<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] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LETTERHEAD OF HATHAWAY CORPORATION APPEARS HERE]
September 18, 1997
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Hathaway Corporation to be held on Thursday, October 23, 1997, commencing at
3:00 p.m. (Mountain Time) at the Lone Tree Country Club, 9808 Sunningdale
Blvd., Littleton, Colorado. The Board of Directors and management look forward
to personally greeting those shareholders able to attend the meeting.
At the Annual Meeting you will be asked to consider and vote on the election
of six directors to serve until the next annual meeting and on a shareholder
proposal, if presented.
Your Board of Directors unanimously recommends a vote FOR the election of
directors and AGAINST the shareholder proposal.
Regardless of the number of shares you own and whether or not you plan to
attend, it is important that your shares are represented and voted at the
Meeting. Accordingly, you are requested to sign, date and mail the enclosed
proxy at your earliest convenience.
On behalf of the Board of Directors, thank you for your cooperation and
support.
Sincerely,
[SIGNATURE OF EUGENE E. PRINCE APPEARS HERE]
Eugene E. Prince
President, Chief Executive Officer
and Chairman of the Board
<PAGE>
HATHAWAY CORPORATION
8228 PARK MEADOWS DRIVE
LITTLETON, COLORADO 80124
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 23, 1997
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 23, 1997 at 3:00 p.m. (Mountain Time) at Lone Tree Country
Club, 9808 Sunningdale Blvd., Littleton, Colorado, for the following purposes:
1. to elect six 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 August 28, 1997 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
[SIGNATURE OF
SUSAN M. CHIARMONTE APPEARS HERE]
Susan M. Chiarmonte
Secretary
Denver, Colorado
September 18, 1997
<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 23, 1997 at 3:00 p.m. (Mountain Time) at Lone Tree Country Club, 9808
Sunningdale Blvd., 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 18, 1997.
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 are shares held in
street name for which the broker indicates that instructions have not been
received from the beneficial owners or other persons entitled to vote, and the
broker does not have discretionary voting authority. 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. Shares counted as present for determination of a quorum, but not
voted for Item 2, will be voted against Item 2 unless a contrary intent is
apparent. The record date for determination of shareholders entitled to notice
of, and to vote at, the Annual Meeting is the close of business on August 28,
1997 (the Record Date). As of the close of business on the Record Date, there
were 4,284,085 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 revoked previously, 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 six nominees for
director (Item 1), AGAINST the shareholder proposal (Item 2) 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. If a shareholder's shares are held by a nominee, the shareholder must
bring to the Annual Meeting a written statement from the nominee confirming
the shareholder's beneficial ownership of a stated number of shares and that
such shares have not been voted by the nominee. 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 approximately $6,500 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 six directors, all of whom will be elected annually
to serve until the next annual meeting of shareholders and until their
successors are elected and qualified, or until the director resigns or is
otherwise removed.
On February 4, 1997 the Board of Directors elected Mr. Delwin D. Hock to
serve as a director until the next annual meeting. Mr. Hock replaced Marvin J.
Fein, who retired in October 1996. Mr. Hock, who retired as Chairman of the
Board of Public Service Company of Colorado in July 1997, was unanimously
elected due to his extensive experience with the power industry and his strong
standing in the business community.
All incumbent directors have been nominated to succeed themselves as
directors. 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 resignation or removal. Unless authority is withheld,
it is intended that the shares represented by proxy at the Annual Meeting will
be voted in favor of the six 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 "FOR" 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.................... 65 President, Chief Executive Officer and
Chairman of the Board of Directors
Richard D. Smith.................... 50 Executive Vice President, Treasurer,
Chief Financial Officer and Director
Chester H. Clarridge................ 67 Director
Delwin D. Hock...................... 62 Director
Graydon D. Hubbard.................. 63 Director
George J. Pilmanis.................. 59 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. Smith has served as a director of the Company since August 1996. He has
been Executive Vice President of the Company since August 1993 and Vice
President of Finance and Treasurer since June 1983. From January 1990 until
October 1996, Mr. Smith was the Company's Secretary. In August 1996 Mr. Smith
assumed management responsibility for the Company's power systems and products
group.
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. Hock was elected as a director of the Company in February 1997. He
retired from his position as Chief Executive Officer of Public Service Company
of Colorado, a gas and electric utility, in January 1996 and as Chairman of
the Board of Directors in July 1997. From September 1962 to January 1996, Mr.
