<PAGE>
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
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
HATHAWAY CORPORATION
- --------------------------------------------------------------------------------
(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] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] 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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
HATHAWAY CORPORATION
8228 PARK MEADOWS DRIVE
LITTLETON, COLORADO 80124
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 26, 1995
To the shareholders of
Hathaway Corporation:
You are hereby notified that the annual meeting of shareholders (the Annual
Meeting) of Hathaway Corporation, a Colorado corporation (the Company), will be
held on October 26, 1995 at 2:30 p.m. (Mountain Time) at 8228 Park Meadows
Drive, Littleton, Colorado, for the following purposes:
1. to elect five persons to the Company's Board of Directors to serve until
the next annual meeting of shareholders or until their successors are
duly elected and have qualified;
2. to vote on a shareholder proposal, if presented; and
3. to consider and act upon such other business as may properly be
presented for action at the Annual Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on September 1, 1995
as the record date (the "Record Date") for the Annual Meeting. Only
shareholders of record at the close of business on the Record Date will be
entitled to notice of and to vote at the Annual Meeting. The Company's transfer
books will not be closed.
The Board of Directors of the Company extends a cordial invitation to all
shareholders to attend the Annual Meeting, as it is important that your shares
be represented at the meeting. Even if you plan to attend the Annual Meeting,
you are strongly encouraged to mark, date, sign and mail the enclosed proxy in
the return envelope provided as promptly as possible.
You may revoke your proxy by following the procedures set forth in the
accompanying proxy statement. If you are unable to attend, your written proxy
will assure that your vote is counted.
By Order of the Board of Directors
LOGO
Richard D. Smith
Secretary
Denver, Colorado
September 29, 1995
<PAGE>
HATHAWAY CORPORATION
8228 PARK MEADOWS DRIVE
LITTLETON, COLORADO 80124
PROXY STATEMENT
This proxy statement and the accompanying proxy card are being furnished to
the holders of common stock, no par value (Common Stock), of Hathaway
Corporation, a Colorado corporation (the Company), in connection with the
solicitation of proxies by the Board of Directors of the Company to be voted at
the annual meeting of shareholders (the Annual Meeting) to be held on October
26, 1995 at 2:30 p.m. (Mountain Time) at the Company's offices at 8228 Park
Meadows Drive, Littleton, Colorado, for the purposes set forth in the
accompanying notice of annual meeting of shareholders. This proxy statement and
the accompanying proxy card were first mailed to shareholders on or about
September 29, 1995.
QUORUM AND VOTING RIGHTS
The presence, in person or by proxy, of the holders of a majority of the
votes represented by the outstanding shares of Common Stock is necessary to
constitute a quorum at the Annual Meeting. Broker non-votes and abstentions
will be counted as shares present in determining whether a quorum is present.
The affirmative vote of the holders of two-thirds of the shares of Common Stock
entitled to vote at the Annual Meeting is required for the election of
directors (Item 1). Since election of directors requires the approving vote to
be measured against all shares of Common Stock entitled to vote, withholding
authority (including broker non-votes) from that vote is the equivalent of a
vote against election of nominated directors. Approval of Item 2 requires the
affirmative vote of a majority of the votes cast at the meeting. Broker non-
votes and abstentions will not be counted as affirmative or negative in
determining the number of shares voted on Item 2. The record date for
determination of shareholders entitled to notice of, and to vote at, the Annual
Meeting is the close of business on September 1, 1995 (the Record Date). As of
the close of business on the Record Date, there were 4,265,583 shares of Common
Stock outstanding, each of which is entitled to one vote at the Annual Meeting.
All shares of Common Stock represented by properly executed proxies will,
unless such proxies have been previously revoked, be voted in accordance with
the instructions indicated in such proxies. If no such instructions are
indicated, such shares will be voted FOR the election of the five nominees for
director, AGAINST the shareholder proposal to sell the Company, and in the
discretion of the proxy holders on any other matter that may properly come
before the Annual Meeting. Any holder of Common Stock has the unconditional
right to revoke his or her proxy at any time prior to the voting thereof at the
Annual Meeting by filing with the Secretary of the Company written revocation
of his or her proxy prior to the voting thereof, giving a duly executed proxy
bearing a later date, or voting in person at the Annual Meeting. Attendance by
a shareholder at the Annual Meeting will not in itself revoke his or her proxy.
Solicitation of proxies for use at the Annual Meeting may be made in person
or by mail, telephone or telegram, by directors, officers and regular employees
of the Company. Such persons will receive no special compensation for any
solicitation activities. In addition, the Company has retained the services of
D.F. King & Co. Inc. to aid in the solicitation of proxies in person, by mail,
telephone or telegram at a fee of $5,000 plus expenses. The Company will
request banking institutions, brokerage firms, custodians, trustees, nominees
and fiduciaries to forward solicitation materials to the beneficial owners of
Common Stock held of record by such entities, and the Company will, upon the
request of such record holders, reimburse reasonable forwarding expenses. The
costs of preparing, printing, assembling and mailing the proxy statement, proxy
card and all materials used in the solicitation of proxies to shareholders of
the Company, and all clerical and other expenses of such solicitation, will be
borne by the Company.
