<PAGE> 1
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
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
Ionics, Incorporated
(Name of Registrant as Specified In Its Charter)
Ionics, Incorporated
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 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:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
--------------------------------------------------------------------------------
<PAGE> 2
(LOGO)
IONICS, INCORPORATED
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 4, 1995
To the Stockholders of
Ionics, Incorporated:
Notice is hereby given that the Annual Meeting of Stockholders of Ionics,
Incorporated (the "Corporation" or the "Company") will be held at the Conference
Center, Second Floor, The First National Bank of Boston, 100 Federal Street,
Boston, Massachusetts, on Thursday, May 4, 1995 at 2:00 P.M. for the following
purposes:
1. To elect four Class III Directors of the Corporation, each to serve
for a three-year term.
2. To approve the Corporation's 1994 Restricted Stock Plan.
3. To select an Auditor of the Corporation for the current fiscal
year.
4. To consider and act upon such other matters as may properly come
before the meeting.
The Board of Directors has fixed the close of business on March 17, 1995 as
the record date for determination of the stockholders entitled to notice of and
to vote at the meeting.
By Order of the Board of Directors
STEPHEN KORN, CLERK
Ionics, Incorporated
65 Grove Street
Watertown, Massachusetts 02172
March 30, 1995
WHETHER OR NOT YOU EXPECT TO BE AT THE MEETING, WILL YOU PLEASE MARK, SIGN,
DATE AND RETURN YOUR PROXY IN THE ENVELOPE ENCLOSED HEREWITH.
<PAGE> 3
IONICS, INCORPORATED
65 GROVE STREET
WATERTOWN, MASSACHUSETTS 02172
------------------------
PROXY STATEMENT
------------------------
MARCH 30, 1995
The Notice of the 1995 Annual Meeting of Stockholders of the Corporation is
set forth on the preceding page and there is enclosed with this Proxy Statement
a form of Proxy solicited by the Board of Directors of the Corporation. The cost
of this solicitation will be borne by the Corporation. In addition to
solicitation by mail, certain of the officers and employees of the Corporation
also may solicit Proxies personally or by telephone or telegram. This Proxy
Statement is being first sent to stockholders on or about March 30, 1995. A copy
of the Annual Report to Stockholders for the year 1994 (including audited
financial statements of the Corporation) also accompanies this Proxy Statement.
Only stockholders of record as of the close of business on March 17, 1995
are entitled to notice of and to vote at the 1995 Annual Meeting and/or any
adjournment thereof. The outstanding stock of the Corporation on the record date
entitled to vote consisted of 14,008,049 shares of common stock, $1 per share
par value ("Common Stock"). All stockholdings and stock benefit plan data set
forth in this Proxy Statement give effect to the 2-for-1 stock split by way of a
100% stock dividend distributed on January 6, 1995 to stockholders of record on
December 14, 1994. The holders of the outstanding shares of Common Stock are
entitled to one vote per share. All shares represented by valid Proxies received
by the Clerk of the Corporation prior to the meeting will be voted as specified
in the Proxy: if no specification is made and if discretionary authority is
conferred by the stockholder, the shares will be voted for the election of each
of the Board's nominees to the Board of Directors in proposal 1; for the
approval of the 1994 Restricted Stock Plan in proposal 2; and for the selection
of an auditor in proposal 3. A stockholder giving a Proxy has the power to
revoke it at any time prior to its exercise by delivering to the Clerk of the
Corporation a written revocation or a duly executed Proxy bearing a later date,
or by attendance at the meeting and voting such shares in person.
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the election inspectors appointed for the meeting and will determine whether or
not a quorum is present. The election inspectors will treat abstentions and
broker "non-votes" as shares that are present and entitled to vote for purposes
of determining the presence of a quorum. Abstentions, but not "non-votes," are
counted for purposes of determining the number of shares voting on a particular
matter submitted to the shareholders for a vote. Neither abstentions or
"non-votes" are treated as having been voted for purposes of determining the
approval of any such matter. A "non-vote" occurs when a nominee holding shares
for a beneficial owner votes on one proposal, but does not vote on another
proposal because the nominee does not have discretionary voting power and has
not received instructions from the beneficial owner.
2
<PAGE> 4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table lists as of March 17, 1995 the number of shares of the
Corporation's Common Stock beneficially owned by stockholders known by the
Corporation to own more than five percent of such Common Stock:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS OF BENEFICIAL PERCENT OF
BENEFICIAL OWNER OWNERSHIP CLASS
------------------------------------------------ -------------------- ----------
<S> <C> <C>
Wellington Management Company 1,125,220 shares(1) 8.0%
75 State Street
Boston, MA 02109
Pilgrim Baxter & Associates 814,000 shares(2) 5.8%
1255 Drummers Lane, Suite 300
Wayne, PA 19087-1590
---------------
<FN>
(1) Includes shared voting power as to 787,920 shares and shared dispositive
power as to all 1,125,220 shares. Wellington Management Company has no sole
voting or sole dispositive power as to any of these shares.
(2) Includes shared voting power and sole dispositive power as to all 814,000
shares. Pilgrim Baxter & Associates has no sole voting power as to any of
these shares.
</TABLE>
The following table sets forth as of March 17, 1995 the number of shares of
Common Stock of the Corporation beneficially owned by all the Directors
(including nominees), each of the executive officers named in the Summary
Compensation Table on page 11 of this Proxy Statement, and all Directors and
executive officers of the Company as a group (15 individuals). Unless otherwise
indicated, the named person possesses sole voting and dispositive power with
respect to the shares.
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT OF
NAME OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP CLASS
------------------------------------------------------- ----------------------- ----------
<S> <C> <C>
William L. Brown....................................... 8,000 (1) *
Arnaud de Vitry d'Avaucourt............................ 175,000 (2) 1.2%
Lawrence E. Fouraker................................... 15,400 (3) *
Samuel A. Goldblith.................................... 13,000 (4) *
Arthur L. Goldstein.................................... 518,834+ (5) 3.6%
Kachig Kachadurian..................................... 261,534+ (6) 1.8%
William E. Katz........................................ 248,528+ (7) 1.8%
Robert B. Luick........................................ 13,200 (8) *
Carl S. Sloane......................................... -- --
John J. Shields........................................ 14,080 (9) *
Mark S. Wrighton....................................... 2,000 (10) *
Allen S. Wyett......................................... 8,000 (11) *
Theodore G. Papastavros................................ 122,602+(12) *
Stephen Korn........................................... 42,894+(13) *
Robert J. Halliday..................................... 50,292+(14) *
All Directors and Executive Officers as a
Group (15 individuals)............................... 1,493,364+(15) 10.0%
---------------
<FN>
* The number of shares owned beneficially at March 17, 1995 is less than 1% of
the shares of Common Stock outstanding at that date.
</TABLE>
3
<PAGE> 5
[FN]
+ If certain of the options owned by these executive officers are exercised,
certain of the shares would be subject to repurchase in varying amounts if
the individual's employment with the Company were to be terminated before
specified dates.
(1) Includes 6,000 shares subject to options, as to which Mr. Brown has the
right to acquire beneficial ownership.
(2) Includes 13,000 shares subject to options, as to which Mr. de Vitry
d'Avaucourt has the right to acquire beneficial ownership. The remaining
162,000 shares, as to which Mr. de Vitry d'Avaucourt shares dispositive
power, are held by a financial institution in a fiduciary capacity for the
benefit of Mr. de Vitry d'Avaucourt's wife. Such number excludes 341,926
shares held in a trust of which Mr. de Vitry d'Avaucourt's wife is the
principal beneficial owner, and also excludes an additional 524,000 shares
held in a separate trust, of which Mr. de Vitry d'Avaucourt is the
principal indirect beneficiary. Mr. de Vitry d'Avaucourt disclaims
beneficial ownership of such 865,926 shares.