Hock held various positions at Public Service Company. He serves as a director
of J.D. Edwards & Company and American Century Investors.
2
<PAGE>
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.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held four meetings during the fiscal year ended June
30, 1997. 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 during the fiscal year
ended June 30, 1997 were Messrs. Clarridge (Chairman) and Fein until his
retirement from the board in October 1996. His temporary successor on the
Audit Committee was Mr. Hubbard. In February 1997, Mr. Hubbard was replaced by
Mr. Hock. The Audit Committee held one meeting during the fiscal year ended
June 30, 1997. Representatives from the Company's independent auditors make a
presentation annually to the Board of Directors after the completion of the
fiscal year end audit. At that time, the entire Board has an opportunity to
discuss issues with or ask questions of the auditors.
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,
1997.
EXECUTIVE OFFICERS
Set forth below is information regarding the Executive Officers of the
Company as of August 28, 1997.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
---- --- -------------------------
<S> <C> <C>
Eugene E. Prince.................... 65 President, Chief Executive Officer and
Chairman of the Board of Directors
Richard D. Smith.................... 50 Executive Vice President, Treasurer,
Chief Financial Officer and Director
</TABLE>
Information with respect to employment experience is provided above.
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 1997, Richard D. Smith, Director, Executive Vice
President, Treasurer and CFO had an outstanding loan in the principal amount
of $133,652 which
3
<PAGE>
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
5.95% per annum during the first six months and 5.55% per annum during the
last six months. The largest aggregate amount of indebtedness, including
accrued interest outstanding during fiscal year 1997 was $141,365. The amount
outstanding, including accrued interest, as of August 28, 1997, was $138,678.
Mr. Smith paid accrued interest of $7,713 on December 31, 1996. The difference
between interest paid by Mr. Smith and interest at a fair market value rate is
considered compensation to Mr. Smith.
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 or a
representation by the beneficial owner), each director and nominee, each
executive officer and all persons who serve as executive officers and
directors of the Company, as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) CLASS (2)
------------------------------------ ----------------------- ----------
<S> <C> <C>
Eugene E. Prince......................... 1,050,986(3) 24.4%
8228 Park Meadows Drive
Littleton, Colorado 80124
Ira Albert............................... 385,500(4) 9.0%
1304 SW 160th Avenue, Suite 209
Ft. Lauderdale, FL 33326
William Hugh Hintze...................... 287,442(5) 6.7%
Suite 19N, The Greenway
14 Greenway Plaza
Houston, TX 77046
Frederick Dorwart........................ 235,940(6) 5.5%
Frederick Dorwart, Lawyers
Old City Hall
124 East 4th Street
Tulsa, OK 74103-5010
Richard D. Smith......................... 263,419(7) 6.1%
8228 Park Meadows Drive
Littleton, Colorado 80124
Chester H. Clarridge..................... 157,458(8) 3.7%
Graydon D. Hubbard....................... 26,000(9) --
George J. Pilmanis....................... 13,500(10) --
Delwin D. Hock........................... 6,000 --
Directors and executive officers of the
Company as a group (6 persons).......... 1,374,427(11) 31.5%
</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 22,500 shares of Common Stock which Mr. Prince has the right to
acquire within 60 days of the Record Date upon exercise of options and
142,936 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 (7)) which includes 19,875 shares of Common Stock
credited to the ESOP account of Mr. Prince. Includes 88,800 shares of
Common Stock held by the Prince
4
<PAGE>
Children's Trusts, of which Mr. Prince's wife is trustee and as to which
Mr. Prince disclaims beneficial ownership.
(4) Based on Schedule 13D filed by Mr. Albert with the Securities and Exchange
Commission on or about June 18, 1997; includes 219,300 shares of Common
Stock, held by Albert Investment Associates, L.P., as to which Mr. Albert
has sole voting power and disclaims beneficial ownership. Includes 143,700
shares of Common Stock held by various accounts as to which Mr. Albert has
discretionary authority and disclaims beneficial ownership.
