<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)
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act
Rule 0-11 (Set forth the amount on which the filing fee is calculated and
state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[IONICS LOGO]
Ionics, Incorporated
65 Grove Street
Watertown, Massachusetts 02472-2882
Arthur L. Goldstein
Chairman and Chief Executive Officer
March 30, 1999
Dear Stockholder:
You are cordially invited to attend our 1999 Annual Meeting of
Stockholders. The meeting is scheduled for 9:30 A.M. on Thursday, May 6, 1999,
and will be held in the Auditorium of the BankBoston building, 100 Federal
Street, Boston, MA 02110.
The notice of meeting and proxy statement that follow describe the business
to be conducted at the meeting.
As is our custom, we will give a presentation on the highlights for the
year 1998 as well as the current status of our business. I sincerely hope that
you will be able to attend this meeting and that you will have the opportunity
to meet members of our management team.
Please sign and return your proxy promptly, whether or not you plan to
attend. Your vote is very important to the Company.
On behalf of the Directors and Officers, I wish to thank you for your
interest in the Company.
[50th Anniversary LOGO]
Sincerely,
/s/ Arthur L. Goldstein
ARTHUR L. GOLDSTEIN
Chairman and Chief Executive Officer
YOUR VOTE IS IMPORTANT
Please sign, date and return your proxy card promptly
<PAGE> 3
[IONICS LOGO]
IONICS, INCORPORATED
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 6, 1999
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 in the auditorium
of the BankBoston building, 100 Federal Street, Boston, Massachusetts, on
Thursday, May 6, 1999 at 9:30 A.M. for the following purposes:
1. To elect four Class I Directors of the Company, each to serve for a
three-year term or until a successor is elected or qualified.
2. To ratify the selection of PricewaterhouseCoopers LLP as independent
auditors for the fiscal year ending December 31, 1999.
3. 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 19, 1999 as
the record date for determination of the stockholders entitled to notice of and
to vote at the meeting. Any stockholder attending the meeting may vote in person
even if such stockholder has returned a proxy.
By Order of the Board of Directors
STEPHEN KORN, CLERK
Ionics, Incorporated
65 Grove Street
Watertown, Massachusetts 02472-2882
March 30, 1999
WHETHER OR NOT YOU EXPECT TO BE AT THE MEETING, PLEASE MARK, SIGN, DATE AND
RETURN YOUR PROXY IN THE ENVELOPE ENCLOSED HEREWITH.
<PAGE> 4
IONICS, INCORPORATED
65 GROVE STREET
WATERTOWN, MASSACHUSETTS 02472-2882
------------------------
PROXY STATEMENT
------------------------
MARCH 30, 1999
The Notice of the 1999 Annual Meeting of Stockholders of Ionics,
Incorporated (the "Company") 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 Company. This Proxy Statement is furnished in connection with
the solicitation of Proxies by the Board of Directors of the Company for use at
the Annual Meeting of Stockholders to be held on Thursday, May 6, 1999 (the
"Annual Meeting") at 9:30 A.M., local time, in the auditorium of the BankBoston
building, 100 Federal Street, Boston, Massachusetts, and any adjournments
thereof. The cost of this solicitation will be borne by the Company. In addition
to solicitation by mail, certain of the officers and employees of the Company
also may solicit Proxies personally or by telephone or telegram. This Proxy
Statement is being first sent to stockholders on or about March 30, 1999. A copy
of the Annual Report to Stockholders for the fiscal year ended December 31, 1998
(including audited financial statements of the Company) also accompanies this
Proxy Statement.
Only stockholders of record as of the close of business on March 19, 1999
(the "Record Date") are entitled to notice of and to vote at the Annual Meeting
and/or any adjournments thereof. The outstanding stock of the Company on the
Record Date entitled to vote consisted of 16,129,804 shares of common stock,
$1.00 per share par value (the "Common Stock"). The holders of the outstanding
shares of Common Stock are entitled to one vote per share. Stockholders may vote
in person or by proxy. Execution of a Proxy will not affect a stockholder's
right to attend the meeting and vote in person. All shares represented by valid
Proxies received by the Clerk of the Company 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; and FOR the ratification of the selection of an auditor in proposal 2. 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 Company 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 stockholders for a vote. Neither abstentions nor
"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, in respect of such other proposal, the nominee does not have
discretionary voting power and has not received instructions from the beneficial
owner. Broker "non-votes" are not considered voted for the particular matter and
have the practical effect of reducing the number of affirmative votes required
to achieve a majority for such matter by reducing the total number of shares
from which the majority is calculated.