(3) Includes 9,000 shares subject to options, as to which Mr. Fouraker has the
right to acquire beneficial ownership. Does not include 600 shares owned by
members of Mr. Fouraker's immediate family, as to which Mr. Fouraker
disclaims beneficial ownership.
(4) Represents shares subject to options, as to which Mr. Goldblith has the
right to acquire beneficial ownership.
(5) Includes 302,000 shares subject to options, as to which Mr. Goldstein has
the right to acquire beneficial ownership. Includes beneficial ownership of
10,812 shares (as of December 31, 1994) held in the Ionics Section 401(k)
Plan for the account of Mr. Goldstein. Does not include 6,800 shares held
by members of Mr. Goldstein's immediate family, as to which Mr. Goldstein
disclaims beneficial ownership.
(6) Includes 183,500 shares subject to options, as to which Mr. Kachadurian has
the right to acquire beneficial ownership. Includes beneficial ownership of
4,752 shares (as of December 31, 1994) held in the Ionics Section 401(k)
Plan for the account of Mr. Kachadurian. Includes 1,000 shares held by a
member of his immediate family, as to which Mr. Kachadurian disclaims
beneficial ownership.
(7) Includes 133,126 shares subject to options, as to which Mr. Katz has the
right to acquire beneficial ownership. Does not include 10,400 shares held
by members of Mr. Katz's immediate family, as to which Mr. Katz disclaims
beneficial ownership.
(8) Includes 3,000 shares subject to options, as to which Mr. Luick has the
right to acquire beneficial ownership. Does not include 740 shares held by
members of Mr. Luick's immediate family, as to which Mr. Luick disclaims
beneficial ownership.
(9) Includes 11,000 shares subject to options, as to which Mr. Shields has the
right to acquire beneficial ownership.
(10) Represents shares subject to options, as to which Mr. Wrighton has the
right to acquire beneficial ownership.
(11) Includes 6,000 shares subject to options, as to which Mr. Wyett has the
right to acquire beneficial ownership. Does not include 1,000 shares held
by a member of Mr. Wyett's immediate family, as to which Mr. Wyett
disclaims beneficial ownership.
(12) Includes 77,500 shares subject to options, as to which Mr. Papastavros has
the right to acquire beneficial ownership. Includes beneficial ownership of
576 shares (as of December 31, 1994) in the Ionics Section 401(k) Plan for
the account of Mr. Papastavros.
4
<PAGE> 6
[FN]
(13) Includes 42,800 shares subject to options, as to which Mr. Korn has the
right to acquire beneficial ownership. Includes beneficial ownership of 94
shares (as of December 31, 1994) in the Ionics Section 401(k) Plan for the
account of Mr. Korn.
(14) Includes 50,000 shares subject to options, as to which Mr. Halliday has the
right to acquire beneficial ownership. Includes beneficial ownership of 292
shares (as of December 31, 1994) in the Ionics Section 401(k) Plan for the
account of Mr. Halliday.
(15) Assumes exercise of options held by the group for all 851,926 shares and
that such shares are outstanding.
EXPLANATION OF AGENDA FOR THE MEETING
ITEM 1. ELECTION OF DIRECTORS.
The Corporation has a Board of Directors consisting of four Class I
Directors, four Class II Directors and four Class III Directors. The Class I,
Class II and Class III Directors currently in office will serve until the annual
meeting of stockholders to be held in 1996, 1997 and 1995, respectively, and
until their respective successors are duly elected and qualified. On February
16, 1995, the Board of Directors voted to enlarge the number of Class I
Directors to four, and elected Carl S. Sloane to fill the vacancy created by
such expansion. At each annual meeting of stockholders, Directors are elected
for a full term of three years to succeed those whose terms are expiring.
It is the intention of the persons authorized by the enclosed Proxy, which
is solicited by the Board of Directors, to nominate and elect the persons named
in the table below as Class III Directors, all of whom currently serve on the
Board. To be elected, each nominee must receive the affirmative vote of a
plurality of the issued and outstanding shares of the Common Stock represented
in person or by Proxy at the Annual Meeting and entitled to vote. The following
table sets forth, for each nominee, his principal occupation since January 1,
1990 and present positions with the Corporation, period of past service as a
Director, age on March 1, 1995, and directorships of other public companies
(i.e., companies subject to the reporting requirements of the Securities
Exchange Act of 1934 or registered as investment companies under the Investment
Company Act):
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS
(SINCE JANUARY 1, 1990),
PRESENT POSITIONS WITH
THE CORPORATION PERIOD OF
AND DIRECTORSHIPS OF PAST SERVICE
NAME AND AGE OTHER PUBLIC COMPANIES AS A DIRECTOR
------------ ------------------------ -------------
Directors whose Terms Expire in 1995 (Class III Directors)
<S> <C> <C>
William L. Brown Retired Chairman of the Board, The First May 1991 to date
(73)*# National Bank of Boston; Director, GC
Companies, Inc.; Stone and Webster,
Incorporated; Standex International
Corporation; and North American Mortgage
Company; Trustee, Bradley Real
Estate Trust
Robert B. Luick Of Counsel, Sullivan & Worcester, Attorneys 1948 to 1968;
(83) (since 1992); prior to 1992, partner, 1971 to date
Sullivan & Worcester; Assistant Clerk of the
Corporation (since prior to 1990)
</TABLE>
5
<PAGE> 7
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS
(SINCE JANUARY 1, 1990),
PRESENT POSITIONS WITH
THE CORPORATION PERIOD OF
AND DIRECTORSHIPS OF PAST SERVICE
NAME AND AGE OTHER PUBLIC COMPANIES AS A DIRECTOR
------------ ----------------------- -------------
<S> <C> <C>
John J. Shields President and Chief Executive Officer, 1988 to date
(56)*# King's Point Holdings Incorporated
(diversified business information,
technology instrumentation and cranberry
cultivation); President and Chief Executive
Officer, Computervision Corporation (January
1991 - April 1993); Senior Vice President,
Digital Equipment Corporation
(1985 - 1989)
Allen S. Wyett President, Wyett Consulting Group, Inc. February 1992 to date
(61)*# (since 1990); Chief Executive Officer,
Robert Allen Fabrics, Inc.(1970-1990)
---------------
<FN>
* Member of Audit Committee
# Member of Compensation Committee
</TABLE>
<TABLE>
The following table sets forth similar information about the Class I and Class II Directors of
the Company, whose terms of office do not expire at the 1995 Annual Meeting and who consequently are
not nominees for election in 1995.
<CAPTION>
PRINCIPAL OCCUPATIONS
(SINCE JANUARY 1, 1990),
PRESENT POSITIONS WITH PERIOD OF
THE CORPORATION AND DIRECTORSHIPS PAST SERVICE
NAME AND AGE OF OTHER PUBLIC COMPANIES AS A DIRECTOR
------------ --------------------------------- -------------
Directors whose Terms Expire in 1996 (Class I Directors)
<S> <C> <C>
Lawrence E. Fouraker Professor Emeritus, Harvard Business School, 1986 to date
(71)*#+ and self-employed business advisor (since
prior to 1990); Director, Alcan Aluminium,
Ltd., General Electric Company, The New
England, Citicorp, and Enserch Corp.
Samuel A. Goldblith Professor Emeritus, Massachusetts Institute 1980 to date
(75)*#+ of Technology, and consultant since 1990;
Senior Advisor to the President,
Massachusetts Institute of Technology (1986
- 1990)
Arthur L. Goldstein President and Chief Executive Officer of the 1971 to date
(59)+ Company (since prior to 1990); Chairman of
the Board of the Company since May 1990;
Director, Unitrode Corporation
</TABLE>
6
<PAGE> 8
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS
(SINCE JANUARY 1, 1990),
PRESENT POSITIONS WITH PERIOD OF
THE CORPORATION AND DIRECTORSHIPS PAST SERVICE
NAME AND AGE OF OTHER PUBLIC COMPANIES AS A DIRECTOR
------------ --------------------------------- -------------
<S> <C> <C>
Carl S. Sloane Professor of Business Administration, February 1995 to date
(58) Harvard Business School (since 1991);
President and Chief Executive Officer,
Temple, Barker & Sloane/Strategic Planning
Associates, Inc. (1990-1991) (management
consulting firm); Director, Leaseway
Transportation Corp.