<PAGE>
ITEM 1: ELECTION OF DIRECTORS
The Company's articles of incorporation and bylaws provide for a board
consisting of not less than three and not more than six persons, as such number
is determined by the Board of Directors. The board has determined that the
board will consist of five directors, all of whom will be elected annually, to
serve until the next annual meeting of shareholders or until their successors
are elected and qualified. The affirmative vote of the holders of two-thirds of
the shares of Common Stock entitled to vote at the Annual Meeting is required
for the election of directors. If the number of votes required for the election
of directors is not received directors will continue in office until the next
annual meeting or until removed. Unless authority is withheld, it is intended
that the shares represented by proxy at the Annual Meeting will be voted in
favor of the five nominees named below. All nominees have agreed to serve if
elected.
If any nominee becomes unable or unwilling to serve at the time of the Annual
Meeting, the shares of Common Stock represented by proxy at the Annual Meeting
will be voted for the election of such other person as the Board of Directors
of the Company may recommend.
MANAGEMENT RECOMMENDS A VOTE IN FAVOR OF EACH NOMINEE NAMED.
NOMINEES
The following information concerning the nominees for election as directors
has been provided by the respective nominee:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
---- --- -------------------------
<S> <C> <C>
Eugene E. Prince 63 President, Chief Executive Officer and Chairman of the Board
of Directors
Marvin J. Fein 75 Director
Chester H. Clarridge 65 Director
Graydon D. Hubbard 61 Director
George J. Pilmanis 57 Director
</TABLE>
Mr. Prince has served as President and a director of the Company since
October, 1975, as Chief Executive Officer since September, 1976 and as Chairman
of the Board of Directors since January, 1981.
Mr. Fein has served as a director of the Company since 1977. He has been a
private investor for more than the past five years.
Mr. Clarridge has served as a director of the Company since 1989. He has been
a private consultant in the instrumentation and control industry since 1978.
Mr. Hubbard has served as a director of the Company since 1991. He is a
retired certified public accountant and was a partner of Arthur Andersen LLP,
the Company's independent public accountants, in its Denver office for more
than five years prior to his retirement in November 1989. Mr. Hubbard is also
an author.
Mr. Pilmanis has served as a director of the Company since 1993. He is
chairman and president of Balriga International Corp., a privately held company
concerned with business development in the Far East and Eastern Europe. From
April 1989 to June 1994 he was president, CEO and a director of Novatank Corp,
a privately held company which manufactures fiberglass storage tanks. In
October 1994 Novatank Corp, which was then in voluntary liquidation, filed for
bankruptcy under Federal bankruptcy laws. From May, 1987 to February, 1989, he
was executive vice president of BI Inc., a publicly held company which is the
leading manufacturer and marketer of electronic home incarceration devices used
by corrections agencies. Mr. Pilmanis has been a director of BI Inc. since
1981.
2
<PAGE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held four meetings during the fiscal year ended June
30, 1995. Each director attended 75% or more of the total number of meetings of
the board held during the period for which he has been a director and all
committees of the board on which such director served.
The Board of Directors has established an Audit Committee and a Compensation
Committee, each of which is composed of directors who are not employees of the
Company. No nominating committee has been established. The Board of Directors
selects the Company's nominees for election to the board. The board will
consider nominees recommended by shareholders who meet the requirements for
shareholder proposals set forth on the last page of the Proxy Statement.
The principal responsibilities of the Audit Committee are to make
recommendations to the Board of Directors concerning the selection of the firm
of independent auditors and the scope of auditing and accounting matters and to
consult with the Company's independent auditors regarding auditing and
accounting matters. The members of the Audit Committee are Messrs. Clarridge
(Chairman) and Fein. The Audit Committee held one meeting during the fiscal
year ended June 30, 1995.
The principal responsibility of the Compensation Committee is to make
recommendations to the Board of Directors concerning the compensation of the
Company's management employees including its executive officers. The members of
the Compensation Committee are Messrs. Hubbard (Chairman) and Pilmanis. The
Compensation Committee held one meeting during the fiscal year ended June 30,
1995.
EXECUTIVE OFFICERS
Set forth below is information regarding the Executive Officers of the
Company as of September 1, 1995.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
---- --- -------------------------
<S> <C> <C>
Eugene E. Prince 63 President, Chief Executive Officer and Chairman of the Board
of Directors
Richard D. Smith 48 Executive Vice President, Treasurer, Secretary and Chief
Financial Officer
</TABLE>
Information with respect to Mr. Prince's employment experience is provided
above.
Mr. Smith has been Executive Vice President of the Company since August,
1993. He has been Vice President of Finance and Treasurer since June 1983. From
June 1983 until March 1986, Mr. Smith was the Company's Secretary. From March
1986 to January 1990, he was Assistant Secretary. Since January 1990, Mr. Smith
has resumed the responsibilities of Secretary.
INDEBTEDNESS OF MANAGEMENT
The Company encourages officers and directors to own shares in the Company
and has lent money to officers and directors for the purpose of purchasing
shares. During fiscal year 1995 Richard D. Smith, Executive Vice President,
Secretary, Treasurer and CFO had an outstanding loan in the principal amount of
$133,652 which he obtained for the purpose of exercising stock options. This
loan was made pursuant to an Officer and Director Loan Plan which was approved
by shareholders. Interest is payable at the applicable treasury rate which was
5.55% per annum during the first six months and 7.07% per annum during the last
six months. The largest aggregate amount of indebtedness, including accrued
interest, outstanding during fiscal year 1995 was $140,986. The amount
outstanding, including accrued interest, as of September 1, 1995, was $139,747.
Mr. Smith paid accrued interest on December 31, 1994. The difference between
interest paid by Mr. Smith and interest at a fair market value rate is
considered compensation to Mr. Smith.