(5) Based on stock transfer records, a written statement from a representative
of the A.J. Hintze Qualified Trust provided to the Company on or about May
22, 1997 and Schedule 13D filed by the A.J. Hintze Qualified Trust with
the Securities and Exchange Commission on or about September 18, 1995;
includes 235,940 shares of Common Stock as to which Mr. Hintze shares
voting and dispositive 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) Based on a written statement from a representative of the A.J. Hintze
Qualified Trust provided to the Company on or about May 22, 1997 and
Schedule 13D filed by the A.J. Hintze Qualified Trust with the Securities
and Exchange Commission on or about September 18, 1995; Mr. Dorwart shares
voting and dispositive 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 27,000 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 142,936 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 4,189 shares of Common Stock credited to the ESOP account of Mr.
Smith. Includes 92,583 shares of Common Stock held by Smith Family Trust,
of which Mr. Smith is trustee.
(8) Includes 4,500 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 135,746 shares of common stock held by a
trust as to which Mr. Clarridge shares voting and investment powers as a
trustee.
(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 13,500 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 81,000 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 142,936 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 24,067 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.
5
<PAGE>
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 1997 fiscal year, Mr.
Clarridge received $450 and Mr. Hubbard received $225 for preparation of
Committee Minutes and Mr. Pilmanis received $5,512 for special assignment
services.
Through February 1997, Mr. Clarridge was a paid consultant to the Company.
He was primarily responsible for directly overseeing the Hathaway Automation
Technology Division in Seattle, WA from January through August 1996. From
September 1996 through February 1997, he provided consulting with respect to
new business development. In fiscal year 1997, the fee paid to Mr. Clarridge
for consulting services was $70,000. The arrangement was terminated effective
March 1, 1997. Mr. Clarridge currently spends approximately 4 days per month
as an unpaid consultant for the company primarily focusing on the acquisition
of products and/or companies in the process instrumentation area. Mr.
Clarridge's consulting involvement will be phased out over three years. As an
incentive for his consulting services, Mr. Clarridge was granted an option on
February 4, 1997 to purchase 36,000 shares at fair market value on the date of
grant ($4.3125) of the Company's common stock exercisable over three years at
one-third each year starting one year from the date of grant with an
expiration date of thirty-nine months from the date of grant or upon
discontinuance as a board member.
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 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
-------------------
ANNUAL COMPENSATION
------------------- SECURITIES ALL OTHER
NAME & PRINCIPAL POSITION YEAR SALARY BONUS UNDERLYING OPTIONS COMPENSATION
- ------------------------- ---- ------------ ------ ------------------- ------------
<S> <C> <C> <C> <C> <C>
Eugene E. Prince........
Chairman, CEO, President 1997 $260,000 $0 67,500 $ 14,939(1)
1996 $258,794 $0 0 $(21,658)
1995 $248,962 $0 0 $ 4,373
Richard D. Smith........
Director, Exec. V.P.,
Treasurer, CFO 1997 $143,000 $0 81,000 $ 15,590 (2)
1996 $142,362 $0 0 $ (2,419)
1995 $137,500 $0 0 $ 9,935
</TABLE>
- --------
(1) All other compensation for Mr. Prince during fiscal year 1997 consists of
Company contributions to defined-contribution plans of $3,179 and Company
paid life insurance premiums of $11,760.
(2) All other compensation for Mr. Smith during fiscal year 1997 consists of
Company contributions to defined contribution plans of $3,030, Company
paid life insurance premiums of $10,845 and interest on a loan to Mr.
Smith under the Officer and Director Loan Plan of $1,715 calculated as the
difference between interest accrued and the fair market rate at the time
the interest rate was set.
6
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides a summary of all stock options granted during
the 1997 fiscal year to the Named Executive Officers. It also shows a
calculation of the potential realizable value if the fair market value of the
Company's shares were to appreciate at either a 5% or 10% annual rate over the
period of the option term.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
- ------------------------------------------------------------------------- ------------------------
PERCENT OF
TOTAL OPTIONS
GRANTED TO EXERCISE OR
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED (1) FISCAL YEAR ($/SH)(2) DATE 5% 10%
---- ----------- ------------- ----------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Eugene E. Prince........ 67,500 13.4% $2.8125 08/15/2003 $ 77,285 $ 180,108
Richard D. Smith........ 81,000 16.1% $2.8125 08/15/2003 $ 92,743 $ 216,130
</TABLE>
- --------
(1) The options granted have a seven year term with one-third exercisable each
year in cumulative annual segments, starting one year from the date of
grant. Grants permit the exercise of options in exchange for shares of the
Company's common stock as well as for cash. In connection with a merger,
sale of assets, share exchange, or change of control of the Company, any
unexercised options become exercisable or the Committee may allow
surrender for cash, substitution or cancellation.