Directors whose Terms Expire in 1997 (Class II Directors)
Arnaud de Vitry Engineering consultant; Chairman of the 1964 to date
d'Avaucourt Board, Eureka (SICAV), Paris, French
(68)*# investment firm (1985 - 1990); Director,
Digital Equipment Corporation and
Schlumberger Limited
Kachig Kachadurian Executive Vice President of the Company 1986 to date
(45) (since May 1994); previously Senior Vice
President and Vice President of the Company
William E. Katz Executive Vice President of the Company 1961 to date
(70)
Mark S. Wrighton Provost and Professor of Chemistry, November 1993 to date
(45)*# Massachusetts Institute of Technology;
Director, Helix Technology Corp. and OIS
Optical Imaging Systems, Inc.
---------------
<FN>
* Member of Audit Committee
# Member of Compensation Committee
+ Member of Executive Committee
</TABLE>
Mr. Luick is of counsel of the law firm of Sullivan & Worcester, which
provides legal services to the Corporation from time to time.
In addition to the Executive Committee of the Board of Directors, which did
not meet during the year, the Corporation has an Audit Committee, of which Mr.
de Vitry d'Avaucourt is Chairman, and a Compensation Committee, of which Mr.
Fouraker is Chairman. There is no standing nominating committee of the Board.
The Audit Committee meets with management and with the Corporation's independent
auditors at least once a year to review financial results and procedures,
internal financial controls, audit plans and recommendations. The Compensation
Committee reviews and establishes the remuneration to be paid to the executive
officers of the Corporation, reviews the remuneration to be paid other officers,
and acts as the administrator of the Corporation's stock option and restricted
stock plans.
During 1994, the Board of Directors held four meetings. The Audit Committee
met twice and the Compensation Committee met three times. Each Director attended
75% or more of the aggregate of (i) the total number of meetings of the Board
and (ii) the total number of meetings held by all committees of the Board on
which such Director served.
If, at the time of the Annual Meeting, any of the above-named nominees are
unable to serve, a circumstance which is not anticipated, and if the enclosed
Proxy confers discretionary authority, the persons
7
<PAGE> 9
named in the Proxy will either vote for such substitute nominees as may be
designated by the Board of Directors or will vote for a reduction in the number
of Directors, as determined by the Board.
ITEM 2. APPROVAL OF 1994 RESTRICTED STOCK PLAN
The 1994 Restricted Stock Plan (the "1994 Plan") was adopted by the
Company's Board of Directors on August 23, 1994 following the recommendation of
the Compensation Committee of the Board of Directors, subject to approval by the
shareholders at this Annual Meeting. A total of 300,000 shares of Common Stock
have been reserved for issuance under the 1994 Plan.
Vote Required
-------------
The affirmative vote of a majority of the votes cast on this matter at the
1995 Annual Meeting will be required to ratify the adoption of the 1994 Plan.
Recommendation
--------------
The Board of Directors has unanimously approved the 1994 Plan and
recommends that shareholders vote FOR the approval of such Plan.
Description of the 1994 Restricted Stock Plan
---------------------------------------------
The essential features of the 1994 Plan, as proposed to be ratified, are
outlined below. The purpose of the 1994 Plan is to increase stock ownership
among officers and other key employees of the Company. The Company believes that
such stock ownership by its officers and key employees is important to advance
the interests of the Company by enhancing the Company's ability to reward such
officers and key employees for their contributions to the Company, and to create
an incentive for their efforts to increase the profitability and growth of the
Company. In addition, the Board of Directors believes that the 1994 Plan will
provide desirable flexibility to the Company's overall compensation program.
Terms of Restricted Stock Awards
--------------------------------
The terms of the 1994 Plan permit the Committee of the Board of Directors
administering the 1994 Plan (the "Committee"), which is currently the
Compensation Committee of the Board of Directors, to make Restricted Stock
Awards ("Awards") to officers and other key employees of the Company or any
subsidiaries of the Company (together, "Subsidiaries") in consideration of their
performance of services. All Awards will be in consideration of past services to
the Company or one of its Subsidiaries, and a recipient must have been employed
by the Company or a Subsidiary for at least six months prior to the date of
grant. Such Awards will be made without payment of any cash or other
consideration by the participating employee at the time of an Award. However,
the Awards generally are subject to the employee's continued employment
throughout the requisite vesting period.
If an employee continues to be employed by the Company following the date
of grant of an Award, such Award will vest in twenty percent annual increments
over the five successive 12-month periods following the Award date. Vesting of
Awards occurs only as long as a participant maintains continuous status as an
employee, and ceases immediately upon termination of such status. Except as
provided below, if a participant ceases to be an employee of the Company prior
to complete vesting of Awards previously granted, then all unvested shares are
immediately forfeited. Such forfeited shares may be issued again under the 1994
Plan, subject to the limitation that grants of Awards for no more than 450,000
shares may be made by the Committee.
8
<PAGE> 10
In the event of the termination of employment of a participant for any
reason (not including death, disability, or retirement at normal retirement age)
with the Company or any Subsidiary, any shares of Common Stock awarded under the
1994 Plan but not yet vested are forfeited by the participant without payment of
any consideration therefor. Unless otherwise determined by the Committee,
restrictions on unvested shares will lapse upon the death, disability or
retirement at normal retirement age of a participant.
Under the terms of the 1994 Plan, no participant may receive an Award for
more than 50,000 shares of restricted stock in any year.
Administration
--------------
The 1994 Plan is administered by a Committee designated by the Board of
Directors, currently the Compensation Committee of the Board of Directors. The
Committee must be constituted in such a manner as to permit the 1994 Plan and
transactions thereunder to comply with Rule 16b-3 as it applies to a plan
intended to qualify thereunder as a discretionary grant or award plan. The
Compensation Committee, all of whose members are "disinterested" under the terms
of Rule 16b-3, is constituted in such a manner as to comply with Rule 16b-3.
Subject to the provisions of the 1994 Plan, the designated Committee has
the authority, in its discretion, to interpret the 1994 Plan and to determine
the employees to whom, and the time or times at which, Restricted Stock Awards
shall be granted and the number of shares of Common Stock to be subject to each
such Award. All decisions, determinations and interpretations of the Committee
shall be final and binding on the eligible participants.
Term of Plan
------------
The Board declared the 1994 Plan effective on August 23, 1994 subject to
its ratification by the shareholders at the 1995 Annual Meeting. Unless sooner
terminated, the 1994 Plan continues in effect for a term of ten years from its
effective date.
Adjustments Upon Changes in Capitalization
------------------------------------------
If any change, such as a stock split or dividend, is made in the Company's
capitalization which results in a change in the outstanding Common Stock of the
Company, then an appropriate adjustment will be made in the number of shares
which have been authorized for issuance under the 1994 Plan, and which have not
yet been issued. The number of shares referenced in this description of the 1994
Plan give effect to the two-for-one stock split by way of stock dividend
distributed on January 6, 1995 to stockholders of record on December 14, 1994.
Effect on 1994 Plan of Change in Control of the Company
-------------------------------------------------------
In the event of a change in control of the Company (defined below), the
Committee may accelerate the lapsing of restrictions on outstanding Restricted
Stock; or adjust the terms of an Award in a manner determined by the Committee
to reflect the change in control; or cause an Award to be assumed, or new rights
substituted therefor, by another entity; or make such other changes as the
Committee may consider to be equitable and in the best interests of the Company.