1
<PAGE> 5
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table lists as of the Record Date the number of shares of the
Company's Common Stock beneficially owned by stockholders known by the Company
to own more than five percent of such Common Stock outstanding at such date:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
------------------- -------------------- ----------
<S> <C> <C>
Wellington Management Company LLP 2,253,080(1) 14%
75 State Street
Boston, MA 02109
Capital Research and Management Company 1,370,000(2) 8.5%
333 South Hope Street
Los Angeles, CA 90071
Capital Guardian Trust Company 964,600(3) 6.0%
11100 Santa Monica Boulevard
Los Angeles, CA 90025-3384
Hartford Capital Appreciation HLS Fund, Inc. 934,900(4) 5.8%
200 Hopmeadow Street
Simsbury, CT 06070
</TABLE>
- ------------
(1) Includes shared voting power as to 1,699,469 shares and shared dispositive
power as to all 2,253,080 shares. Wellington Management Company LLP has no
sole voting power or sole dispositive power as to any of these shares.
(2) Includes sole dispositive power as to all 1,370,000 shares. Capital Research
and Management Company has no voting power and no shared dispositive power
as to any of these shares.
(3) Includes sole voting power as to 829,000 shares and sole dispositive power
as to all 964,600 shares. Capital Guardian Trust Company has no shared
voting power or shared dispositive power as to any of these shares. In
addition, its affiliate, Capital International S.A., holds sole voting power
and sole dispositive power as to an additional 41,000 shares.
(4) Includes shared voting power and shared dispositive power as to all 934,900
shares. Hartford Capital Appreciation HLS Fund, Inc. has no sole voting
power or sole dispositive power as to any of these shares.
The following table sets forth as of the Record Date the number of shares
of Common Stock of the Company beneficially owned by each of the directors
(including nominees), each of the current executive officers named in the
Summary Compensation Table on page 9 of this Proxy Statement, and all directors
(including nominees) and executive officers of the Company as a group (16
persons). Unless otherwise indicated, the named person possesses sole voting and
dispositive power with respect to the shares.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(#) CLASS(#)
------------------------ ----------------------- ----------
<S> <C> <C>
Douglas R. Brown........................................... 16,161(1) *
William L. Brown........................................... 16,000(2) *
Arnaud de Vitry d'Avaucourt................................ 31,500(3) *
Kathleen F. Feldstein...................................... 2,661(4) *
Arthur L. Goldstein........................................ 636,992(5)+ 3.8%
William E. Katz............................................ 249,204(6)+ 1.5%
Carl S. Sloane............................................. 8,000(7) *
John J. Shields............................................ 9,960(8) *
Daniel I.C. Wang........................................... 4,161(9) *
</TABLE>
2
<PAGE> 6
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(#) CLASS(#)
------------------------ ----------------------- ----------
<S> <C> <C>
Mark S. Wrighton........................................... 9,261(10) *
Allen S. Wyett............................................. 15,150(11) *
Robert J. Halliday......................................... 89,236(12)+ *
Stephen Korn............................................... 81,893(13)+ *
Theodore G. Papastavros.................................... 152,065(14)+ *
All directors and executive officers as a group (16
persons)................................................. 1,338,395(15) 7.8%
</TABLE>
- ---------------
# The number of shares of Common Stock deemed outstanding as of the Record
Date for each individual includes shares of Common Stock outstanding on such
date owned by such individual and all shares of Common Stock subject to
stock options held by such individual exercisable as of the Record Date or
within 60 days after the Record Date.
* Less than 1%
+ 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 which Mr. Douglas R. Brown has the right to acquire
pursuant to the exercise of stock options.
(2) Includes 13,000 shares which Mr. William L. Brown has the right to acquire
pursuant to the exercise of stock options.
(3) Includes 9,500 shares which Mr. de Vitry d'Avaucourt has the right to
acquire pursuant to the exercise of stock options. Another 12,000 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.
(4) Includes 2,000 shares which Ms. Feldstein has the right to acquire pursuant
to the exercise of stock options.