(2) Exercise price was established at quoted market price for company shares
on the date of grant.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth information regarding option exercises during
the 1997 fiscal year and unexercised stock options held as of the 1997 fiscal
year end by each of the Named Executive Officers:
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
SHARES VALUE OPTIONS AT FY-END(#) OPTIONS AT FY-END($)(1)
ACQUIRED ON REALIZED ------------------------- -------------------------
NAME EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Eugene E. Prince........ 30,000 $65,625 22,500 45,000 $7,031 $14,063
Richard D. Smith........ 21,000 $48,563 27,000 54,000 $8,438 $16,875
</TABLE>
- --------
(1) Fair market value of unexercised in-the-money options at fiscal year end
is based on the closing price of $3.125 of Common Stock on June 30, 1997.
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
For fiscal years beginning July 1, 1996 long-term incentives are provided
through stock option grants. See the table under OPTION GRANTS IN LAST FISCAL
YEAR and the discussion under COMPENSATION COMMITTEE REPORT.
EMPLOYMENT AGREEMENTS WITH EXECUTIVE OFFICERS
The Company has Employment Agreements with Eugene E. Prince and Richard D.
Smith which became effective July 1, 1993 for an initial term of five years
and continuing subsequently on a year-to-year basis unless the Company or the
officers give termination notice at least 60 days prior to expiration of the
initial or subsequent terms.
Base Salary. The Agreements provide a base salary of not less than $250,000
for Mr. Prince and $137,500 for Mr. Smith, reviewed annually for increase on a
merit basis. In August of 1995 their base salaries were increased to $260,000
and $143,000 respectively. Mr. Smith was increased to $150,000 in August of
1997.
7
<PAGE>
Annual Incentive Plan. Annual incentive bonuses are paid based on
achievement levels established annually by the Board of Directors for return
on equity and total shareholder return. No annual bonuses are paid if the
Company has a net loss.
Long-Term Incentive Plan Payment. The Company's long term incentive payment
plan utilizes stock options.
Certain Dispositions. Separate bonuses are paid for gains on dispositions of
certain subsidiaries or divisions of the Company. This bonus for Mr. Prince is
an amount equal to a percentage of the accumulative pre-tax gain recognized on
a disposition in an amount equal to 2% of the first $5 million of accumulative
pre-tax gain; 1.75% of the next $4 million of pre-tax gain; 1.5% of the next
$3 million of pre-tax gain; 1.25% of the next $2 million of pre-tax gain; and
1% of any additional amount of pre-tax gain. Amounts for Mr. Smith are one-
half the amounts stated for Mr. Prince.
Other Provisions. Messrs. Prince and Smith participate in other benefits and
perquisites as are generally provided by the Company to its employees. In
addition, the Company pays for an annual physical exam and up to $5,000 each
year in financial consulting for Mr. Prince, and provides both executives with
a long-term disability insurance program, $500,000 of life insurance and an
automobile.
In the event of death, disability or termination by the Company prior to a
change in control, other than for cause, the Agreements provide for limited
continuations of salary and insurance benefits and for bonus prorations or
settlements.
CHANGE OF CONTROL ARRANGEMENTS
In 1989 the Company entered into agreements with Messrs. Prince and Smith
pursuant to which, upon termination by the Company (other than for cause as
defined in the Agreements) or by the executive for good reason (as defined in
the Agreements) within 90 days prior to or 24 months following a change of
control of the Company, each is entitled to receive a severance 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, an allocation
for incentive compensation for the current year up to the date of termination
and two year continuation of insurance benefits. 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 Company not later than the September 30 immediately preceding renewal.
The Company has similar agreements (providing less severance payments) with
eight other key managers. The change of control agreements require the key
executives to remain in the employ of the Company for a specified period in
the event of a potential change in control of the Company and provide
employment security to them in the face of current pressures to sell the
Company or in the event of take-over threats, so that they can devote full
time and attention to the Company's efforts free of concern about discharge in
the event of a change of control of the Company. These agreements are common
at other public companies. They are not excessive and are within industry
standards. In 1997, the Board of Directors considered termination of these
agreements and determined that the reasons for executing change of control
agreements in 1989 continue to be valid and concluded that notices of non-
renewal would not be in the best interests of shareholders.