A change in control is defined as the acquisition of shares of Common Stock
by any person, entity or group in a transaction or series of transactions
resulting in the beneficial ownership of more than 30% of the outstanding Common
Stock; a merger, consolidation or sale of substantially all the assets of the
Company; a contested election of directors of the Company resulting in a
majority of the nominees recommended by the Board of Directors of the Company
not being elected; a change in composition within a 60-day period of a
9
<PAGE> 11
majority of the Company's Board of Directors; or any other event which results
in a change in voting power sufficient to elect a majority of the Board.
Amendment and Termination of the 1994 Plan
------------------------------------------
The Board of Directors may at any time amend, alter, suspend or discontinue
the 1994 Plan, but no amendment, alteration, suspension or discontinuation can
be made which would impair the rights of any participant under any grant
previously made, without his or her consent. In addition, to the extent required
to comply with Rule 16b-3 (or any other applicable law or regulation), the
Company will obtain shareholder approval of any 1994 Plan amendment in such a
manner and to such a degree as is required.
Tax Information
---------------
The following is a summary of the federal income tax considerations to a
participant under the 1994 Plan. This summary is intended to be for general
information only, and does not purport to address all federal income tax
considerations that may be relevant to particular participants (such as foreign
persons), or the tax consequences of a death. In addition, the discussion does
not address any state, local or foreign tax considerations.
The federal income tax treatment to a participant who receives an Award
will depend on whether or not he or she timely files an election under Section
83(b) of the Internal Revenue Code (the "Code"). If such an election is timely
filed, the participant will recognize ordinary income in an amount equal to the
fair market value of the shares at the time of the Award. If the election is not
timely filed, the participant will recognize ordinary income at the time the
shares vest in an amount equal to the fair market value of the shares at that
time. The ordinary income so recognized by a participant will be treated as
wages for tax purposes and will be subject to federal and state withholding tax.
Upon any resale of the shares, the participant will recognize capital gain
or loss equal to the difference (if any) between the sale price and his or her
tax basis in such shares. Such gain or loss (except upon forfeiture if an
election under Section 83(b) is filed) will be treated as capital gain or loss,
and will qualify for long-term capital gain or loss treatment if the shares have
been held for more than one year. The current maximum federal rate of tax on net
capital gain (excess of net long-term capital gain over net short-term capital
loss) is 28%.
Subject to certain limits on the deductibility of employee remuneration
under Section 162(m) of the Code, the Company is generally entitled to a tax
deduction in the amount that the participant recognizes as ordinary income with
respect to the Shares acquired under the 1994 Plan. The 1994 Plan has been
structured so that Awards granted will not be subject to the limits on
performance-based compensation contained in Section 162(m).
New Plan Benefits
-----------------
The benefits or amounts that will be received by or allocated to the
executive officers and other key employees of the Company under the 1994 Plan
are not determinable at this time, because such benefits or amounts depend upon
certain unknown factors, including compensation decisions to be made in the
future, future market value of the Common Stock, and whether a participant
continues to be employed as an officer or as an employee for the requisite
vesting periods.
ITEM 3. SELECTION OF AN AUDITOR.
It is proposed that the stockholders select an independent auditor for the
Corporation for the current fiscal year, which ends December 31, 1995. The
persons named in the Proxy intend to vote in favor of selecting
10
<PAGE> 12
Coopers & Lybrand L.L.P. unless otherwise directed in the Proxy. The firm became
auditors for the Corporation in 1974.
Although the Corporation is not required to submit the selection of its
auditor to a vote of stockholders, the Board of Directors of the Corporation
believes it is sound policy and in the best interests of the stockholders to do
so. In the event a majority of the votes cast are against the selection of
Coopers & Lybrand L.L.P., the Board will consider the vote and the reasons
therefor in future recommendations on the selection of an auditor for the
Corporation.
A representative of Coopers & Lybrand L.L.P. is expected to be present at
the stockholders' meeting with the opportunity to make a statement if desired,
and is expected to be available to respond to appropriate questions from
stockholders who are present at the meeting.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides summary information concerning compensation
paid or accrued by the Company to, or on behalf of, the Company's Chief
Executive Officer and each of the four other most highly compensated executive
officers of the Company (determined as of December 31, 1994) for the fiscal
years ended December 31, 1992, 1993 and 1994:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
AWARDS
--------------------------
RESTRICTED SECURITIES ALL OTHER
ANNUAL COMPENSATION STOCK UNDERLYING COMPENSATION(3)
NAME AND ----------------------- AWARDS OPTIONS/SARS ----------------
PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($) (1) (SHARES)(2) ($)
------------------------------- ----- ---------- ---------- ---------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Arthur L. Goldstein............ 1994 296,250 80,000 100,000 3,000
Chairman of the Board, 1993 282,500 0 100,000 3,233
President and Chief 1992 275,000 140,000 0 2,042
Executive Officer
Kachig Kachadurian............. 1994 201,250 63,000 60,000 3,931
Executive 1993 190,000 0 45,000 3,262
Vice President 1992 185,000 85,000 0 2,050
William E. Katz................ 1994 199,250 63,000 30,000 0
Executive 1993 190,000 0 45,000 0
Vice President 1992 185,000 85,000 0 0
Theodore G. Papastavros........ 1994 143,000 25,000 20,000 941
Vice President, 1993 136,250 0 20,000 393
Strategic Planning 1992 132,500 45,000 0 267
and Treasurer
Stephen Korn................... 1994 143,000 20,000 20,000 469
Vice President, General 1993 136,250 0 14,000 157
Counsel and Clerk 1992 132,500 35,000 0 107
</TABLE>
11
<PAGE> 13
[FN]
---------------
(1) The Compensation Committee will determine at a Meeting to be held on May 4,
1995 the amount of restricted stock grants to be made to executive officers
for 1994 under the Corporation's 1994 Restricted Stock Plan. Any such grants
will be conditional upon the approval by the stockholders of the 1994
Restricted Stock Plan. See Agenda Item 2. No awards have yet been made under
the Plan, and no other restricted stock awards have been made by the
Company.
(2) See Note 2 to table included under "Stock Option Grants."
(3) Company matching contributions to officer's account in Ionics Section 401(k)
Plan, available to all employees after an eligibility period. Employees may
elect to contribute to the Plan from 1% to 12% of the amount that they would
otherwise receive as cash compensation, and the contributed amounts, subject
to certain limitations, are not subject to current federal income taxes.
Amounts contributed to the Plan are invested at the direction of the
employee in shares of the Company's Common Stock or in shares of one or more
of four mutual funds. The Company contributes to the Plan, for the
individual accounts of the participants in the Plan, an amount equal to 50%
of the amount each participant has elected to invest, up to 6% of
compensation, in Common Stock of the Company. Matching amounts are invested
entirely in the Company's Common Stock. The contributions by the Company for
any one calendar year cannot exceed an aggregate maximum amount fixed from
time to time by the Board of Directors.
STOCK OPTION GRANTS
The following table provides information concerning the grant of stock
options (also reported in the Summary Compensation Table) under the Company's
1979 Stock Option Plan during the fiscal year ended December 31, 1994, to the
named executive officers.
<TABLE>
OPTION/SAR GRANTS IN 1994(1)
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED
PERCENTAGE OF ANNUAL RATES
TOTAL OF STOCK PRICE
NUMBER OF OPTIONS/SARS APPRECIATION FOR
SECURITIES UNDERLYING GRANTED TO EXERCISE OPTION TERM(3)
OPTIONS/SARS GRANTED(2) EMPLOYEES PRICE EXPIRATION --------------------
NAME (SHARES OF COMMON STOCK) IN FISCAL 1994 ($/SHARE) DATE 5%($) 10%($)
---- ------------------------ -------------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Arthur L. Goldstein...... 100,000 15.8% 24.31 10/3/2004 1,529,000 3,874,786
Kachig Kachadurian....... 60,000 9.5% 24.31 10/3/2004 917,400 2,324,872
William E. Katz.......... 30,000 4.8% 24.31 10/3/2004 458,700 1,162,436
Theodore G.