(5) Includes 424,000 shares which Mr. Goldstein has the right to acquire
pursuant to the exercise of stock options. Includes beneficial ownership of
4,437 shares 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 145,000 shares which Mr. Katz has the right to acquire pursuant to
the exercise of stock options. Does not include 8,400 shares held by
members of Mr. Katz's immediate family, as to which Mr. Katz disclaims
beneficial ownership.
(7) Includes 7,000 shares which Mr. Sloane has the right to acquire pursuant to
the exercise of stock options.
(8) Includes 9,500 shares which Mr. Shields has the right to acquire pursuant
to the exercise of stock options.
(9) Includes 4,000 shares which Mr. Wang has the right to acquire pursuant to
the exercise of stock options.
(10) Includes 9,000 shares which Mr. Wrighton has the right to acquire pursuant
to the exercise of stock options.
3
<PAGE> 7
(11) Includes 13,000 shares which Mr. Wyett has the right to acquire pursuant to
the exercise of stock options. 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 87,000 shares which Mr. Halliday has the right to acquire pursuant
to the exercise of stock options. Includes beneficial ownership of 1,013
shares in the Ionics Section 401(k) Plan for the account of Mr. Halliday.
(13) Includes 80,000 shares which Mr. Korn has the right to acquire pursuant to
the exercise of stock options. Includes beneficial ownership of 670 shares
in the Ionics Section 401(k) Plan for the account of Mr. Korn.
(14) Includes 101,500 shares which Mr. Papastavros has the right to acquire
pursuant to the exercise of stock options. Includes beneficial ownership of
2,005 shares in the Ionics Section 401(k) Plan for the account of Mr.
Papastavros.
(15) Assumes exercise of options held by the group for all 924,900 shares and
that such shares are outstanding.
The information provided in the above footnotes concerning beneficial
ownership in the Ionics Section 401(k) Plan is derived from a Plan statement as
of December 31, 1998.
EXPLANATION OF AGENDA FOR THE MEETING
PROPOSAL 1. ELECTION OF DIRECTORS.
The Company has a Board of Directors currently consisting of four Class I
Directors, four Class II Directors and three Class III Directors. Robert B.
Luick resigned as a Class III Director on February 22, 1999, leaving a vacancy
in that office. The Class I, Class II and Class III Directors currently in
office will serve until the annual meeting of stockholders to be held in 1999,
2000 and 2001, respectively, and until their respective successors are duly
elected and qualified (or until the director's earlier resignation or removal).
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 four persons
named in the table below as Class I Directors, all of whom presently serve as
Class I Directors. 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 BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" ALL THE NOMINEES
LISTED BELOW. The following table shows, for each nominee, his or her principal
occupation since January 1, 1994 and present positions with the Company, period
of past service as a Director, age on March 1, 1999, 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 of 1940):
4
<PAGE> 8
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
(SINCE JANUARY 1, 1994),
PRESENT POSITIONS WITH PERIOD
THE COMPANY OF PAST
AND DIRECTORSHIPS SERVICE AS A
NAME AND AGE OF OTHER PUBLIC COMPANIES DIRECTOR
------------ ------------------------- ------------
<S> <C> <C>
Directors whose Terms Expire in 1999 (Class I Directors)
Douglas R. Brown President and Chief Executive Officer, May 1996 to date
(44)* Advent International Corp. (registered
investment advisor) (since January 1,
1996); Chief Investment Officer, Advent
International Corp. (1995); Chief
Executive Officer, Advent International
plc (1990-1994); Director, Advent
International Corp. and Aspen Technology
Corp. (computer software)
Kathleen F. Feldstein President, Economic Studies, Inc. November 1997 to date
(58)* (economic consulting firm) since 1987;
Director, Bank America Corp., BellSouth
Corporation (telecommunications
services, systems and products), John
Hancock Mutual Life Insurance Company
and Knight-Ridder, Inc. (newspaper
publishing)
Arthur L. Goldstein (63)+ President and Chief Executive Officer of 1971 to date
the Company (since prior to 1994);
Chairman of the Board of the Company
since May 1990; Director, Cabot
Corporation (specialty chemicals
manufacturing and energy products), and
State Street Corporation (bank holding
company) and State Street Bank and Trust
Company
Carl S. Sloane Professor of Business Administration, February 1995 to date