3
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table and notes set forth, as of the Record Date, the
beneficial ownership, as defined by the regulations of the Securities and
Exchange Commission, of Common Stock by each person known to the Company to be
the beneficial owner of more than 5% of the outstanding shares of Common Stock
(based on the records of the Company's stock transfer agent), each director,
each executive officer and all persons who serve as executive officers and
directors of the Company, as a group.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) CLASS(2)
------------------- ----------------------- ----------
<S> <C> <C>
Eugene E. Prince 1,076,662(3) 25.1%
8228 Park Meadows Drive
Littleton, Colorado 80124
Richard D. Smith 279,760(4) 6.5%
8228 Park Meadows Drive
Littleton, Colorado 80124
William Hugh Hintze 327,442(5) 7.7%
Suite 19N, The Greenway
14 Greenway Plaza
Houston, TX 72040
Frederick Dorwart 275,940(6) 6.5%
Frederick Dorwart, Lawyers
Old City Hall
124 East 4th Street
Tulsa, OK 74103-5010
Chester H. Clarridge 160,988(7) 3.8%
Marvin J. Fein 50,627(8) 1.2%
Graydon D. Hubbard 26,000(9) --
George J. Pilmanis 4,500(10) --
Directors and executive officers of the
Company as a group
(6 persons) 1,422,841(11) 32.7%
</TABLE>
- --------
(1) All beneficial ownership is sole and direct unless otherwise noted.
(2) No percent of class is shown for holdings of less than 1%.
(3) Includes 30,000 shares of Common Stock which Mr. Prince has the right to
acquire within 60 days of the Record Date upon exercise of options and
175,696 shares of Common Stock held by the Employees' Stock Ownership Plan
and Trust (the "ESOP") as of the Record Date, as to which Mr. Prince could
be deemed to have shared investment power as a trustee of the ESOP, (this
same number of shares is included under Mr. Smith's beneficial ownership in
footnote (4)) which includes 18,863 shares of Common Stock credited to the
ESOP account of Mr. Prince. Includes 88,800 shares of Common Stock held by
the Prince Children's Trusts, of which Mr. Prince's wife is trustee and as
to which Mr. Prince disclaims beneficial ownership.
(4) Includes 21,000 shares of Common Stock which Mr. Smith has the right to
acquire within 60 days of the Record Date upon exercise of outstanding
options and 175,696 shares of Common Stock held by the ESOP as of the
Record Date, as to which Mr. Smith could be deemed to have shared
investment power as a trustee of the ESOP (this same number of shares is
included under Mr. Prince's beneficial ownership in footnote (3)), which
includes 3,680 shares of Common Stock credited to the ESOP account of Mr.
Smith. Includes 82,164 shares of Common Stock held by Smith Family Trust,
of which Mr. Smith is trustee.
4
<PAGE>
(5) Includes 275,940 shares of Common Stock as to which Mr. Hintze shares
voting power with Frederick Dorwart, co-trustee of the A.J. Hintze
Qualified Trust (this same number of shares is included under Mr. Dorwart's
beneficial ownership in footnote (6)).
(6) Mr. Dorwart shares voting power with William Hugh Hintze, co-trustee of the
A.J. Hintze Qualified Trust (this same number of shares is included under
Mr. Hintze's beneficial ownership in footnote (5)).
(7) Includes 10,500 shares of Common Stock which Mr. Clarridge has the right to
acquire within 60 days of the Record Date upon exercise of outstanding
options. Includes 17,212 shares of Common Stock owned by a trust of which
Mr. Clarridge's wife is trustee, as to which Mr. Clarridge disclaims
beneficial ownership. Includes 133,276 shares of common stock held by a
trust as to which Mr. Clarridge shares voting and investment powers as a
trustee.
(8) Includes 10,500 shares of Common Stock which Mr. Fein has the right to
acquire within 60 days of the Record Date upon exercise of outstanding
options.
(9) Includes 13,500 shares of Common Stock which Mr. Hubbard has the right to
acquire within 60 days of the Record Date upon exercise of outstanding
options. Includes 5,000 shares of Common Stock held by Hubbard Family
Partnership as to which Mr. Hubbard is managing general partner.
(10) Consists of 4,500 shares of Common Stock which Mr. Pilmanis has the right
to acquire within 60 days of the Record Date upon exercise of outstanding
options.
(11) Includes 90,000 shares of Common Stock which directors and executive
officers have the right to acquire within 60 days of the Record Date upon
exercise of outstanding options and 175,696 shares of Common Stock held by
the ESOP as to which Mr. Prince and Mr. Smith have shared investment power
as trustees of the ESOP, which includes 22,543 shares of Common Stock held
by the ESOP for the accounts of Messrs. Prince and Smith.
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
The Board of Directors holds four full day meetings each year. Non-employee
directors are compensated at the rate of $3,000 per full day meeting of the
board, $900 for each additional one-half day meeting and $400 per hour for a
phone meeting. Also, each director receives $900 per meeting attended of any
committee of the board of which he is a member and $900 for each additional
one-half day meeting. If a director attends a board or committee meeting which
is held at a location outside of the Denver, Colorado area, he is compensated
for travel time at the rate of $900 per each half day.
Board members are compensated at the rate of $225 per hour for the time spent
consulting with the Company at the request of the Board of Directors or the
President, preparing minutes of the Audit or Compensation Committees and on
special assignment of such committees. During the 1995 fiscal year, Mr. Hubbard
received $1,125 for special assignment services. Mr. Clarridge and Mr. Hubbard
each received $225 for preparation of Committee Minutes.