Papastavros............ 20,000 3.2% 24.31 10/3/2004 305,800 774,957
Stephen Korn............. 20,000 3.2% 24.31 10/3/2004 305,800 774,957
<FN>
---------------
(1) The Company has issued no SARs (stock appreciation rights).
(2) All options were granted under the Company's 1979 Stock Option Plan, and each option is exercisable for one share
of Common Stock, which may be purchased upon exercise with either cash or Common Stock. The options have a duration
of ten years and one day, and are immediately exercisable, subject to the Company's right to repurchase a decreasing
proportion of any shares purchased upon exercise during the first five years from the date of grant in the event the
employee leaves the Company or desires to sell the shares. Such repurchase rights in the Company terminate in the
event of a merger, consolidation or sale of all the assets by the Company, or in the event another entity, person or
group acquires 30% or more of the outstanding voting shares of the Company. Options may not be transferred by an option
holder (other than by the laws of descent or distribution), may be exercised only while the holder is an employee of the
</TABLE>
12
<PAGE> 14
Company or a subsidiary, or within 30 days after termination of employment,
or by the holder's estate for a period of 90 days after his death.
(3) The potential realizable dollar value of a grant is the product of (a) the
difference between: (i) the product of the per-share market price on the
date of grant and the sum of 1 plus the adjusted stock price appreciation
rate (the assumed rate of appreciation compounded annually over the term of
the option); and (ii) the per-share exercise price of the option; and (b)
the number of shares underlying the grant at fiscal year-end.
STOCK OPTION EXERCISES
The following table provides information, with respect to the executive
officers listed in the Summary Compensation Table, concerning the exercise of
options during, and holdings of unexercised options at the end of, 1994.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN FISCAL 1994
AND FISCAL YEAR-END OPTION/SAR VALUES (1)
(I) (II) (III) (IV)
NUMBER OF
SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING IN-THE-MONEY
ACQUIRED ON VALUE UNEXERCISED OPTIONS/SARS AT
EXERCISE REALIZED(2) OPTIONS/SARS AT FISCAL YEAR-END(2)
NAME # ($) FISCAL YEAR-END ($)
---- ----------- ----------- --------------- --------------------
<S> <C> <C> <C> <C>
Arthur L. Goldstein................... 12,000 259,500 302,000 3,551,500
Kachig Kachadurian.................... 14,000 303,000 183,500 2,351,375
William E. Katz....................... 17,250 402,984 133,126 1,679,707
Theodore G. Papastavros............... 0 -- 77,500 1,089,500
Stephen Korn.......................... 2,000 32,125 42,800 418,200
---------------
<FN>
(1) All options were granted under the Company's 1979 Stock Option Plan and are currently exercisable, subject to certain
repurchase rights in the Corporation. See Note 2 to the preceding table. The Company has issued no SARs (stock
appreciation rights).
(2) Calculated as the difference between the closing price of the Company's Common Stock, as reported on the date of option
exercise, and the exercise price of the option(s) (Column II), and as the difference between the closing price of the
Company's Common Stock, as reported on December 30, 1994, and the exercise price of the option(s) (Column IV).
</TABLE>
PENSION PLAN
Employees based in Watertown, Massachusetts; Phoenix, Arizona; Campbell,
California; and Bellevue, Washington may at their election participate in the
Company's defined benefit retirement plan ("Retirement Plan") after attaining
age 21 and completing one year of service. No benefits vest under the Retirement
Plan until an employee has five years of participation, at which time the
employee becomes 100% vested. An employee must contribute at least 1% of base
salary in order to accrue benefits under the Retirement Plan. The benefits
payable upon retirement vary with the years of service and level of compensation
while participating in the Retirement Plan. Upon retirement, officers also
receive the total of their own contributions to the Retirement Plan plus the
earnings thereon. The following table shows the estimated annual Company-
provided pension benefits payable to an officer at normal retirement age (age
65) in the Retirement Plan.
13
<PAGE> 15
<TABLE>
PENSION PLAN TABLE
(ESTIMATED ANNUAL BENEFITS
FOR YEARS OF CREDITED SERVICE
INDICATED (1))
<CAPTION>
YEARS OF SERVICE
BASE SALARY AT -------------------------------------------------------
RETIREMENT DATE 15 20 25 30 35
--------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$ 50,000............................... $ 6,280 $ 7,882 $ 9,485 $11,087 $12,689
75,000............................... 9,643 12,170 14,697 17,224 19,751
100,000............................... 13,006 16,458 19,910 23,362 26,813
125,000............................... 16,369 20,746 25,122 29,499 33,876
150,000............................... 19,732 25,033 30,335 35,636 40,938
175,000............................... 22,782 29,008 35,235 41,461 47,688
200,000............................... 25,832 32,984 40,135 47,286 54,437
225,000............................... 28,883 36,959 45,035 53,111 61,187
250,000............................... 31,933 40,934 49,935 58,936 67,937
---------------
<FN>
(1) Effective January 1, 1994, no more than $150,000 of cash compensation may be taken into account in calculating
contributions under the Retirement Plan. In 1993, the cash compensation limit was $235,840.
</TABLE>
Under the terms of the Retirement Plan, only the amount shown as "Salary"
in the Summary Compensation Table is covered under "Base Salary" above. The
fixed monthly retirement benefit of an officer retiring at normal retirement age
(assuming payment is made on a life annuity basis) is determined by the
following formula: (i) for years prior to January 1, 1986 -- one half of one
percent of the first $550 of base monthly salary as of January 1, 1985, plus one
and one-quarter percent (1.25%) of the balance of base monthly salary as of that
date, that sum being multiplied by the number of prior years of service; plus
(ii) for each year after December 31, 1985 through December 31, 1988 -- one half
of one percent (0.5%) of the first $550 of base monthly salary as of January 1st
of such year plus one and one-quarter percent (1.25%) of the balance of base
monthly salary; plus (iii) for each year after December 31, 1988 -- one and
one-quarter percent (1.25%) of base monthly salary as of January 1st of that
year. Fixed retirement benefits are not subject to deduction for Social Security
benefits or other benefits received by officers.
Executive officers named in the Summary Compensation Table have been
credited with the following years of service, and would receive the following
estimated annual benefit at normal retirement age (65): Mr. Goldstein, 34.6
years, $85,447; Mr. Kachadurian, 14 years, $54,988; Mr. Katz, 45.4 years,
$53,600; Mr. Papastavros, 38.2 years, $47,373; and Mr. Korn, 5.3 years, $35,897.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
The Board of Directors appoints each year from among its members a
Compensation Committee (the "Committee"). The Committee, which currently
consists of seven non-employee directors (all of whom are "disinterested
persons" under Rule 16b-3 of the Securities Exchange Act of 1934), is
responsible for reviewing and establishing the compensation of the executive
officers of the Company, and for authorizing grants under the Company's 1979
Stock Option Plan and 1994 Restricted Stock Plan. The Committee has furnished
this report concerning compensation of executive officers for the fiscal year
ended December 31, 1994.
The compensation program for executive officers involves consideration of
cash compensation, the granting of options to acquire the Company's Common
Stock, and the granting of restricted stock under the recently adopted 1994
Restricted Stock Plan.
14
<PAGE> 16
Cash Compensation
Cash compensation of executive officers is structured to include base
salary and, based on the achievement of performance objectives, a cash bonus.
The Company's objective is to pay a fair and competitive base salary to all
employees and to keep the growth of salary levels at or near the rate of
inflation. The Company determines the competitiveness of its base salary levels
in relation to other companies engaged in its industry, represented by those in
the "peer group" Index set forth in this Proxy Statement, or similar industries.
The Committee believes that the base salary paid to the Company's executive
officers falls within the median of the range of compensation paid by the "peer
group" companies. Salary levels for executive officers are usually established
in the early part of the fiscal year for that fiscal year (or, at management's
discretion, for implementation at mid-year).