(62)+# Harvard Graduate School of Business
Administration (since 1991); Director,
Sapient Corporation (information
technology applications and solutions);
The Pittston Company (diversified
products and services ); and Rayonier,
Inc. (specialty pulps, timber and wood
products)
</TABLE>
- ---------------
* Member of Audit Committee
# Member of Compensation Committee
+ Member of Executive Committee
5
<PAGE> 9
The following table contains similar information about the Class II and
Class III Directors of the Company, whose terms of office do not expire at the
1999 Annual Meeting and who consequently are not nominees for election in 1999:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
(SINCE JANUARY 1, 1994),
PRESENT POSITIONS WITH PERIOD
THE COMPANY OF PAST
AND DIRECTORSHIPS SERVICE AS A
NAME AND AGE OF OTHER PUBLIC COMPANIES DIRECTOR
------------ ------------------------- ------------
<S> <C> <C>
Directors whose Terms Expire in 2000 (Class II Directors)
Arnaud de Vitry d'Avaucourt Engineering consultant 1964 to date
(72)*
William E. Katz Executive Vice President of the 1961 to date
(74) Company since prior to 1994
Daniel I.C. Wang Institute Professor, Massachusetts May 1997 to date
(63)* Institute of Technology
Mark S. Wrighton Chancellor, Washington University, November 1993 to date
(49)# St. Louis, Missouri (since July
1995); previously Provost and
Professor of Chemistry,
Massachusetts Institute of
Technology; Director, Helix
Technology Corporation (cryogenic
and vacuum technology products), OIS
Optical Imaging Systems, Inc.
(active matrix liquid crystal
display products), and Cabot
Corporation (specialty chemicals
manufacturing and energy products)
</TABLE>
- ---------------
* Member of Audit Committee
# Member of Compensation Committee
6
<PAGE> 10
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
(SINCE JANUARY 1, 1994),
PRESENT POSITIONS WITH PERIOD
THE COMPANY OF PAST
AND DIRECTORSHIPS SERVICE AS A
NAME AND AGE OF OTHER PUBLIC COMPANIES DIRECTOR
------------ ------------------------- ------------
<S> <C> <C>
Directors whose Terms Expire in 2001 (Class III Directors)
William L. Brown Retired Chairman of the Board, The First May 1991 to date
(77)* National Bank of Boston; Director, G.C.
Companies, Inc. (motion picture
distribution); Trustee, Bradley Real
Estate Trust
John J. Shields General Partner, Boston Capital Ventures 1988 to date
(60)#+ (venture capital) since January 2, 1998;
President and Chief Executive Officer,
King's Point Holdings Incorporated
(diversified business information,
technology instrumentation and cranberry
cultivation) April 1993 - December 1997;
Director, Centennial Technologies, Inc.
(manufacturer and marketer of PC cards
for microelectronics applications).
Allen S. Wyett President, Wyett Consulting Group, Inc. February 1992 to date
(65)#
</TABLE>
- ---------------
* Member of Audit Committee
# Member of Compensation Committee
+ Member of Executive Committee
In addition to the Executive Committee of the Board of Directors, which did
not meet during the year, the Company has an Audit Committee, of which Mr.
Douglas Brown is Chairman, and a Compensation Committee, of which Mr. Wyett is
Chairman. There is no nominating committee of the Board. The Audit Committee
meets with management and with the Company's independent auditors at least once
and usually twice 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 Company, reviews the remuneration to be paid other officers, and acts as the
administrator of the Company's stock option and restricted stock plans.
During 1998, the Board of Directors held four meetings. The Audit Committee
met twice and the Compensation Committee met once. Except for Mr. Sloane, 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 is
unable to serve, a circumstance which is not anticipated, and if the enclosed
Proxy confers discretionary authority, the persons named in the Proxy will
either vote for such substitute nominee(s) 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.
7
<PAGE> 11
PROPOSAL 2. SELECTION OF AN AUDITOR
The Board of Directors proposes that the firm of PricewaterhouseCoopers
LLP, independent certified public accountants, be appointed to serve as auditors
for the fiscal year ending December 31, 1999. The ratification of this selection
is not required under the laws of Massachusetts, where the Company is
incorporated, but the Board of Directors of the Company 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 PricewaterhouseCoopers
LLP, the Board will consider the vote and the reasons therefor in future
recommendations on the selection of an auditor for the Company.
