.

<TABLE>
<CAPTION>
Number of Shares
of Common Stock Percent
Name of Beneficial Owner Beneficially Owned (1) of Class
- --------------------------------------------------------- ------------------------ ---------
<S> <C> <C>
Morgan Stanley, Dean Witter, Discover & Co. ............. 2,782,813(2) 10.1%
1585 Broadway
New York, New York 10036

Basil P. Regan .......................................... 2,585,250(3) 9.4%
6 East 43rd Street
New York, New York 10017

Munn, Bernhard & Associates, Inc. ....................... 1,914,534(4) 6.9%
6 East 43rd Street
New York, New York 10017

James F. Lyons .......................................... 976,364(5) 3.5%

Sarah H. Lucas .......................................... 229,612(6) *

Paul H. Geere ........................................... 63,049(7) *

Kevin R. Cloutier ....................................... 77,500(8) *

Michael W. Schraeder .................................... 99,249(9) *

All Directors and Executive Officers as a Group ......... 1,708,590(10) 6.2%
</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 25,
1998 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
January 9, 1998, filed with the SEC by Morgan Stanley, Dean Witter,
Discover & Co. ("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 2,782,813 shares
of Common Stock and shares voting power with respect to 2,637,613 shares
of Common Stock. Morgan Stanley Management shares dispositive power with
respect to 2,608,418 shares of Common and shares voting power with respect
to 2,464,718 shares of Common Stock.

(3) The information reported is based on a Schedule 13G, dated February 27,
1998, filed with the SEC by Basil P. Regan.

(4) The information reported is based on an amended Schedule 13G, dated
February 11, 1998, 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 set forth does not include shares of Common Stock held by
certain individuals affiliated with MBA who disclaim membership in a group
with MBA.

2
<PAGE>

(5) Amount shown includes options to purchase 716,667 shares of Common Stock.

(6) Amount shown includes options to purchase 222,150 shares of Common Stock.

(7) Amount shown includes options to purchase 62,500 shares of Common Stock.

(8) Amount shown reflects options to purchase 77,500 shares of Common Stock.

(9) Amount shown includes options to purchase 98,750 shares of Common Stock.

(10) Amount shown includes options to purchase 93,500 shares of Common Stock.
See also notes (5) through (9) above and notes (2) and (3) 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,
3 and 4 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, 3
and 4 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,
3 and 4, 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, 3 and 4,
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 each of Items 2, 3 and 4 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, 3 and 4, 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 2000, 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 II Directors, whose terms will
extend until the 2001 Annual Meeting.

The nominees for Class II Directors, William S. Antle III, Richard Rogers
and Ed Zschau, were nominated by the Board of Directors in February 1998.

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 II Directors. The Board of Directors
knows of no reason why any

3
<PAGE>

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 1999
or 2000.

William S. Antle III, 53, Chairman, President and Chief Executive
Officer, Oak Industries, Inc., Waltham, Massachusetts ............... 1995 23,000(2)(3) *
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.,
New England Investment Co. and ESCO Electronics.

Richard G. Rogers, 65, President, Tokyo
Electron Massachusetts, Beverly, Massachusetts ...................... 1995 27,000(2)(3) *
Mr. Rogers has been President of Tokyo Electron Massachusetts, a
company that designs and manufactures semiconductor
manufacturing equipment, since September 1997. From March
1994 until August 1997 Mr. Rogers was President of Tokyo
Electron America, Austin, Texas, an importer of fabrication
equipment for use by U.S. semiconductor manufacturers. 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, 58, Senior Lecturer of Business Administration, Harvard
University, Cambridge, Massachusetts ................................ 1995 21,500(2)(3) *
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, Censtor Corp. and StarTek, Inc.

Directors Whose Terms Will Expire in 2000
(Class I Directors)

James F. Lyons, 63, President and Chief Executive Officer,
GenRad, Inc., Westford, Massachusetts ............................... 1993 976,364(4) 3.5%
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.
</TABLE>

4
<PAGE>

<TABLE>
<CAPTION>
Number of
Shares of
Year Became Common Stock
a Director Beneficially Percent
Biographical Summaries of Nominees and Directors of the Company Owned (1) of Class
- -------------------------------------------------------------------- ---------------- --------------------- ---------
<S> <C> <C> <C>
Adriana Stadecker, 51, Director, Human Resources, BTR plc, London,
England ........................................................... 1994 27,000(2)(3) *
Ms. Stadecker has been the Director of Human Resources at BTR
plc since July 1997. From July 1994 until June 1997 Ms.
Stadecker was Founder and President of EPIC International.
From October 1992 through June 1994, Ms. Stadecker was
responsible for Executive Operations at Digital Equipment
Corporation. She became Vice President of that 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, 55, Chairman of the Board and Chief Executive
Officer, Gensym Corporation, Cambridge, Massachusetts ............. 1995 23,000(2)(3) *
Mr. Hawkinson has been Chief Executive Officer and Chairman of
the Board of Directors of Gensym Corporation, a software
company, since September 1986.