Mr. Clarridge is a paid consultant to the Company primarily with respect to
new business development for Power and Process Instrumentation. This
arrangement requires at least 12 weeks work per year and may be terminated at
any time. In fiscal year 1995 the consultant fee paid to Mr. Clarridge for
these services was $57,000.
5
<PAGE>
SUMMARY OF CASH AND OTHER COMPENSATION OF EXECUTIVE OFFICERS
The following table shows the compensation earned by the Chief Executive
Officer and one other executive officer (the "Named Executive Officers") whose
total annual salary and bonus exceeded $100,000 for services to the Company
during fiscal year 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL
COMPENSATION ALL OTHER
NAME AND PRINCIPAL ------------------ COMPENSATION
POSITION YEAR SALARY($) BONUS($) ($)
------------------ ---- --------- -------- ------------
<S> <C> <C> <C> <C>
Eugene E. Prince 1995 $248,962 $ 0 $ 4,373(1)
Chairman, CEO, President
1994 250,008 162,922 67,695
1993 248,288 0 19,532
Richard D. Smith 1995 137,500 0 9,935(2)
Exec. V.P., CFO,
Secretary and Treasurer
1994 135,938 84,542 30,639
1993 123,813 0 6,961
</TABLE>
- --------
(1) All other compensation for Mr. Prince during fiscal year 1995 consists of
(i) Company contributions to defined-contribution plans of $3,602, (ii)
Company paid life insurance premiums of $11,760 and (iii) a negative
accrual under the Long-Term Incentive Plan of $10,989. In the prior year an
accrual under the Long Term Incentive Plan was computed based on achieving
the target level of total shareholder return by June 30, 1996. The target
level has not been achieved and the negative accrual shown is based on
achieving the threshold level of total shareholder return by June 30, 1996.
The amount represents market value of the Common Stock ($2.81275 based on
the average of the closing bid and ask price on June 30, 1995) plus
dividends paid for 11,667 shares, less $47,595 accrued in the prior year.
(2) All other compensation for Mr. Smith during fiscal year 1995 consists of
(i) Company contributions to defined contribution plans of $3,602 (ii)
Company paid life insurance premiums of $10,845 (iii) interest on a loan to
Mr. Smith under the Officer and Director Loan Plan of $983 calculated as
the difference between interest accrued and the fair market rate at the
time the interest rate was set, and (iv) a negative accrual under the Long-
Term Incentive Plan of $5,495. In the prior year an accrual under the Long
Term Incentive Plan was computed based on achieving the target level of
total shareholder return by June 30, 1996. The target level has not been
achieved and the negative accrual shown is based on achieving the threshold
level of total shareholder return by June 30, 1996. The amount represents
market value of the Common Stock ($2.81275 based on the average of the
closing bid and ask price on June 30, 1995) plus dividends paid for 5,834
shares, less $23,798 accrued in the prior year.
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
UNDER NON-STOCK PRICE-BASED
NUMBER OF PLANS
SHARES, UNITS PERFORMANCE OR OTHER --------------------------------
OR OTHER PERIOD UNTIL THRESHOLD TARGET MAXIMUM
NAME RIGHTS (#) MATURATION OR PAYOUT (# SHARES) (# SHARES) (# SHARES)
---- ------------- -------------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Eugene
E.
Prince 0 7/1/93 through 6/30/96 35,000 70,000 140,000
Richard
D.
Smith 0 7/1/93 through 6/30/96 17,500 35,000 70,000
</TABLE>
The Company's Long-Term Incentive Plan provides benefits based on a sliding
scale of rising levels of achievement for return on equity and total
shareholder return which are established by the Board of Directors. The plan is
currently based on performance over a three year period and covers fiscal years
ending in 1994, 1995 and 1996. (See the discussion of the Company's Long-Term
Incentive Plan under the caption CEO Employment Agreement below.)
6
<PAGE>
In each of the first two years of the performance period, the future shares
that will ultimately be awarded under the plan is estimated. The estimated
number of shares is then multiplied by a fraction based on the number of
periods elapsed in the performance period. In the second year, the total
cumulative shares is compared to the total accumulated in the first year and an
adjustment is made to bring the total to the cumulative amount.
In the first year of the current performance period, it was assumed the
target level of total shareholder return would be achieved and one-third of the
performance period had elapsed. Based on all the information currently
available, it is now assumed that the threshold level will be achieved and two-
thirds of the performance period has elapsed. No adjustment to account for the
change in assumptions and lapse of time is required.
OPTION GRANTS IN LAST FISCAL YEAR
There were no options granted to the Named Executive Officers during fiscal
1995 under the Company's stock option plans.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth information regarding option exercises during
the 1995 fiscal year and unexercised stock options held as of the 1995 fiscal
year-end by each of the Named Executive Officers:
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FY-END (#) AT FY-END ($)(1)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Eugene
E.
Prince -0- -0- 30,000 0 $9,375 0
Richard
D.
Smith -0- -0- 21,000 0 6,563 0
</TABLE>
- --------
(1) Fair market value of unexercised in-the-money options at fiscal year-end is
based on the closing price of $2.625 of Common Stock on June 30, 1995.