8
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal year 1997 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.
- --------
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.
- --------
COMPENSATION COMMITTEE REPORT
In fiscal 1993 the Committee engaged Towers Perrin, nationally known
executive compensation consultants, to conduct an audit of the CEO's
compensation package and, subsequently, to recommend provisions for a revised
package. The Towers Perrin recommendations were incorporated into the five
year employment contract for the CEO and a similar contract for the Executive
Vice President, which were approved by the Board of Directors in fiscal 1994.
Base salaries for Messrs. Prince and Smith are reviewed annually on a merit
basis and compared to a national compensation survey under a policy to
maintain salaries within a general range of 80% to 120% of the survey median.
No salary increases were recommended by the Committee for fiscal 1994, 1995 or
1997 or for Mr. Prince for fiscal 1998. The Committee recommended salary
increases of 4% for both executives for fiscal 1996 and a 5% increase for Mr.
Smith for fiscal 1998.
In recommending target levels of achievement for the Annual Incentive Plan,
the Committee reviews past operating results and stock prices and the
forecasts and business plans of the Company for the ensuing year. No bonuses
were paid under the plan for fiscal 1995, 1996 and 1997 because threshold
performance levels were not achieved or because the Company incurred operating
losses. For fiscal 1998 the Committee recommended target achievement levels as
follows: for total shareholder return, a 25% improvement in stock price; for
return on equity, elimination of losses and achieving a modest level of
profitability.
The Company's long term incentive program is based on stock options. In
making its recommendations for grants of stock options, the Committee
considers customary business practices, the direct link between option share
benefits and improving shareholder values, the enlarged operating
responsibilities of Mr. Smith, the prior level of stock option grants for both
executives, the current level of share options held by Messrs. Prince and
Smith, the shares available for option and the total shares under option
grants. The Committee also considers the Company's current operating
conditions, under which it is vitally important to all shareholder interests,
particularly during a time of vocal dissidence by a few shareholders, to have
strong long-term incentives for management to remain positive and dedicated,
well motivated and business focused. Option grants recommended by the
Committee under this program are summarized under OPTION GRANTS IN LAST FISCAL
YEAR.
Graydon D. Hubbard
George J. Pilmanis
9
<PAGE>
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,
1997.
[GRAPH APPEARS HERE]
<TABLE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG NASDAQ (U.S. COMPANIES), NASDAQ MEASURING DEVICES AND THE COMPANY
<CAPTION>
NASDAQ
Measurement period HATHAWAY MEASURING NASDAQ
(Fiscal Year Covered) CORPORATION DEVICES (U.S.)
- --------------------- ----------- --------- ------
<S> <C> <C> <C>
Measurement PT -
06/30/92 $ 100.0 $ 100.0 $ 100.0
FYE 06/30/93 $ 48.0 $ 108.0 $ 126.0
FYE 06/30/94 $ 82.0 $ 111.0 $ 127.0
FYE 06/30/95 $ 55.0 $ 186.0 $ 170.0
FYE 06/30/96 $ 85.0 $ 244.0 $ 218.0
FYE 06/30/97 $ 69.0 $ 309.0 $ 265.0
</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.
ITEM 2: SHAREHOLDER PROPOSAL
The following proposal was submitted by the A.J. Hintze Qualified Trust, 2503
Hodges Bend Circle, Sugar Land, Texas 77479, holder of 235,940 shares of Common
Stock.
Shareholder Proposal
Resolved, it is requested that the Board of Directors seek potential buyers
for Hathaway Corporation by taking all such actions deemed necessary or
desirable in facilitating same, including, without limitation, the elimination
of any shareholder rights plan (the so-called "poison pill"), "golden
parachute" severance provisions which provide certain benefits and compensation
to management in the event of a takeover or buyout, and reduction of the two-
thirds voting requirement for the election of directors to a simple majority.
10
<PAGE>
Shareholder Supporting Statement
The proponent of this proposal is a trust holding over 235,940 shares of
Hathaway common stock. A proposal similar to that set forth above was
introduced for a vote at the October 24, 1996 annual meeting of shareholders
and received substantial approval.