A representative of PricewaterhouseCoopers LLP is expected to be present at
the Annual 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.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE
RATIFICATION OF THIS SELECTION.
8
<PAGE> 12
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides summary information concerning the annual and
long-term compensation paid to or earned by the Company's Chief Executive
Officer and each of the four other most highly compensated executive officers of
the Company during the fiscal years ended December 31, 1998, 1997 and 1996 (the
"Named Executive Officers"):
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($)(1) BONUS($) ($) (#)(2) ($)
------------------ ---- ------------ -------- ---------- ------------ ---
<S> <C> <C> <C> <C> <C> <C>
Arthur L. Goldstein...... 1998 529,600 50,000 0 150,000 53,104
Chairman of the Board, 1997 509,600 120,000 0 0 43,881
President and Chief 1996 459,600 250,000 0 150,000 39,154
Executive Officer
William E. Katz.......... 1998 244,100 30,000 0 50,000 8,814
Executive 1997 234,100 60,000 0 0 7,624
Vice President 1996 218,100 136,400 0 40,000 7,006
Robert J. Halliday....... 1998 186,600 40,000 0 50,000 3,774
Vice President, Finance 1997 176,600 60,000 0 0 2,951
and Chief 1996 164,600 76,250 0 40,000 2,881
Financial Officer
Theodore G.
Papastavros............ 1998 186,600 30,000 0 50,000 8,585
Vice President, 1997 176,600 60,000 0 0 6,705
Strategic Planning 1996 164,600 76,250 0 40,000 6,286
Stephen Korn............. 1998 184,600 30,000 0 40,000 3,838
Vice President, General 1997 176,600 45,000 0 0 2,815
Counsel and Clerk 1996 164,600 76,250 0 40,000 2,757
</TABLE>
- ---------------
(1) Salary figures for 1996 include amounts ranging from $6,600 to $9,600
previously categorized as personal benefits.
(2) Options granted in 1998 were granted under the Company's 1997 Stock
Incentive Plan ("1997 Plan"). Each option is exercisable for one share of
Common Stock, which may be purchased upon exercise with either cash or
Common Stock. The options granted under the 1997 Plan have a duration of ten
years, and are exercisable in 20% installments commencing on the first
anniversary of the date of grant. Options may not be transferred by an
option holder (other than by will or by the laws of descent and distribution
or pursuant to a valid domestic relations order), and may be exercised only
while the holder is an employee or within 90 days after termination of
employment. Options granted in 1996 were granted under the Company's 1979
Stock Option Plan ("1979 Plan"). Each option is exercisable for one share of
Common Stock, which may be purchased upon exercise with either cash or
Common Stock. Options granted under the 1979 Plan 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 another entity, person or group
9
<PAGE> 13
acquires 30% or more of the outstanding voting shares of the Company.
Options granted under the 1979 Plan 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 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) Comprised of (a) Company matching contributions to officer's account in the
Ionics Section 401(k) Plan, available to all employees after an eligibility
period, and (b) amounts accrued under the Company's Supplemental Executive
Retirement Plan, described below following the Pension Plan Table. Matching
401(k) Plan contributions in 1998 for the Named Executive Officers in their
order of presentation were $4,800, $0, $2,500, $4,800 and $2,000,
respectively. Amounts accrued under the Supplemental Executive Retirement
Plan for the Named Executive Officers in 1998 were $48,304, $8,814, $1,274,
$3,785 and $1,838, respectively. Employees may elect to contribute to the
Ionics Section 401(k) Plan from 1% to 12% of the amount that they would
otherwise receive as cash compensation, and the contributed amounts, subject
to certain limitations, are not subject to current federal income taxes.
Amounts contributed to the Plan are invested at the direction of the
employee in shares of the Company's Common Stock or in shares of one or more
of seven mutual funds. The Company contributes to the Plan, for the
individual accounts of the participants in the Plan, an amount equal to 50%
of the amount each participant has elected to invest, up to 6% of
compensation, in Common Stock of the Company. Matching amounts are invested
entirely in the Company's Common Stock. The contributions by the Company for
any one calendar year cannot exceed an aggregate maximum amount fixed from
time to time by the Board of Directors.