Directors Whose Terms Will Expire in 1999
(Class III Directors)

William G. Scheerer, 60, Advisor to President, Kalman Saffran
Associates, Inc. .................................................. 1988 23,850(2)(3) *
Mr. Scheerer has been Advisor to the President of Kalman Saffran
Associates, Inc. since January, 1998. From January 1997 to
January 1998, Mr. Scheerer was President of Performance Quest,
LLC, Morganville, New Jersey. 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.

Russell A. Gullotti, 55, Chairman, President and Chief Executive
Officer, National Computer Systems, Inc., Eden Prairie, Minnesota . 1995 23,000(2)(3) *
Mr. Gullotti has been President and Chief Executive Officer of
National Computer Systems, Inc. since October 1994 and
Chairman of the Board of Directors 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%.

5
<PAGE>

(1) The number of shares beneficially owned by each director 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 25, 1998 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 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.

(2) Includes for the following persons options to purchase the indicated number
of shares of Common Stock: Ms. Stadecker (20,000 shares), Mr. Antle
(17,500 shares), Mr. Gullotti (17,500 shares), Mr. Hawkinson (17,500
shares), Mr. Rogers (17,500 shares), Mr. Zschau (17,500 shares) and Mr.
Scheerer (12,500 shares).

(3) Includes 1,500 shares of restricted stock issued on each of August 31, 1994
and 1995 and August 30, 1996 and 2,500 shares of restricted stock issued
on August 29, 1997 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
and 2,500 shares of restricted stock issued on August 29, 1997 to each of
Messrs. Antle, Gullotti, Hawkinson and Rogers and 1,500 shares of
restricted stock issued on August 30, 1996 and 2,500 shares of restricted
stock issued on August 29, 1997 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.

(4) Amount shown includes options to purchase 716,667 shares of Common Stock.

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, Employee
Stock Purchase Plan and the Company's Non-Qualified Stock Option Plan. The
members are Ed Zschau (Chair), William S. Antle III, Lowell B. Hawkinson and
Richard Rogers. 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 Russell A. Gullotti. 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,
Adriana Stadecker 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, Richard Rogers
and Ed Zschau.

In 1997 the Board of Directors met nine times, its Audit Committee met
seven times, its Compensation Committee met two times, its Technology and
Quality Committee met three times and its Corporate Governance Committee met
once. 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

Kevin R. Cloutier filed on October 24, 1997 a Form 4 with the SEC with
respect to two transactions on September 5, 1997.

6
<PAGE>

EXECUTIVE COMPENSATION

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
Compensation
Annual 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 .......................... 1997 $432,504 $359,502 $4,412 350,000 $4,750
President, Chief Executive Officer 1996 357,504 230,752 1,378 -- 8,750
1995 357,504 160,162 4,411 350,000 8,125
Kevin R. Cloutier ....................... 1997 200,004 150,000 -- 100,000 35,722
Vice President, General Manager 1996 137,504 162,195 -- 150,000 4,750
Electronic Manufacturing Systems 1995 -- -- -- -- --
Paul H. Geere ........................... 1997 196,689 246,320 697 -- 55,116
Vice President, Managing Director 1996 161,128 115,187 -- 250,000 32,524
Advanced Diagnostic Solutions 1995 -- -- -- -- --
Sarah H. Lucas .......................... 1997 200,004 150,000 3,526 -- 4,750
Vice President, Chief Strategic 1996 191,664 100,000 3,367 150,000 8,750
Officer 1995 155,434 83,200 -- 50,000 8,125
Michael W. Schraeder .................... 1997 200,004 213,396 3,526 100,000 25,027
President, Electronic Manufacturing 1996 158,334 131,483 -- 155,000 4,750
Systems 1995 -- -- -- -- --
</TABLE>

- ------------
(A) Mr. Cloutier joined the Company in June 1985, and became an executive
officer in October 1996. Mr. Cloutier resigned from the Company on February
23, 1998. Mr. Geere joined the Company in January 1995, and became an
executive officer in May 1996. Mr. Schraeder joined the Company in July
1979, and became an executive officer in October 1996.