The policy of the Company is to pay cash bonuses based upon the achievement
of specified corporate, business unit and individual performance objectives. The
cash bonuses listed in the Summary Compensation Table earned by executive
officers in 1992 and 1994, as well as by other senior officers, were earned
under the Company's Managerial Bonus Program. No cash bonuses were earned in
1993. The Managerial Bonus Program considers both quantitative and qualitative
performance. Quantitative performance focuses upon two measurements: earnings
before interest and taxes (EBIT) achieved by the business unit(s) for which the
executive officer has major responsibility or involvement, and EBIT return on
the average capital employed by such business unit(s) during the year.
Qualitative performance focuses primarily on the degree to which the officer has
participated in and contributed to the achievement of specified individual,
divisional, departmental or corporate non-financial objectives. With the
adoption of the 1994 Restricted Stock Plan (see Agenda Item 2), the Committee
may, after consideration of management's recommendations, utilize restricted
stock to fill a portion of any cash award that might be payable under the
Managerial Bonus Program, or may otherwise make discretionary restricted stock
awards.
Budgeted amounts for EBIT and EBIT return on average capital employed are
established for each business unit early in each fiscal year. At the same time,
a corresponding cash bonus target is established for each executive officer
based upon the budgets of the business unit(s) for which the officer has major
managerial responsibility or involvement. The cash bonus actually awarded,
determined early in the next fiscal year by the Committee, depends upon the
extent to which the actual performance of the business unit(s) for which the
officer has responsibility or involvement meets or exceeds the budgeted amounts,
and upon the degree of success in achieving the qualitative objectives.
The Committee may make discretionary bonus awards in appropriate
circumstances under which an executive officer might merit a bonus based on
other considerations.
The base salary of Mr. Goldstein, the Company's Chief Executive Officer
(and the base salary of the other corporate executive officers) was established
by the Committee in May 1994, and reflected a 4.3% increase, consistent with the
Committee's salary policy. This increase was implemented as of July 1, 1994.
Based on the Company's record performance in 1994, and in consideration of
such performance in the context of the Company's Managerial Bonus Program
discussed above, the Compensation Committee awarded cash bonuses to Mr.
Goldstein and other executive officers and key employees on February 16, 1995.
Mr. Goldstein was awarded a cash bonus of $80,000. The Committee also intends to
issue restricted stock awards to Mr. Goldstein and to such other executive
officers and key employees at a meeting scheduled in May, provided that the 1994
Restricted Stock Plan is approved by the stockholders at the 1995 Annual
Meeting. The number of shares of restricted stock to be awarded will be
determined by the Committee at its May meeting.
15
<PAGE> 17
Stock Options
The Committee believes that stock options are an appropriate mechanism to
provide senior management with a long-term incentive to strive for the continued
growth and success of the Company. The Company's stock option policy,
established by the Committee, is to recognize employee leadership and
significant contribution to the Corporation, regardless of the employee's level.
The Committee also believes that ownership of the Company's stock by management
promotes the enhancement of shareholder value by creating a greater communality
of interest among shareholders and management. For these reasons, the Committee
has used in the past, and expects to use in the future, the Company's 1979 Stock
Option Plan as an element of its executive compensation program. The size of
stock option grants is based upon evaluation of a recipient's performance,
salary level and number of options held as a result of prior grants. On October
3, 1994, the Compensation Committee awarded Mr. Goldstein a stock option grant
of 100,000 shares (post-split) based upon a qualitative assessment of his
performance since the last stock option grant to him in 1993, including factors
such as growth in the Company's revenues and profitability, success in achieving
annual qualitative goals, and success in negotiating and completing a major
acquisition.
Compliance with Internal Revenue Code Section 162(m)
Section 162(m) of the Internal Revenue Code enacted in 1993, generally
disallows a tax deduction to a public company for compensation in excess of $1
million paid to the company's chief executive officer and four other most highly
compensated executive officers. Certain types of performance-based compensation,
such as that available under the Company's 1979 Stock Option Plan and 1994
Restricted Stock Plan, will not be subject to the deduction limit if certain
requirements set forth in Section 162(m) are met. The Company believes that its
compensation awards to executive officers arising out of the 1979 Stock Option
Plan and 1994 Restricted Stock Plan comply with the requirements of Section
162(m).
Compensation Committee
Lawrence E. Fouraker (Chairman)
William L. Brown
Arnaud de Vitry d'Avaucourt
Samuel A. Goldblith
John J. Shields
Mark S. Wrighton
Allen S. Wyett
FIVE-YEAR SHAREHOLDER RETURNS COMPARISON
The Securities and Exchange Commission (SEC) requires that the Company
include in this proxy statement a line-graph presentation comparing cumulative
five-year return to the Company's shareholders (based on appreciation of the
market price of the Company's Common Stock) on an indexed basis with (i) a broad
equity market index and (ii) an appropriate published industry or
line-of-business index, or peer group index constructed by the Company. The
following presentation compares the Company's Common Stock price in the five
year period from December 31, 1989 to December 31, 1994, to the S&P 500 Stock
Index and to a "peer group" index over the same period. The "peer group" index
consists of the common stock of Calgon Carbon Corporation, Osmonics, Inc., Pall
Corporation and United States Filter Corporation. These corporations are
involved in various aspects of the water treatment or liquids separations
businesses. The presentation assumes that the value of an investment in each of
the Company's Common Stock, the S&P 500 Index, and the peer group index was $100
on December 31, 1989, and that any cash dividends paid by any constituent
company (none have been paid by the Company) were reinvested in the same
security.
16
<PAGE> 18
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURNS
AMONG IONICS, S&P 500 INDEX AND "PEER GROUP" INDEX OF COMPARABLE COMPANIES
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) IONICS, INC. S&P 500 PEER GROUP
<S> <C> <C> <C>
1989 100.00 100.00 100.00
1990 118.75 96.89 103.18
1991 187.50 126.28 152.90
1992 282.81 135.88 148.47
1993 206.77 149.52 133.06
1994 261.46 151.55 131.72
</TABLE>
DIRECTOR COMPENSATION
Each director who is not an employee of the Company receives an annual
retainer of $8,000, plus a fee of $1,000 for each regular board meeting
attended. In addition, under the Company's 1986 Stock Option Plan for
Non-Employee Directors ("1986 Plan"), each person who is not an employee of the
Company or any of its subsidiaries and who is elected a Director of the Company
is entitled to receive an option for 1,000 shares of Common Stock upon his
initial election, an option to acquire 1,000 additional shares immediately upon
completion of each of his next four successive years in office, and an option to
acquire 500 additional shares immediately upon completion of each of his next
five successive years in office. Thus, under the 1986 Plan, a Director is
entitled to receive options for a maximum of 7,500 shares of Common Stock.
Options granted under the 1986 Plan have an exercise price equal to the market
price on the date of grant, do not become exercisable until the expiration of
six months from the date of grant, and thereafter may be exercised only during
certain "window" periods. Options granted under the 1986 Plan expire ten years
after the date of grant, and terminate 30 days after the holder ceases to be a
Director, or 90 days following a Director's death.
STOCKHOLDER PROPOSALS
The Corporation's 1996 Annual Meeting is presently expected to be held on
May 3, 1996. Proposals of stockholders intended to be presented at the 1996
Annual Meeting must be received no later than November 25, 1995, for inclusion
in the Corporation's proxy statement and proxy for that meeting, except that if
the date of the 1996 Annual Meeting is changed by more than 30 calendar days
from the presently expected date, the Corporation must receive such proposal
within a reasonable time before the Board of Directors makes it proxy
solicitation.
17
<PAGE> 19
OTHER MATTERS
As of this time, the Board of Directors knows of no other matters to be
brought before the meeting. However, if other matters properly come before the
meeting or any adjournment thereof, and if discretionary authority to vote with
respect thereto has been conferred by the enclosed Proxy, the persons named in
the Proxy will vote the Proxy in accordance with their best judgment as to such
matters.