STOCK OPTION GRANTS
The following table provides information concerning the grant of stock
options (also reported in the Summary Compensation Table) under the Company's
1997 Stock Incentive Plan during the fiscal year ended December 31, 1998, to the
Named Executive Officers. No stock appreciation rights ("SARs") were granted
during fiscal 1998.
OPTION GRANTS IN 1998(1)
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED
ANNUAL RATES
NUMBER OF PERCENTAGE OF OF STOCK PRICE
SECURITIES UNDERLYING TOTAL OPTIONS APPRECIATION FOR
OPTIONS GRANTED(1) GRANTED TO EXERCISE OPTION TERM(2)
(SHARES OF EMPLOYEES PRICE EXPIRATION ---------------------
COMMON STOCK) IN FISCAL 1998 ($/SHARE) DATE 5%($) 10%($)
--------------------- -------------- --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Arthur L. Goldstein..... 150,000 16% $29.50 8/19/2009 2,782,859 7,052,310
William E. Katz......... 50,000 5.3% $29.50 8/19/2009 927,620 2,350,770
Robert J. Halliday...... 50,000 5.3% $29.50 8/19/2009 927,620 2,350,770
Theodore G.
Papastavros........... 50,000 5.3% $29.50 8/19/2009 927,620 2,350,770
Stephen Korn............ 40,000 4.3% $29.50 8/19/2009 742,096 1,880,616
</TABLE>
- ---------------
(1) All options were granted under the Company's 1997 Stock Incentive Plan. 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 are exercisable in 20% installments annually commencing on
the first anniversary of the date of grant. The vesting of the options
accelerate so that they become fully exercisable upon the occurrence of a
"Change in Control." A Change in Control is defined as the acquisition by
any individual, entity or group of 20% or more of the outstanding voting
shares of the
10
<PAGE> 14
Company; continuing directors constituting less than a majority of the Board
of Directors; a business combination in which the stockholders of the
Company prior to the business combination do not own beneficially more than
60% of the then outstanding shares of common stock and the combined voting
power of the entity resulting from the business combination; or a complete
dissolution, liquidation or sale of substantially all the assets of the
Company other than to an entity of which former stockholders of the Company
own more than 60% of the outstanding voting stock and the combined voting
power of such entity. Options may not be transferred by an option holder
(other than by will or by the laws of descent and distribution or pursuant
to a valid domestic relations order), and may be exercised only while the
holder remains an employee or within 90 days after termination of
employment.
(2) Amounts represent hypothetical gains that could be achieved for the options
if exercised at the end of the option term. These gains are based on assumed
rates of stock appreciation of 5% and 10% compounded annually from the date
the options were granted to their expiration date and are not intended to
forecast possible future appreciation, if any, in the price of the Common
Stock. The gains shown are net of the option exercise price, but do not
include deductions for taxes or other expenses associated with the exercise
of the options or the sale of the underlying shares. The actual gains, if
any, on the stock option exercises will depend on the future performance of
the Common Stock, the option holder's continued employment through the
period that exercise rights vest and the date on which the options are
exercised.
STOCK OPTION EXERCISES
No stock options were exercised by any of the Named Executive Officers in
1998.
PENSION PLAN
Employees of the Company and its domestic divisions and subsidiaries
(except for employees of the Fabricated Products division based in Bridgeville,
Pennsylvania, who participate in a defined contribution pension plan) may at
their election participate in the Company's defined benefit retirement plan (the
"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, participants 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 executive
officer or other participant at normal retirement age (age 65) in the Retirement
Plan.