The proponent's disappointment with the performance of management and of
Hathaway stock has continued into 1997 with the price per share dropping
precipitously. This continued trend of low stock prices for Hathaway shares
occurs during a rigorous bull market in general.
The proponent believes that new management for Hathaway might enable
Hathaway to achieve its full potential. As currently structured, however,
potential buyers for Hathaway are undoubtedly discouraged by the obstacles
placed in their way by current management such as the shareholders' rights
plan and the generous severance packages which would substantially increase
the price of acquiring Hathaway. Additionally, under the current governing
corporate documents, directors may only be elected upon receiving the
affirmative vote of the holders of two-thirds of the shares of common stock
entitled to vote for the election of directors. Reducing the voting
requirements for the election of directors to a simple majority is another
suggested step in facilitating the entry of new management into Hathaway.
Proponent believes that these management entrenchment devices are not in the
best interest of Hathaway's shareholders and urges your "yes" vote on this
proposal.
The Company's Statement in Opposition
PLEASE VOTE "AGAINST" THE SHAREHOLDER PROPOSAL.
-------
This Shareholder Proposal is similar to proposals that have been presented
at the last two annual meetings which have been defeated by substantial
margins each year. The Board of Directors gives continuing consideration to
whether it should seek a disposition of the Company. The board believes that
the long term potential of the Company is substantially greater than the
current market price. Competition in the Company's products is significant and
the board believes that any affirmation that the Company is for sale would
result in a serious competitive disadvantage in the Company's marketplace and
could have an adverse affect on the Company's business. 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 rights plan, the severance agreements and the two-thirds
voting requirement for the election of directors are all provisions designed
to assure the Company 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. Modern takeover efforts involve two-
tiered tender offers and other techniques for confusing the terms of
acquisition. In these situations, shareholders may be tempted to sell at a
price lower than fair value because a failure to do so may result in an even
lower price. It is in the best interest of the Company that any acquisition be
negotiated in the interest of all shareholders and the anti-takeover devices
described help assure that result.
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.
INDEPENDENT PUBLIC ACCOUNTANT
Arthur Andersen LLP served as independent auditors of the Company for the
fiscal year ended June 30, 1997. 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.
11
<PAGE>
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 1998.
ANNUAL REPORT
The Company's Annual Report for the year ended June 30, 1997 has been mailed
to shareholders with this Proxy Statement.
SHAREHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Shareholders' proposals for the 1998 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 May
22, 1998 in order to be presented at the annual meeting or be considered for
inclusion in the Company's 1998 proxy statement and proxy card.
PLEASE SIGN, DATE AND MAIL PROMPTLY THE ENCLOSED PROXY.
Hathaway Corporation
September 18, 1997
12
<PAGE>
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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
23, 1997, and at all adjournments thereof, with respect to the following:
ITEM 1. ELECTION OF DIRECTORS--Nominees of the Board:
E.E. Prince, R.D. Smith, C.H. Clarridge, D.D. Hock, G.D. Hubbard, and
G.J. Pilmanis,
<TABLE>
<CAPTION>
<S> <C>
[_] FOR all nominees [_] WITHHOLD AUTHORITY
(except as indicated to to vote for all nominees.
the contrary below).
</TABLE>
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
PRINT THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW. IF AUTHORITY TO VOTE
FOR NOMINEES IS NOT EXPRESSLY WITHHELD, IT SHALL BE DEEMED GRANTED.
----------------------------------------------------------------------------
(to be signed and dated on other side)
================================================================================
<PAGE>
================================================================================
(continued from other side)
MANAGEMENT RECOMMENDS VOTING "AGAINST" THE SHAREHOLDER PROPOSAL
ITEM 2. SHAREHOLDER PROPOSAL, if presented
FOR [_] AGAINST [_] ABSTAIN [_]
SHARES WILL BE VOTED AGAINST THE PROPOSAL IF INSTRUCTIONS ARE NOT GIVEN.
ITEM 3. OTHER MATTERS-In the proxies discretion on such other business matters
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.
..................................
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: ....................... 1997
PLEASE SIGN AND RETURN THIS PROXY
IN THE ENCLOSED POSTAGE PAID
ENVELOPE AS PROMPTLY AS POSSIBLE
================================================================================