CEO EMPLOYMENT AGREEMENT
The Company has entered into an Employment Agreement (the "Agreement") with
Eugene E. Prince, CEO, effective as of July 1, 1993 for a term of five years
and continuing thereafter on a year-to-year basis unless the Company or the CEO
gives at least 60 days notice prior to termination. The Agreement provides for
a base salary of $250,000 per year and shall be reviewed for increase on a
merit basis annually. In fiscal year 1996 his salary was increased to $260,000.
The Agreement provides an annual bonus with respect to each fiscal year based
on "return on equity" and a calculation of "total shareholder return." The
bonus paid is a percentage of base compensation and is determined from a scale
based on rising levels of achievement which are set by the Board of Directors
for each fiscal year. Threshold levels must be achieved in order to earn the
minimum payment. No annual bonus shall be paid if the average low price per
share for the month of June for the fiscal year is less than the average low
price per share for the month of June for the preceding fiscal year.
Return on equity is determined by (i) dividing net profit after taxes for the
fiscal year by (ii) the net worth of the Company at the beginning of the year.
The Company will pay an annual cash bonus to the CEO in an amount from 10% up
to 40% of current base salary based on the level of return on equity that is
achieved for the year. Total shareholder return is calculated by determining
(i) the average low price per share for the month of June for the fiscal year
plus cash dividends paid per share in such fiscal year and (ii) subtracting
therefrom the average low price per share for the month of June of the
immediately preceding fiscal year. The Company will pay an annual cash bonus to
the CEO in an amount from 10% up to 40% of current base salary based on the
level of total shareholder return that is achieved for the year. The total
annual bonus paid may not exceed 80% of base salary.
7
<PAGE>
The CEO's long-term incentive benefit is based on return on equity and a
calculation of total shareholder return computed over a three year period
including fiscal years ending in 1994 to 1996. The payout is in shares of
common stock. From 17,500 up to 70,000 shares of common stock are payable to
the CEO based on the level of return on equity established by the Board of
Directors for the three year period and from 17,500 up to 70,000 shares of
common stock are payable based on the level of total shareholder return over
the three year period. Under the long-term incentive benefit, achievement of
the threshold total shareholder return is required to obtain awards under the
return on equity measure. Performance levels may be adjusted annually during
the performance period. The total long-term incentive payout may not exceed
140,000 shares.
The Company has established a separate cash bonus payable to the CEO with
respect to a disposition of certain subsidiaries or divisions of the Company.
This bonus is payable in cash in an amount equal to a percentage of the
cumulative pretax gain recognized on a disposition in an amount equal to 2% of
the first $5 million of cumulative pretax gain, 1.75% of the next $4 million of
pretax gain, 1.5% of the next $3 million of pretax gain, 1.25% of the next $2
million of pretax gain and 1% of any additional amount of pretax gain.
The CEO participates in other benefits and perquisites as are generally
provided by the Company to its employees. In addition, the Company will provide
a long-term disability insurance program for the CEO, payment for an annual
physical exam, payment of up to $5,000 each year for financial consulting,
$500,000 of life insurance and an automobile.
The Agreement includes provisions for payment upon death and disability. If
the Agreement is terminated by the Company prior to a change in control, other
than for cause, retirement or disability, base salary will be continued for one
full year and benefits will be continued for the greater of the remaining term
of the current contract or one full year. Upon such termination, provision is
made for proration of the annual bonus and long-term incentive payout.
EXECUTIVE VICE PRESIDENT EMPLOYMENT AGREEMENT
The Company has entered into an employment agreement with Richard D. Smith,
Executive Vice President, effective as of July 1, 1993 which has the same term
and provisions for continuation as are contained in the Agreement with the CEO.
The Executive Vice President's base salary began in 1993 at $137,500. In fiscal
year 1996 his salary was increased to $143,000. Mr. Smith's annual bonus is
structured the same as the CEO's so that his total annual bonus payment will be
pro rata to the CEO's according to their respective base salaries. The long-
term incentive payments and special bonuses payable upon disposition of certain
subsidiaries or divisions are structured similarly to the CEO's contract but
payments will be equal to one half that payable to the CEO.
Mr. Smith participates in other benefits and perquisites as are generally
provided by the Company to its employees. In addition, the Company will provide
a long-term disability insurance program for Mr. Smith, $500,000 of life
insurance and an automobile.
The agreement includes provisions for payment upon death and disability.
Termination provisions are similar to those provided for the CEO.
CHANGE OF CONTROL ARRANGEMENTS
In 1989 the Company entered into agreements with Messrs. Prince and Smith
pursuant to which, upon termination (other than for cause) within 90 days prior
to or at any time following a change of control of the Company or for good
reason (as defined in the agreements), each is entitled to receive cash
payments of base salary and benefits to the date of termination, a payment
equal to 2.5 times the sum of current annual base salary plus the amount paid
under the Incentive Compensation Plan for the preceding fiscal year, any
incentive compensation due but unpaid and an allocation for incentive
compensation for the current year up to the date of termination. These
agreements expire December 31 of each year, however, they are extended
automatically on January 1 of each year for a term of two years, unless notice
of non-renewal is given by the
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Company not later than the September 30 immediately preceding renewal.
Management believes that change of control agreements benefit shareholders by
providing security to management in the face of take-over threats; management
will be motivated to remain with the Company and negotiate for the best
possible deal for shareholders in the event of a disposition; providing for a
smooth transition increases shareholder value. These benefit agreements are
common at other public companies. They are not excessive and are within
industry standards. The Board of Directors gave consideration to termination
of these agreements and determined that the reasons for executing change of
control agreements in 1989 continue today and decided not to give notice of
non-renewal.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal year 1995 the Compensation Committee was comprised of Messrs.