(B) Compensation paid by the Company to Messrs. Cloutier, Geere and Schraeder
for the fiscal year during which they did not serve as executive officers is
not shown.

(C) Mr. Geere's salary is calculated on the basis of an annual average
conversion rate of $1.00:\P.6101 between the U.S. dollar and the British
pound during the 1997 fiscal year.

(D) For Messrs. Schraeder and Geere, the amounts shown for 1997 include
commissions in the amount of $43,396 and $115,777, 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 on the date of purchase.

(F) Options to purchase 212,500 shares granted to Mr. Cloutier expired upon the
termination of his employment with the Company.

(G) For Mr. Lyons and Ms. Lucas, the amounts shown for 1997 constitute payments
by the Company under its 401(k) plan. The amount shown for Mr. Cloutier in
1997 is composed of payments of $27,192 for relocation, $3,780 for
automobile allowance and $4,750 under the Company's 401(k) plan. The amount
shown for Mr. Geere in 1997 is composed of payments of $16,391 for
relocation, $15,534 for automobile allowance and $23,191 under the Company's
defined contribution plan. The amount shown for Mr. Schraeder in 1997 is
composed of payments of $16,677 for relocation, $3,600 for automobile
allowance and $4,750 under the Company's 401(k) plan.

Severance Agreements

The Company entered into severance agreements (each a "Severance
Agreement") with Messrs. Cloutier, Geere, Schraeder and Ms. Lucas (each a
"Named Executive") effective as of May 9, 1997. Under each Severance Agreement
the Named Executive is entitled to a base salary, an annual performance bonus
and all benefits generally made available

7
<PAGE>

to officers of the Company. Each Severance Agreement will terminate two years
from the date the Company terminates the Named Executive. Each Severance
Agreement provides that either party may terminate the Severance Agreement upon
30 days' notice to the other party; provided, however, if (i) the Company
terminates the Named Executive's employment without cause; (ii) the Named
Executive dies or becomes disabled; or (iii) the Named Executive terminates his
or her employment with the Company for good reason, then the Company will pay
to the Named Executive a lump-sum cash amount equal to one hundred percent of
the Named Executive's base salary and will continue to provide benefits to the
Named Executive for a period of one year from the date of the termination. In
addition, all options to purchase Company stock held by the Named Executive
will immediately become exercisable. In the event of a change in control of the
Company, if the Named Executive is terminated within three years of the date of
the change in control, then the Company will pay to the Named Executive a
lump-sum cash amount equal to two hundred percent of the sum of (A) the Named
Executive's base salary and (B) an amount equal to the bonus earned by the
Named Executive for the prior fiscal year. In addition, the Company will pay to
the Named Executive the pro-rata portion of the Named Executive's target bonus
for the year of termination and will continue to provide benefits to the Named
Executive for a period of three years from the date of termination. Moreover,
all options to purchase Company stock held by the Named Executive will become
immediately exercisable. However, the payments and benefits to which each Named
Executive will be entitled under each Severance Agreement will be reduced to
the extent necessary to prevent the Named Executive from becoming liable for
the excise tax levied on certain "excess parachute payments" under Section 4999
of the Internal Revenue Code of 1986, as amended (the "Code"). Each Severance
Agreement imposes certain confidentiality and non-competition obligations on
the Named Executive and provides each Named Executive with indemnification
rights.

In addition to the Severance Agreements described above, the Company
entered into a severance agreement with Mr. Lyons (the "Executive") effective
as of May 9, 1997 which provides that either the Company or the Executive may
at any time terminate the Executive's employment with the Company upon 30 days'
notice to the other party; provided, however, if (i) the Company terminates the
Executive's employment without cause; (ii) the Executive dies or becomes
disabled; or (iii) if the Executive terminates his employment with the Company
for good reason, then the Company will pay to the Executive a lump-sum cash
amount equal to three hundred percent of the sum of (A) the Executive's current
base salary and (B) the bonus for the previous year. In addition, the Company
will continue to provide benefits to the Executive for a period of three years
from the date of termination. Moreover, all options to purchase Company stock
held by the Executive will become immediately exercisable. However, the
payments and benefits to which the Executive will be entitled under the
agreement will be reduced to the extent necessary to prevent the Executive from
becoming liable for the excise tax levied on certain "excess parachute
payments" under Section 4999 of the Code.