By Order of the Board of Directors
STEPHEN KORN, Clerk
Watertown, Massachusetts
March 30, 1995
18
<PAGE> 20
Ionics, Incorporated
--------------------
1994 Restricted Stock Plan
--------------------------
Adopted August 23, 1994
1. Purpose.
--------
The purpose of this Restricted Stock Plan (the "Plan") is to attract,
motivate, and retain outstanding individuals as employees of Ionics,
Incorporated (the "Corporation") and its Subsidiaries, as hereinafter defined,
to align their future interests with those of the Corporation's stockholders,
and to reward appropriately those who make substantial contributions to the
success and welfare of the Corporation.
2. Stock Subject to the Plan.
--------------------------
The stock that may be granted under the Plan ("Restricted Stock") shall
be the Common Stock, $1.00 par value, of the Corporation. The maximum total
number of shares of such stock that may be issued under the Plan shall be
150,000 shares (except as such amount may be adjusted in accordance with the
provisions of Section 9 hereof). Such shares may be either unissued shares or
treasury shares. No participant in the Plan may be awarded more than 25,000
shares of Restricted Stock under the Plan in any calendar year.
If previously awarded shares are forfeited to the Corporation by reason
of termination of employment during the applicable Restriction Period, or for
any other reason, such shares may again be awarded under the Plan, provided
that no more than 75,000 of such shares are so awarded again. In the event the
Corporation acquires or merges or consolidates with another company, Common
Stock issuable under the Plan as a result of the Corporation's assumption of
outstanding awards from such other company or the substitution of grants under
the Plan for outstanding awards of such other company shall not reduce the
shares available for grant under the Plan.
3. Eligibility and Participation.
------------------------------
Individuals eligible to receive grants of Restricted Stock, as
hereinafter defined, under the Plan shall be those employees of the Corporation
and its Subsidiaries selected from time to time by the Plan's administrative
committee, provided, however, that each grant recipient must have been employed
by the Corporation or a Subsidiary for a period of at least six months
immediately preceding the date of grant. No person who is not an officer or
salaried employee of the Corporation or a Subsidiary shall be eligible to
receive a grant under the Plan. Grants made under the Plan in any year shall
neither preclude nor require selection of a grantee to receive future grants or
require that the grantee receive the same type or amount of award as at any
other time, or as may be received by any other grant recipient at any time.
Neither the Plan nor any action taken under the Plan shall be construed as
giving any grantee the right to be retained in the employ of the Corporation or
a Subsidiary.
-1-
<PAGE> 21
4. Administration of the Plan.
---------------------------
The Plan shall be administratered by a Committee (the "Committee")
appointed by, and to serve at the pleasure of, the Board of Directors of the
Corporation and consisting of three or more directors, each of whom is a
"disinterested person" within the meaning of Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, or any successor provision, as applicable to
the Corporation at the time. Until the Board of Directors shall otherwise
determine, that Committee shall be the Compensation Committee of the Board of
Directors. Subject to the express provisions hereof, the Committee shall have
sole and complete authority to make grants of Restricted Stock. Such authority
shall include, but not be limited to, selecting individuals to receive grants
under the Plan, determining the number of shares of Common Stock (subject to
the limitations in Section 2 hereof) to be awarded to each grant recipient
under the plan and the terms and conditions under which such grants shall be
made, and determining the duration and terms of each Restriction Period.
The Committee also shall have authority to adopt rules and regulations
for carrying out the Plan and to interpret, construe, implement, and otherwise
administer the provisions of the Plan. Decisions of the Committee shall be
final. A majority of the Committee shall constitute a quorum. The acts of a
majority of the members present at any meeting at which a quorum is present (or
acts approved in writing by a majority of the Committee) shall be the acts of
the Committee. The Committee shall keep minutes of its proceedings and from
time to time make such reports to the Board of Directors as the Board shall
direct.
5. Effective Date.
---------------
The Effective Date of the Plan shall be the date upon which the Plan is
adopted by the Board of Directors of the Corporation. The Plan shall terminate
if it is not approved within twelve months after the Effective Date by vote of
the holders of a majority of the stock of the Corporation present in person or
by proxy and entitled to vote at a special or annual meeting of the
stockholders of the Corporation.
6. Terms and Conditions of Grants.
-------------------------------
6.1 Grants under the Plan shall consist of Restricted Stock, which
shall be shares of Common Stock of the Corporation transferred to grant
recipients in furtherance of the purposes of the Plan without, unless otherwise
provided, other payment and subject to the restrictions referred to in this
Section 6. All shares of Restricted Stock granted under the Plan shall be so
granted for, and in consideration of, past services rendered to the Corporation
or a Subsidiary and shall be subject to the following terms and conditions and
to such other terms and conditions, not inconsistent with the Plan, as shall be
prescribed by the Committee in its sole discretion and as shall be contained in
the Agreement referred to in Section 6.1(d) hereof.
-2-
<PAGE> 22
(a) At the time of a grant of shares of Restricted Stock, the Committee
shall establish for all such shares received by a grantee (or, if it is the
intent that the total of such shares shall be divided into separate parts,
for each part of such total) a period of time (the "Restriction Period")
commencing with the date of the grant of such shares during which
time the shares may not be sold, assigned, transferred, pledged, or
otherwise encumbered, except as herein provided. Different Restriction
Periods may be fixed for different parts of the shares that are being
granted to a recipient, and the Restriction Period for one grant may differ
from the Restriction Period for other grants. Unless otherwise determined
by the Committee, the Restriction Period will be five (5) years, so that
twenty percent (20%) of the shares constituting a particular grant shall
become free of restrictions on each of the first five anniversary dates
from the date of grant. Except for such restrictions, unless otherwise
determined by the Committee, the grant recipient as owner of such
Restricted Stock shall have all the rights of a stockholder, including but
not limited to the right to receive any dividends paid on such Restricted
Stock and the right to vote such Restricted Stock. Unless otherwise
determined by the Committee, the restrictions shall terminate upon the
earliest to occur of the expiration of the Restriction Period or the
grantee's death, disability, or retirement at normal retirement age, or in
any other circumstances determined by the Committee at the time of the
grant or at any time thereafter.
(b) If a grant recipient ceases to be an employee of the Corporation or
a Subsidiary, all shares of Restricted Stock theretofore granted to him as
to which the restrictions imposed under this Section 6 have not
terminated or do not thereby terminate shall, except as provided in Section
7 hereof, upon such cessation of employment be forfeited and returned to
the Corporation unless the Committee, in its discretion, otherwise
determines.
(c) Each certificate issued in respect of shares of Restricted Stock
granted under the Plan shall be registered in the name of the grantee and
deposited by him, together with a stock power endorsed in blank, with the
Corporation and shall bear the following (or a similar) legend:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms, conditions and
restrictions (including forfeiture) contained in a Plan and an
Agreement between the registered owner and Ionics, Incorporated. A copy
of such Plan and Agreement will be furnished to the holder of this
certificate upon written request and without charge."
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<PAGE> 23
(d) The grant recipient shall enter into an Agreement with the
Corporation, in a form no inconsistent with the Plan, agreeing to the
terms and conditions of the grant and such other matters as the
Committee shall in its sole discretion determine. The Agreement may be
amended by the Committee at any time to modify the Restriction Period
with respect to any shares of Restricted Stock the restrictions on
which have not then lapsed or in any other respect; provided that,
except as provided in Section 12, no amendment shall adversely affect
the terms and conditions of an outstanding grant without the written
consent of the grant recipient.
(e) Upon the termination of the restrictions imposed under this
Section 6, the Corporation shall return to the grantee ( or his legal
representative, beneficiary, or heir) certificates, without a legend,
for the shares of Common Stock deposited with it pursuant to subsection
(c) hereof.
6.2 The Corporation or a Subsidiary, as the case may be, shall have
the right to deduct from amounts payable to the grantee, or to require the
grantee to pay, any taxes required by law to be withheld with respect to such
Restricted Stock. In the Committee's discretion such tax obligations may be
paid in whole or in part in shares of Common Stock, including shares retained
from the grant creating the tax obligation, valued at their fair market value
on the date of delivery.