Hubbard and Pilmanis who are both non employees. See the caption EXECUTIVE
COMPENSATION--COMPENSATION OF DIRECTORS for information concerning
compensation paid to directors for attending and participating in board and
committee meetings and special assignments.
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Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933 or the Securities Exchange
Act of 1934 that might incorporate future filings, including this proxy
statement, in whole or in part, the following report and the performance graph
on page 10 shall not be incorporated by reference into any such filings.
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COMPENSATION COMMITTEE REPORT
In fiscal year 1994 the full board comprised the Compensation Committee and
was responsible for setting the Company's policies with respect to employee
compensation (except that Mr. Prince did not participate in discussions or
decisions with respect to his own compensation). In fiscal year 1995 the
Compensation Committee consisted of two board members.
In fiscal year 1994 the Compensation Committee retained the Towers Perrin
organization ("Towers Perrin"), nationally known consultants in the field of
executive compensation, to provide information and advice on structuring
compensation for the CEO. Towers Perrin submitted a recommended compensation
package for the CEO which the Committee adopted and followed. The philosophy
recommended by Towers Perrin and approved by the Committee expressed the
intention to provide the CEO with a fair and competitive compensation package
if Company performance is adequate to provide such a package. It was further
recommended that the Committee position the CEO's compensation package within
a complete range of the median of the electronic instruments industry. Based
on the Towers Perrin report and recommendations, a base salary of $250,000 was
established in fiscal 1994 with a target annual cash bonus of 40% of base
salary up to a maximum of 80% of base salary and a target long term benefit of
70,000 shares up to a maximum of 140,000 shares of company common stock for
achieving three year performance targets. Both the annual incentive bonus and
the long term incentive payout are based on sliding scales for achieving
predetermined performance targets established by the Board of Directors for
return on equity and total shareholder return. Threshold levels must be
achieved in order to earn the minimum payment under either the annual
incentive plan or the long-term plan. No annual bonus shall be paid if the
stock price in June of the current fiscal year is less than the stock price in
June of the preceding fiscal year. Under the long term plan, achievement of
the threshold total shareholder return is required to obtain awards under the
return on equity measure.
In fiscal year 1995 no bonus was paid based on total shareholder return
because the stock price in June 1995 was below the threshold and no return on
equity bonus was payable because the June 1995 stock price was below the prior
June stock price and the return on equity was below the threshold. The
Committee (Mr. Prince being absent during discussion of his salary) approved a
base salary increase of 4% to $260,000 which is within a complete range of the
median cash compensation for the electronic instruments industry. Key
performance factors in this conclusion were that the Company has maintained
profitability, product quality and market share despite declining core
business.
GRAYDON D. HUBBARD
GEORGE J. PILMANIS
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PERFORMANCE GRAPH
The following performance graph reflects change in the Company's cumulative
total stockholder return on common stock as compared with the cumulative total
return of the NASDAQ Stock Market Index and the NASDAQ Measuring and
Controlling Devices Index for the period of five fiscal years ended June 30,
1995.
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG NASDAQ (U.S. COMPANIES), NASDAQ MEASURING DEVICES AND THE COMPANY
<TABLE>
<CAPTION>
6/30/90 6/30/91 6/30/92 6/30/93 6/30/94 6/30/95
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
NASDAQ (U.S.) $100 $106 $127 $160 $162 $215
NASDAQ MEASURING DEVICES $100 $107 $109 $117 $121 $203
HATHAWAY CORPORATION $100 $ 68 $150 $ 71 $122 $ 83
</TABLE>
COMPLIANCE WITH SECTION 16(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers and persons who own more than ten percent of
the Company's Common Stock to report their ownership and any changes in that
ownership to the Securities and Exchange Commission. The Company believes that
all Section 16(a) filing requirements applicable to its directors, executive
officers and greater than ten percent beneficial owners have been met except
that Forms 5 for Eugene E. Prince and Richard D. Smith covering an aggregate of
2 transactions for each were filed four days late.
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CERTAIN LITIGATION
In October 1994 William Hintze, acting on behalf of the Estate of A.J. Hintze
and the A.J. Hintze Living Trust and A.J. Hintze Qualified Trust, brought an
action against the Company in the District Court in Jefferson County, Colorado
to require the Company to produce a shareholder list. This action was
improperly filed in Jefferson County and the plaintiff dismissed the action
without prejudice and on November 14, 1994 refiled the matter as case number
94CV405 in the District Court in Douglas County, Colorado under the caption
Estate of A.J. Hintze, William Hintze, Trustee for the Estate of A.J. Hintze,
A.J. Hintze Living Trust, A.J. Hintze Qualified Trust v. Hathaway Corporation.
The plaintiffs had sought a copy of a list of shareholders of the Company and
the Company had provided a list of record shareholders. Plaintiffs now seek to
obtain a supplemental list of shareholders identifying the beneficial owners.
The Company believes it has provided the list of shareholders as required by
Colorado law. The plaintiff seeks an order compelling the Company to produce
the full and complete shareholder list, which the Company believes it has
provided, ordering the Company to pay the inspection and copying costs of
plaintiff and to award plaintiff damages and costs, including reasonable
attorneys fees. The Company has answered the complaint averring, among other
things, that the Company has provided plaintiff with a list of shareholders of
record which is all it is required to do by statute. The Company also avers
that plaintiff does not meet the requirements of the Colorado statute requiring
production of a shareholder list and is not entitled to the relief sought
because it has failed to comply with various federal securities laws. The
Company has filed a Motion for Summary Judgment on the grounds that plaintiffs
do not meet the statutory requirements for inspection of shareholder records. A
determination of this motion is now pending.