Option Grants in Last Fiscal Year

The following table sets forth certain information regarding options
granted during the fiscal year ended January 3, 1998 by the Company to each of
the named executive officers:

<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Rates of
Stock Price Appreciation
Individual Grants for Option Term(A)
---------------------------------------------------------------------- ---------------------------
Number of Securities % of Total Options Exercise or
Underlying Options Granted to Employees Base Price Expiration
Name Granted (#) in Fiscal Year ($/Sh) Date 5%($) 10%($)
- ------------------------------ ---------------------- ---------------------- ------------ ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
James F. Lyons ............... 350,000 13.6% $ 16.50 5/08/07 $3,631,866 $9,203,863
Keven R. Cloutier ............ 100,000 3.9% 15.00 4/25/07 943,342 2,390,614
Paul H. Geere ................ -- 0.0% -- -- -- --
Sarah H. Lucas ............... -- 0.0% -- -- -- --
Michael W. Schraeder ......... 100,000 3.9% 15.00 4/25/07 943,342 2,390,614
</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 the terms of each executive officer's own stock option
agreement. The Company has not granted stock appreciation rights to date.

8
<PAGE>

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 January 3, 1998
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 ........... 250,000 $2,375,000 600,000 350,000 $13,825,300 $4,484,550
Kevin R. Cloutier ........ 10,000 232,500 77,500 212,500 1,280,820 2,736,825
Paul H. Geere ............ 112,500 1,295,499 -- 187,500 -- 3,152,438
Sarah H. Lucus ........... 1,750 26,031 184,650 112,500 4,116,533 1,891,463
Michael W. Schraeder ..... 10,000 206,313 73,750 216,250 1,248,553 2,702,843
</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 January 3,
1998, the last business day of fiscal 1997, was $29.313. Value is calculated
on the basis of the difference between the option exercise price and $29.313
multiplied by the number of shares of Common Stock underlying the option.

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 three executive officers,
Messrs. Lyons, Cloutier, and Schraeder 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, $8,375 and $15,452, respectively, assuming vesting of the benefits after
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 Company's 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 ($20.50 in 1997). 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 four non-employee
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

9
<PAGE>

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.

On July 7, 1993, Mr. Lyons became the Company's Chief Executive Officer.
In determining his compensation arrangements in 1997, 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
maintained at the same level in 1995 and 1996 and increased 14.5% in 1997.
Second, consistent with the goal of rewarding for the accomplishment of Company
objectives, Mr. Lyons received incentive compensation equal to 45% of his base
compensation in 1995, 65% of his base compensation in 1996 and 83% of his base
compensation in 1997 as a result of the Company's achievement of its
objectives. Finally, the grant of stock options to Mr. Lyons in 1997 was
intended to link the rewards of the Chief Executive Officer with those of the
Company's shareholders. The stock options granted to Mr. Lyons in 1997 are
exercisable on a cumulative basis with respect to 25% of the shares after one
year from the date of grant and an additional 25% per year thereafter.

Section 162(m) of 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 its 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.

Richard G. Rogers, Chair
Lowell Hawkinson
William S. Antle III
Ed Zschau

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, 1997 with the total return on the S&P Technology
Sector Index and the S&P 500 Composite Index. The comparison assumes $100 was
invested on December 31, 1992 in the Company's Common Stock and in each of the
foregoing indices and assumes reinvestment of dividends.

[STOCK PERFORMANCE CHART]

<TABLE>
<CAPTION>
Company/Index 1992 1993 1994 1995 1996 1997
- -------------------------------- ------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
GenRad, Inc. $100 $122 $117 $190 $454 $589
S&P Technology Sector Index 100 123 143 207 293 369
S&P 500 Composite Index 100 110 112 153 189 252
</TABLE>

ITEM 2

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 1991 Equity Incentive Plan
(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 8,250,000 shares of Common Stock. At March 25,
1998, there were approximately 194 participants in the Incentive Plan, and
options to purchase 4,354,543 shares of Common Stock were outstanding under the
Incentive Plan with 335,914 shares available for future grants. Accordingly,
the Board of Directors has adopted, subject to shareholder approval, an
amendment (the "Incentive Plan Amendment") to the Incentive Plan increasing the
number of shares of Common Stock available for issuance under the Incentive
Plan by 500,000 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 500,000 shares.
The 500,000 shares will be issued by the Compensation Committee in its
discretion under the Incentive Plan. In the case of incentive stock options,
such options will be granted with exercise prices not less than 100% (110% in
the case of a 10% shareholder) of the fair market value of the Company's Common
Stock on the dates of grant.

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 January 3,
1998.