6.3 No rights or interests of a grant recipient under the Plan may be
assigned, encumbered, or transferred except by will or the laws of descent and
distribution.
7. Change in Control.
------------------
In order to preserve the rights of a grant recipient in the event of a
merger or consolidation of the Corporation with another corporation or of a
Change in Control of the Corporation, the Committee may in its discretion
include in the grant Agreement or in any amendment thereto (subject to the
provisions of Section 6.1(d): (i) permitting restrictions on Restricted Stock
to lapse, in whole or in part, immediately prior to such event; (ii) adjusting
the terms of a grant in a manner determined by the Committee to reflect the
Change in Control; (iii) causing a grant to be assumed, or new rights
substituted therefor, by another entity; and/or (iv) making such other
provision as the Committee may consider equitable and in the best interests of
the Corporation. After a Change in Control of the Corporation, the Corporation
shall pay all reasonable legal fees, costs, and other expenses incurred by any
grantee in enforcing rights under this Plan or the grant Agreement.
A "Change in Control" shall be deemed to have occurred if (a) any
entity, person or Group (other than the Company or a subsidiary) acquires
shares of Common Stock in a transaction or in a series of transactions that
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<PAGE> 24
result in such entity, person or Group directly or indirectly owning
beneficially more than thirty percent (30%) of the outstanding shares of Common
Stock; (b) there is a merger, consolidation or sale of all or substantially all
of the assets of the Company; (c) there is a contested election of directors of
the Company which results in a majority of the members of the Board recommended
by the Company not being elected; (d) there is a change in composition within a
sixty (60) day period of a majority of the Company's Board of Directors;
or (e) there is any other event which results in a change in voting power
sufficient to elect a majority of the Board.
A "Group" shall consist of two or more persons acting as a partnership,
limited partnership, syndicate, or other group for the purpose of acquiring,
holding or disposing of voting securities of the Company.
8. Securities and Other Laws.
--------------------------
In any case where in the opinion of the Committee, the issue and/or
delivery of shares of Common Stock under the Plan would violate requirements of
Federal or state securities or other laws, or the requirements of any exchange
on which the securities are listed, the Corporation shall be entitled to
postpone such issue and/or delivery until such requirements have been met. The
Committee may require representations and agreements from any grant recipient
in order to ensure compliance with Federal or state securities or other laws.
9. Adjustment in Number of Shares.
-------------------------------
In the event that there are any changes in the outstanding Common Stock
of the Corporation by reason of stock dividends, stock splits, or
recapitalizations (whether by way of mergers, consolidations, combinations, or
exchanges or shares or the like) the aggregate number and kind of shares
available under the Plan shall be appropriately adjusted by the Committee, if
necessary, to reflect equitably such change or changes. Any shares of stock or
other securities received by a grant recipient with respect to shares still
subject to the restrictions imposed by Section 6 will be subject to the same
restrictions and shall be deposited with the Corporation in accordance with
Section 6.
10. Notice of Election Under Section 83(b).
---------------------------------------
Each grant recipient making an election under Section 83(b) of the
Internal Revenue Code of 1986, as amended, and the regulations and rulings
promulgated thereunder, will provide a copy thereof to the Corporation within
thirty days of the filing of such election with the Internal Revenue Service
and the Agreement referred to in Section 6 shall so provide.
11. Term of Plan.
-------------
Unless sooner terminated the Plan shall terminate ten years from the
Effective Date and no Restricted Stock shall be granted thereafter.
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<PAGE> 25
12. Amendments and Termination.
---------------------------
The Plan or any portion hereof may be amended at any time and from time
to time or terminated by the Board of Directors, subject to such approval of
the stockholders as the Board of Directors shall deem necessary or advisable.
No amendment or termination shall adversely affect the terms and conditions of
outstanding grants without the written consent of the grantee, except that the
Plan and any Agreement may be amended without the consent of any grant
recipient in order to conform to restrictions or limitations imposed by
securities or tax laws or regulations, or any other laws or regulations deemed
by the Corporation to be binding upon it.
13. Miscellaneous.
--------------
13.1 TRANSFER OF EMPLOYMENT. The transfer of employment of an
employee from the Corporation to a Subsidiary or from a Subsidiary to the
Corporation or to another Subsidiary shall not constitute a termination of
employment for the purposes of the Plan.
13.2 DEFINITION OF SUBSIDIARY. For all purposes of the Plan, the term
"Subsidiary" means any corporation of which the Corporation owns or controls
more than 50% of the outstanding shares of capital stock entitled ordinarily
(rather than in some contingency) to vote for the election of directors
(counting shares owned or controlled by a Subsidiary within this definition as
being owned or controlled by the Corporation).
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<PAGE> 26
IONICS, INCORPORATED
65 Grove Street, Watertown, Massachusetts
Proxy for Annual Meeting May 4, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints ARTHUR L. GOLDSTEIN and STEPHEN KORN,
and each of them, as Proxies of the undersigned, each with the power to appoint
his substitute, and hereby authorizes both of them, or any one if only one be
present, to represent and to vote, as designated below, all the shares of the
Common Stock of Ionics, Incorporated held of record by the undersigned or with
respect to which the undersigned is entitled to vote or act, at the Annual
Meeting of Stockholders to be held on May 4, 1995 or any adjournment thereof.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy will
be voted FOR Proposals 1, 2 and 3 with discretionary authority to vote upon
such other matters as may properly come before the meeting. PLEASE MARK, SIGN,
DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
SEE REVERSE SIDE. If you wish to vote in accordance with the Board of
Directors recommendation, just sign and date on the reverse side. You need not
mark any boxes.
--------------------------------------------------------------------------------
PLEASE VOTE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
--------------------------------------------------------------------------------
Please sign this Proxy exactly as your name appears on the books of the
Corporation. Joint owners should each sign personally. Trustees and other
fiduclaries should indicate the capacity in which they sign, and where more
than one name appears, a majority must sign. If a corporation, this signature
should be that of an authorized officer who should state his of her title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
____________________________________ _____________________________________
____________________________________ _____________________________________
____________________________________ _____________________________________
<PAGE> 27
/ X / PLEASE MARK VOTES
AS IN THIS EXAMPLE FOR ALL
FOR WITHHELD EXCEPT
1.) Election of all four Class III / / / / / /
Directors listed below.
William L. Brown, Robert B. Luick, John J. Shields
and Allen S. Wyatt
Instructions: To withhold authority to vote for any individual
nominee, mark "For All Except" box and strike a line through
the name of the nominee(s) in the list above.
RECORD DATE SHARES:
--------------------------------------------------------------------------------
REGISTRATION
--------------------------------------------------------------------------------
---------------------------
Please be sure to sign and date this Proxy. Date
--------------------------------------------------------------------------------
------------Shareholder sign here---------------------Co-owner sign here-------
FOR AGAINST ABSTAIN
2.) Proposal to approve 1994 Restricted / / / / / /
Stock Plan.
FOR AGAINST ABSTAIN
3.) Selection of Coopers & Lybrand / / / / / /
as auditors.
4.) To consider and act upon such other matters as may
properly come before the meeting.
Mark box at right if comments or address changes have / /
been noted on the reverse side.
--------------------------------------------------------------------------------
DETACH CARD DETACH CARD
IONICS, INCORPORATED
Dear Shareholder:
Please take note of the important information enclosed with this Proxy Card.
The matters to be voted upon are discussed in detail in the enclosed proxy
materials.
Your vote counts, and you are strongly encouraged to exercise your right to
vote your shares.
Please mark the boxes on the proxy card to indicate how your shares are to be
voted. Then sign the card, detach it and return your proxy vote in the
enclosed postage paid envelope.
Your vote must be received prior to the Annual Meeting of Shareholders, May 4,
1995.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
IONICS, INCORPORATED