INDEPENDENT PUBLIC ACCOUNTANT
Arthur Andersen LLP served as independent auditors of the Company for the
fiscal year ended June 30, 1995. A representative of Arthur Andersen LLP is
expected to be present at the Annual Meeting. He will have an opportunity to
make a statement if he so desires, and is expected to be available to respond
to appropriate questions.
The Audit Committee of the Board of Directors has not yet made a
recommendation to the Board of Directors with respect to the selection of
independent certified public accountants for fiscal 1996.
ANNUAL REPORT
The Company's Annual Report for the year ended June 30, 1995 has been mailed
to shareholders with this Proxy statement.
ITEM 2: SHAREHOLDER PROPOSAL
The following proposal was submitted by the Estate of A.J. Hintze and the
A.J. Hintze Qualified Trust, 2503 Hodges Bend Circle, Sugar Land, Texas 77479,
holder of 275,940 shares of Common Stock.
Shareholder Proposal
Resolved, it is requested that the Board of Directors seek potential buyers
for the Corporation by taking all such actions deemed necessary or desirable in
facilitating same which may include removal of the poison pill and golden
parachute provisions.
Shareholder Supporting Statement
The proponent of the above resolution is a trust holding over 270,000 shares
of Hathaway common stock. Over the past several years, the proponent has been
very disappointed in the low price of Hathaway stock as
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compared with 1987 when the value was above $9.00 per share. The proponent's
representatives have voiced concerns to management, but all that comes forth is
a statement that "things will get better." Last year, Global software was sold
to its former management for $7 million after an independent appraisal set its
value at near $11 million. See January 14, 1994 Proxy Statement. Large bonuses
were paid to two of the chief corporate officers. Other than short-term price
increases when extraordinary dividends were paid as a result of the sale, the
stock price has languished. The proponent believes it will continue to do so
under present management.
At various times in the past, outside groups have shown interest in the
Corporation and its products, but these offers have not received the degree of
serious consideration that the proponent believes would be in the best interest
of the Corporation.
With at least five years to bring stock prices up and improve earnings on a
long term basis, it seems clear that the Board Chairman has been unable to
effect such a result. All this has taken place during a span when overall stock
indexes have soared. In most other corporations, a new CEO already would be
installed. However, Mr. Prince continues on. The proponent believes a change is
long overdue.
All in all, it is the proponent's conviction that Hathaway stock and earnings
cannot reach its former high until significant changes in the compensation
package of Hathaway's management are effected and the Corporation can engage in
meaningful discussions with potential buyers. If you agree, please vote "Yes"
on our proposals.
The Company's Statement in Opposition
THE COMPANY RECOMMENDS SHAREHOLDERS VOTE "AGAINST" THE SHAREHOLDER PROPOSAL.
The shareholder proposal requests the Board of Directors to seek potential
buyers for the Company. The Board of Directors has given long and serious
consideration to whether it should seek a disposition of the Company at this
time. The board believes that the long term potential of the Company is
substantially greater than the current market price. The public market is
available for those shareholders who wish to dispose of their shares at this
time. Competition in the Company's products is now significant and the board
believes that any affirmation that the Company is for sale would result in
serious competitive disadvantage. While the board believes it would be unwise
to advertise the Company for sale, it will, of course, consider any serious
proposals of interested parties on terms that would be fair to shareholders.
The shareholder proposal refers to a "poison pill", which we assume to be a
reference to the shareholder rights plan which was adopted in 1989. The purpose
of a shareholder rights plan is to provide to the Company some assurance that
it will have an opportunity to negotiate any proposed acquisition of the
Company rather than succumb to a takeover effort that is entirely on the terms
of the offeror. The shareholder rights plan can be terminated in the event of a
transaction favorable to the Company. The board believes that continuation of
the shareholder rights plan is in the best interest of shareholders.
The shareholder proposal also refers to "golden parachutes" which we assume
refers to severance agreements which the Company has with certain key
employees. It is difficult to retain high quality, key employees, of which this
Company has several, in the face of demands that the Company be sold. A sale of
the Company might very well result in the dismissal of some of our key
employees and without some assurance of job stability we are at risk of losing
key employees in the current competitive market. In August 1995 the Board of
Directors completed a review of our severance agreements and determined to add
five additional key employees to our number of employees with severance
benefits. The board thought this action was necessary to allay any unrest
caused by the shareholder proposal that the Company seek a buyer. The
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board believes that retention of our key employees will be beneficial to
shareholders in the event of a sale and under the circumstances the severance
agreements are important to retaining key employees.
The statement in support of the shareholder proposal refers to the sale of
Global Software, Inc. in 1994 for $7 million "after an independent appraisal
set its value at near $11 million." This statement is false. In the Company's
proxy statement dated January 14, 1994 with respect to the special meeting of
shareholders called to vote on the proposal to sell Global Software, it was
made clear that the Company obtained advice from Broadview Associates (an
investment banking firm specializing in mergers and acquisitions in the
information technology industry) on the value of Global Software for sale
purposes. This was clearly for the purpose of establishing an asking price.