11
<PAGE>

1991 EQUITY INCENTIVE PLAN

<TABLE>
<CAPTION>
Dollar Value Number of Shares
Name and Position ($)(A) of Common Stock
- -------------------------------------------------------------------------- -------------- -----------------
<S> <C> <C>
James F. Lyons, Chief Executive Officer .................................. $ 4,146,250 350,000
Kevin R. Cloutier, Vice President, General Manager
Electronic Manufacturing Systems ........................................ 1,337,500 100,000
Paul H. Geere, Vice President, Managing Director
Advanced Diagnostic Solutions ........................................... -- --
Sarah H. Lucas, Vice President, Chief Strategic Officer .................. -- --
Michael W. Schraeder, President, Electronic Manufacturing Systems ........ 1,337,500 100,000
Executive Officer Group (seven persons) .................................. 10,225,000 800,000
Non-Executive Officer Director Group (seven persons) ..................... -- --
Non-Executive Officer Employee Group (109 persons) ....................... 20,774,150 1,681,096
</TABLE>

- ------------
(A) Value is calculated on the basis of the positive difference between the
option exercise price and $28.375, the closing price for the Company's
Common Stock on the NYSE on March 25, 1998, 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 Clerk 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 25,
1998, there were approximately 194 participants in the Incentive Plan.

Administration

The Incentive Plan is administered by the Compensation Committee of the
Board of Directors, consisting of Messrs. Rogers, Antle, Hawkinson and Zschau.

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 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 25% 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.

12
<PAGE>

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 by the Company to repurchase 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% of the shares after one year from the date of award and an
additional 33% 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 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.

In the event that a change in control of the Company results in the
receipt by any option holder of an "excess parachute payment" (as defined in
Section 280G of the Code), the Company will not be entitled to a deduction for
the amount of the "parachute payment" (as defined in Section 280G of the Code).

Amendments and Termination

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

13
<PAGE>

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. Any long-term capital gain will be taxed at a rate of 20% if such
shares were held for more than 18 months and 28% if such shares were held for
more than 12 months but not more than 18 months.

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 or (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. Any
long-term capital gain will be taxed at a rate of 20% if such shares were held
for more than 18 months and 28% if such shares were held for more than 12
months but not more than 18 months. 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 fair market 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) of the Code, the Company will
be entitled to a corresponding business expense deduction. Any excess of amount
realized by the optionee on disposition over the fair market value of the
shares at the time of exercise will be treated as short-term capital gain, and
taxed at ordinary rates.

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. However, the amount of adjusted net
alternative minimum tax paid in any taxable year is available as a credit
against regular tax in future years.

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 of the date
of the 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. However,
the recipient is allowed a capital loss if the amount paid for the Common Stock
is not fully restored on forfeiture. 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

14
<PAGE>

of the Common Stock at that time and the original purchase price for the
shares. Subject to Section 162(m) of the Code and satisfaction of the
applicable reporting requirements, 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. The capital gain recognized on the
disposition of such shares by the recipient will be short-term capital gain to
the extent such shares are held by the recipient for 12 months or less and
long-term capital gain to the extent such shares are held by the recipient for
more than 12 months. Any long-term capital gain will be taxed at a rate of 20%
to the extent such shares were held for more than 18 months and 28% to the
extent such shares were held for more than 12 months but not more than 18
months.

Compensation Deduction. Section 162(m) of the Code 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 further provided that certain other requirement 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. Moreover, the $1
million limit on deductions under Section 162(m) of the Code is further reduced
by the amount of any compensation not deductible by the Company under Section
280G of the Code (i.e., any parachute payment). See "Mergers and Change of
Control" above.

Board Recommendation

The Board of Directors believes that approval of the proposed Incentive
Plan Amendment is in the best interest of the Company and its shareholders and
recommends a vote "FOR" the proposal contained in Item 2 of the accompanying
Notice of Meeting.

ITEM 3.

PROPOSAL TO AMEND THE 1991 DIRECTORS' STOCK OPTION PLAN

On May 9, 1991, the shareholders of the Company approved the 1991
Directors' Stock Option Plan (the "1991 Director Plan") pursuant to which
options to purchase shares of the Company's Common Stock are automatically
granted at specified times to the non-employee directors of the Company. A
maximum of 200,000 shares of the Company's Common Stock can be issued under the
1991 Director Plan. At March 25, 1998, 5,000 shares of the Company's Common
Stock remained available for grant under the 1991 Director Plan.

The Board of Directors believes that it is in the best interest of the
Company and its shareholders to increase the number of shares which may be
issued under the 1991 Director Plan by 50,000 shares. The Board so amended the
1991 Director Plan on February 10, 1998, subject to shareholder approval. The
Board of Directors believes that the amendment of the 1991 Director Plan is
important to promote the recruitment and retention of highly qualified outside
directors and to strengthen the commonality of interest between directors and
shareholders. If the proposed amendment to the 1991 Director Plan is approved
by the shareholders, the maximum number of shares of the Company's Common Stock
which may be issued under the 1991 Director Plan will be 250,000.

The following is a summary of the material provisions of the 1991 Director
Plan and is qualified in its entirety by reference to the complete text of the
1991 Director Plan, as it is proposed to be amended, a copy of which may be
obtained from the Company upon request to the Clerk of the Company.

Administration, Eligibility and Awards

The 1991 Director Plan is administered by the Company's Board of Directors
which has the power to construe and interpret the terms and provisions of the
1991 Director Plan. While grants of stock options under the 1991 Director Plan
are automatic and non-discretionary, all questions of interpretation of the
1991 Director Plan are determined by the Board of Directors. Only directors of
the Company who are not employees of the Company are eligible to participate in
the 1991 Director Plan.

15
<PAGE>

Following the approval of the 1991 Director Plan by the shareholders of
the Company on May 9, 1991, an option to purchase 5,000 shares of the Company's
Common Stock was automatically granted to each eligible director under the 1991
Director Plan. Currently, the 1991 Director Plan provides that (i) each person
who becomes an eligible director receives the grant of an option to purchase
10,000 shares of the Company's Common Stock on the close of business on the
date of his or her initial election to the Board of Directors and (ii) each
eligible director is granted an additional option to purchase 2,500 shares of
Common Stock each year on the close of business on the fifth business day
following the public release of the Company's annual earnings for the preceding
fiscal year, provided that he or she is an eligible director on the date of
grant. The option exercise price for each option granted under the 1991
Director Plan is equal to the closing price per share of the Company's Common
Stock on the NYSE on the date of grant. All options granted under the 1991
Director Plan are exercisable at any time prior to the fifth anniversary of the
date of grant.

Mergers and Change in Control

In the event of any merger, consolidation, sale of all or substantially
all of the assets of the Company, reorganization, recapitalization, stock
dividend, stock split, reverse stock split or other similar transaction, an
appropriate and proportionate adjustment may be made in the number and kind of
shares reserved for issuance under the 1991 Director Plan or subject to
outstanding options and in the exercise price of outstanding options under the
1991 Director Plan. Further, in the event of a consolidation, merger or sale of
all or substantially all of the assets of the Company or in the event of a
liquidation of the Company, the Board of Directors of the Company may take any
one or more of the following actions, as to any outstanding options: (i)
provide that such options will be assumed, or equivalent options substituted,
by the acquiring or successor corporation, (ii) provide that all unexercised
options will terminate immediately prior to the consummation of any such
transaction unless exercised by the optionee within a specified period or (iii)
in the event of a merger, where shares of the Company's Common Stock are
exchanged for cash, provide for a cash payment to the director equal to the
difference between the merger consideration and the exercise price of
outstanding options.

Amendments and Termination

The provisions of the 1991 Director Plan specifying those persons who are
eligible to participate in the 1991 Director Plan, the timing and size of the
automatic option grants and the method by which the option exercise price is
determined may not be amended more than once every six months, other than to
comport with changes in the Code. Otherwise, the Board of Directors may modify
or amend the 1991 Director Plan in any respect, except that if the approval of
the shareholders of the Company is required as to such modification or
amendment under Rule 16b-3 under the Securities Exchange Act of 1934, the Board
of Directors may not effect such modification or amendment without shareholder
approval.

The 1991 Director Plan currently provides that unless it is terminated
earlier in connection with a merger, reorganization or similar transaction, the
1991 Director Plan will terminate upon the earlier of March 29, 1999 or the day
on which all shares available for the issuance under the 1991 Director Plan
have been issued pursuant to the exercise of options granted under the 1991
Director Plan.

Federal Income Tax Consequences

The options granted under the 1991 Director Plan will be non-statutory
stock options not intended to qualify under Section 422 of the Code. The grant
of options will not result in taxable income to the director or a tax deduction
for the Company. The exercise of an option will result in taxable ordinary
income to the director and a corresponding deduction for the Company, in each
case equal to the difference between the fair market value of the shares on the
date the option was granted (the option exercise price) and their fair market
value on the date the option was exercised.

As of March 25, 1998, the current non-employee directors of the Company
had received grants of options under the 1991 Director Plan to purchase an
aggregate of 132,500 shares of the Company's Common Stock. On March 25, 1998,
the closing price of the Company's Common Stock on the NYSE was $28.375.

Board Recommendations

The Board of Directors believes that approval of the proposed amendment to
the 1991 Director Plan is in the best interest of the Company and its
shareholders and recommends a vote "FOR" the proposal contained in Item 3 of
the accompanying Notice of Meeting.