Broadview Associates suggested an asking price of $11,800,000. The proxy
statement makes clear that this value was not an appraisal. The Company
retained Broadview Associates to try to find a buyer for Global Software and no
buyer could be found at any price. A sale to Global Software management was
then negotiated and the Company asked Broadview Associates to render a fairness
opinion. Broadview Associates then gave the only appraisal that was really
prepared with respect to the sale of Global Software and concluded that a sale
at $7 million was fair from a financial point of view. The proponent
shareholder well knew these facts since they received a copy of the January 14,
1994 proxy statement, as did all other shareholders. The sale of Global
Software was approved by vote of 68% of the shares authorized to vote and 87%
of the shares voting on the sale. Shareholders should also know that the sale
of Global Software was timely completed since it has incurred substantial
losses since the sale.
The shareholder statement also states that "at various times in the past,
outside groups have shown interest in the Corporation and its products, but
these offers have not received the degree of serious consideration that the
proponent believes would be in the best interest of the Corporation." In 1989
TBG Investment Company, NV, acquired a greater than 5% interest in the Company
which they stated to be for investment purposes. The Company was concerned that
TBG might try to acquire the Company in an unfriendly tender offer. The Company
maintained a communication with TBG until it disposed of its shares during 1990
to 1992. There have been only two other passive inquiries which may have been
prompted by an interest in acquiring the Company. The Company gave attention to
these inquiries until discussions were terminated by mutual agreement. The
shareholder statement implies that there is significant outside interest in
acquiring the Company but the facts simply do not support their statement.
The shareholder statement is critical of management and compensation paid to
management. The board strongly encourages shareholders to review the 1995
Annual Report (and previous annual reports if they are available). The
Company's annual report addresses the issues of share price and management's
performance. In 1994 the Company retained the Towers Perrin organization
(nationally known consultants in the field of executive compensation) to
provide information and advice on structuring compensation for the CEO. Towers
Perrin submitted a recommended compensation package which was adopted and
followed. Further information concerning executive compensation is included
under the caption "Compensation Committee Report" on page 8 of the Company's
proxy statement dated September 20, 1994, issued in connection with the 1994
annual meeting and on page 9 of this proxy statement.
THE COMPANY RECOMMENDS SHAREHOLDERS VOTE "AGAINST" THE SHAREHOLDER PROPOSAL.
SHAREHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
Shareholders' proposals for the 1996 annual meeting of shareholders must be
submitted in writing to the Secretary of the Company at the address of the
Company set forth on the first page of this Proxy Statement no later than June
1, 1996 in order to be included in the Company's 1996 proxy statement and proxy
card.
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ITEM 3: OTHER MATTERS
The Board of Directors knows of no business to be presented for action at the
Annual Meeting except as described above. However, if other matters are
properly presented for a vote, the proxies will be voted upon such matters in
accordance with the judgment of the persons acting under the proxies.
PLEASE SIGN, DATE AND MAIL PROMPTLY THE ENCLOSED PROXY.
HATHAWAY CORPORATION
September 29, 1995
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HATHAWAY CORPORATION
8228 PARK MEADOWS DRIVE
LITTLETON, COLORADO 80124
The undersigned hereby appoints Eugene E. Prince and Richard D. Smith, or
either of them, proxies of the undersigned, each with the power of
substitution, and hereby authorizes them to vote, as designated below, all the
shares of common stock, no par value, of the undersigned at the annual meeting
of shareholders of Hathaway Corporation (the "Company") to be held on October
26, 1995, and at all adjournments thereof, with respect to the following:
ITEM 1. ELECTION OF DIRECTORS--Nominees:
E. E. Prince, M.J. Fein, C.H. Clarridge, G.D. Hubbard and G.J. Pilmanis
[_] FOR all nominees (except as [_] WITHHOLD AUTHORITY
indicated to the contrary below). to vote for all nominees.
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, PRINT
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW. IF AUTHORITY IS NOT
EXPRESSLY WITHHELD, IT SHALL BE DEEMED GRANTED.
(to be signed and dated on other side)
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<PAGE>
- -------------------------------------------------------------------------------
(continued from other side)
MANAGEMENT RECOMMENDS VOTING "AGAINST" THE FOLLOWING PROPOSAL
ITEM 2. SHAREHOLDER PROPOSAL, if presented
[_] FOR [_] AGAINST [_] ABSTAIN
SHARES WILL BE VOTED AGAINST THIS PROPOSAL IF INSTRUCTIONS ARE NOT GIVEN.
ITEM 3. OTHER MATTERS--In the proxies' discretion, on such other business as
may properly come before the Annual Meeting.
This proxy is being solicited on behalf of the Board of Directors of the
Company, and may be revoked prior to its exercise. This proxy, when properly
executed, will be voted as directed above by the undersigned shareholder. If no
direction is made, it will be voted FOR the nominees named in Item 1, AGAINST
the shareholder proposal, if presented, in Item 2, and in the proxies'
discretion on such other business as may properly come before the annual
meeting in Item 3.
..................................
By: ..............................
YOUR SIGNATURE SHOULD APPEAR
EXACTLY AS YOUR NAME APPEARS IN
THE SPACE AT THE LEFT. FOR JOINT
ACCOUNTS, ALL OWNERS SHOULD SIGN.
WHEN SIGNING IN A FIDUCIARY OR
REPRESENTATIVE CAPACITY, PLEASE
GIVE YOUR FULL TITLE AS SUCH.
Date: ......................, 1995
PLEASE SIGN AND RETURN THIS PROXY
IN THE ENCLOSED POSTAGE PAID
ENVELOPE AS PROMPTLY AS POSSIBLE.
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