16
<PAGE>

ITEM 4.

PROPOSAL TO AMEND THE 1994 DIRECTOR RESTRICTED STOCK PLAN

The purposes of the 1994 Director Restricted Stock Plan (the "1994
Director Plan") are to encourage stock ownership by outside directors of the
Company whose continued services are considered essential to the Company's
future progress and to provide them with a further incentive to remain as
directors of the Company as well as to more closely align their interests with
those of the Company's stockholders by providing them with an equity interest
in the Company. In order to continue the purposes of the 1994 Director Plan,
the Board of Directors has adopted, subject to shareholder approval, an
amendment to the 1994 Director Plan to increase the number of shares of Common
Stock available for issuance under the Plan by 50,000 shares. If the proposed
amendment to the 1994 Director Plan is approved by the shareholders, the
maximum number of shares of the Company's Common Stock which may be issued
under the 1994 Director Plan will be 100,000.

The following is a summary of certain provisions of the 1994 Director
Plan, and is qualified in its entirety by reference to the complete text of the
1994 Director Plan, a copy of which may be obtained from the Company upon
request to the Clerk of the Company.

Administration, Eligibility and Number of Shares

The 1994 Director Plan is administered by the Board of Directors.
Directors of the Company who are not employees of the Company or any subsidiary
of the Company are eligible to participate in the 1994 Director Plan.
Currently, the Company has seven outside directors eligible to participate in
the 1994 Director Plan.

Up to 50,000 shares of the Company's Common Stock may be issued under the
1994 Director Plan (100,000, if the amendment is approved). Any shares of
Common Stock which are forfeited under the terms of the 1994 Director Plan will
again be available for issuance under the 1994 Director Plan. As of March 25,
1998, 46,000 shares of Common Stock had been issued under the 1994 Director
Plan, and 4,000 shares of Common Stock were available for issuance under the
1994 Director Plan.

Awards

On August 31 of each year that the 1994 Director Plan is in effect, each
eligible director is granted a restricted stock award of 2,500 shares of the
Company's Common Stock (an "Award"). These Awards are subject to certain
restrictions which generally prohibit the transfer of any shares granted under
the 1994 Director Plan prior to the first to occur of (i) the first, second and
third anniversaries of the date of the Award, each with respect to one-third of
the shares awarded, (ii) the director's death, disability or resignation with
the consent of the Board of Directors or (iii) a change in control of the
Company. If a director resigns or refuses to stand for reelection without the
consent of the Board of Directors, the director forfeits any shares which are
still subject to the foregoing restrictions and which were granted under the
1994 Director Plan during the one year period preceding such resignation or
refusal.

Amendments and Termination

The 1994 Director Plan may be terminated, modified or amended at any time
by the holders of a majority of the then outstanding voting shares of the
Company. The Board of Directors at any time may modify or amend the 1994
Director Plan in any respect, except that without the approval of the
shareholders of the Company, the Board of Directors may not make any amendment
which would (i) cause the 1994 Director Plan to no longer comply with Rule
16b-3 promulgated under the Securities Exchange Act of 1934 or (ii) require
shareholder approval under any applicable listing requirement. The provisions
of the 1994 Director Plan relating to the amount and timing of each Award may
not be amended more than once every six months, other than to comport with
changes in the Code, the Employee Retirement Income Security Act of 1974, or
the rules thereunder.

The termination or any modification or amendment of the 1994 Director Plan
may not, without the consent of a recipient of an Award, affect his or her
rights under an Award previously made to him or her. Unless sooner terminated
by the Board of Directors or shareholders, the 1994 Director Plan will
terminate upon the earlier of (i) the close of business on the day next
preceding the tenth anniversary of the date of its adoption by the Board of
Directors, or (ii) the date on which all shares available for issuance under
the 1994 Director Plan shall have been issued pursuant to the final vesting of
Awards.

Federal Income Tax Consequences

Neither the Company nor the recipient of an Award will realize any federal
income tax consequences at the time an Award is made under the 1994 Director
Plan unless the recipient makes a Section 83(b) election within 30 days of the
date of an Award, in which case he or she will recognize ordinary income for
the year in which

17
<PAGE>

the Award is received, in an amount equal to the fair market value of the
Common Stock at the time the Award is made. If a Section 83(b) election is not
made, 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 fair market value
of the Common Stock at that time. Upon the sale of the Common Stock acquired
pursuant to an Award, the recipient will recognize a capital gain or loss equal
to the difference between his or her basis in the shares (any ordinary income
previously recognized) and the sales price. If the recipient holds the shares
for more than one year after vesting or, if an election is made under Section
83(b) of the Code, for more than one year after the date of the Award, he or
she will recognize a long term capital gain or loss. The rate applicable to any
long-term capital gain will be 20% if the shares are held for more than 18
months and 28% if the shares are held for more than 12 months but not more than
18 months. Subject to Section 162(m) of the Code, the Company will be entitled
to deduct, as compensation expense, the same amount as the recipient is
required to include as ordinary income provided the applicable reporting
requirements are satisfied in a timely manner. 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.

Board Recommendation

The Board of Directors believes that approval of the proposed amendment to
the 1994 Director Plan is in the best interests of the Company and its
shareholders and recommends a vote "FOR" the proposal contained in Item 4 to
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 2, 1999. Price Waterhouse LLP originally was engaged by the
Board of Directors as of April 1, 1995.

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 14, 1998 to
the Clerk of the Company, 7 Technology Park Drive, Westford, Massachusetts
01886-0033.

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 13, 1998

|------------------------------------------------------------------------------|
| 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 IT AT ANY TIME IF IT |
| HAS NOT BEEN VOTED. |
|------------------------------------------------------------------------------|

838-PS-97

<PAGE>

NOTICE TO PARTICIPANTS IN 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, as Trustee of the 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 enclosed Proxy identifies the number of shares
of GenRad Common Stock that you may direct the Trustee to vote.

Please complete, date and sign the Proxy and return it to Proxy Services,
Boston EquiServe, P.O. Box 9381, Boston, Massachusetts 02205-9956. All ChIP
Participants must return the completed Proxy on or before May 12, 1998 in the
envelope provided. The Trustee has provided EquiServe with a ballot executed in
blank. EquiServe will tabulate the total from the Proxies it receives and will
enter these totals on the ballot. This ballot will then be tabulated by
EquiServe with all other ballots cast at the Meeting.

For ChIP participants, the number of shares indicated on the enclosed
Proxy 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 (978) 589-7331.

All ChIP participants are extended a cordial invitation to attend the
Meeting.

GenRad, Inc.

By: Walter A. Shephard, Clerk

April 13, 1998

PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY
AND MAIL IT PROMPTLY IN THE ENVELOPE PROVIDED.
<PAGE>

DETACH HERE

PROXY

GenRad, Inc.

7 Technology Park Drive, Westford, MA 01886

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 14, 1998 at 11:00 a.m. at the BankBoston
Auditorium, 100 Federal Street, Boston, Massachusetts, and any adjournment or
adjournments thereof (the "Meeting"). The undersigned acknowledges receipt of
the Company's Proxy Statement dated April 13, 1998 (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 Boston
EquiServe, P.O. Box 9381, Boston, Massachusetts 02205-9956.

|-------------| |-------------|
| SEE REVERSE | | SEE REVERSE |
| SIDE | (Continued, and to be Signed on Reverse Side) | SIDE |
|-------------| |-------------|

<PAGE>

DETACH HERE

|x| Please mark
votes as in
this example

IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED IN FAVOR OF THE PROPOSALS
SET FORTH BELOW.

<TABLE>
<CAPTION>
<S> <C>
1. To elect William S. Antle III, Richard G. Rogers and 2. To consider and act upon a FOR AGAINST ABSTAIN
Ed Zschau to the Board of Directors to serve as proposal to amend the Company's |_| |_| |_|
Class II Directors for three-year terms. 1991 Equity Incentive Plan (the
"Incentive Plan") by increasing the
FOR WITHHELD number of shares of Common Stock
|_| |_| available for issuance under the
Incentive Plan by 500,000 shares.
MARK HERE
FOR ADDRESS
CHANGE AND 3. To consider and act upon a FOR AGAINST ABSTAIN
|_|_______________________________ NOTE BELOW |_| proposal to amend the Company's |_| |_| |_|
For all nominees except as 1991 Directors' Stock Option Plan
noted above (the "1991 Director Plan") by
increasing the number of shares of
Common Stock available for
issuance under the 1991 Director
Plan by 50,000 shares.

4. To consider and act upon a FOR AGAINST ABSTAIN
proposal to amend the Company's |_| |_| |_|
1994 Director Restricted Stock Plan
(the "1994 Director Plan") by
increasing the number of shares of
Common Stock available for
issuance under the 1994 Director
Plan by 50,000 shares.

Please sign exactly as name appears hereon. Joint owners should
each sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such.

Signature: ________________________ Date: __________ Signature: _____________________________ Date: ________________
</TABLE>