11
<PAGE> 15
PENSION PLAN TABLE
(ESTIMATED ANNUAL BENEFITS
FOR YEARS OF CREDITED
SERVICE INDICATED)
<TABLE>
<CAPTION>
BASE SALARY AT
RETIREMENT DATE(1) 5 10 15 20 25 30 35 40
- ------------------ - -- -- -- -- -- -- --
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 50,000 .............. $2,841 $ 5,088 $ 6,955 $ 8,823 $10,690 $12,558 $14,426 $16,293
75,000 .............. 4,262 7,631 10,556 13,482 16,407 19,332 22,257 25,182
100,000 .............. 5,682 10,175 14,158 18,141 22,123 26,106 30,089 34,072
125,000 .............. 7,103 12,719 17,759 22,799 27,840 32,880 37,920 42,961
150,000 .............. 8,524 15,263 21,360 27,458 33,556 39,654 45,752 51,850
175,000 .............. 9,550 17,412 24,567 31,723 38,878 46,033 53,189 60,344
200,000 .............. 9,625 18,530 26,739 34,952 43,165 51,378 59,591 67,804
225,000 .............. 9,625 19,643 28,128 37,255 46,383 55,510 64,638 73,765
250,000 .............. 9,625 20,756 29,309 37,347 46,383 55,510 64,638 73,765
300,000 .............. 9,625 22,982 33,295 42,991 52,687 62,383 72,079 81,775
350,000 .............. 9,625 23,327 35,155 46,509 57,862 69,215 80,569 91,922
400,000 .............. 9,625 23,327 35,579 47,832 60,084 72,337 84,589 96,842
450,000 .............. 9,625 23,327 35,579 47,832 60,084 72,337 84,589 96,842
500,000 .............. 9,625 23,327 35,579 47,832 60,084 72,337 84,589 96,842
550,000 .............. 9,625 23,327 35,579 47,832 60,084 72,337 84,589 96,842
600,000 .............. 9,625 23,327 35,579 47,832 60,084 72,337 84,589 96,842
650,000 .............. 9,625 23,327 35,579 47,832 60,084 72,337 84,589 96,842
</TABLE>
- ---------------
(1) Effective January 1, 1994, under Internal Revenue Code Section 401(a)(17),
no more than $150,000 of cash compensation may be taken into account in
calculating benefits under the Retirement Plan (effective January 1, 1997,
this number was adjusted to $160,000).
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, 1989 -- one half of one
percent (0.5%) of the first $550 of base monthly salary as of January 1, 1990,
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 calendar year 1989 -- one and one-quarter percent (1.25%)
of base monthly salary as of January 1, 1990; plus (iii) for each year after
December 31, 1989 -- 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.
The Named Executive Officers have been credited with the following years of
service, and would receive the following estimated annual benefits at normal
retirement age (65): Mr. Goldstein, 38.6 years, $85,895; Mr. Katz, 49.4 years,
$53,600; Mr. Halliday, 8.1 years, $53,658; Mr. Papastavros, 42.2 years, $61,368;
and Mr. Korn, 9.3 years, $39,539.
In 1996, the Company's Board of Directors adopted a Supplemental Executive
Retirement Plan for officers and key employees of the Company ("SERP"). The
purpose of the SERP is to permit officers and other key employees whose Base
Salary exceeds the maximum pay upon which retirement benefits may be accrued in
any year to accrue retirement benefits on Base Salary in excess of that amount,
equivalent to the benefits that would have been accrued under the Retirement
Plan if Base Salary levels over that amount could
12
<PAGE> 16
be taken into account in calculating benefits under that Plan. The SERP is
administered by the Compensation Committee of the Board of Directors.
STOCK PLANS
The Company currently has four stock ownership plans: the 1979 Stock Option
Plan; the 1997 Stock Incentive Plan; the 1994 Restricted Stock Plan; and the
1986 Stock Option Plan for Non-Employee Directors. No new stock options will be
granted under the 1979 plan, under which options for 1,645,280 shares were
outstanding as of December 31, 1998.
CHANGE IN CONTROL SEVERANCE AGREEMENTS
The Company has entered into Employee Retention Agreements (the
"Agreements") with each of the Named Executive Officers and with six other
officers of the Company or its subsidiaries. The Agreements have an initial term
expiring on December 31, 1999, and are automatically extended on an annual basis
unless the Company provides at least three months' notice that the Agreements
will not be extended. Each Agreement provides for severance benefits if the
employment of the employee is terminated by the Company (other than for Cause,
as defined in the Agreement, or by reason of his death or disability) or by the
employee for Good Reason (as defined in the Agreement) within 24 months after a
Change in Control (as defined in the Agreement). Each Agreement provides that,
in the event of a Potential Change in Control (as defined in the Agreement), the
employee may not voluntarily resign as an employee, subject to certain
conditions, for at least six months after the occurrence of such Potential
Change in Control.
The Agreements provide for the following severance benefits: (i) a lump-sum
payment equal to 200% (299% in the case of Mr. Goldstein) of the sum of (x) the
employee's average annual base salary in the year of his termination and the
prior two years plus (y) the average of the cash bonuses paid or awarded to him
in respect of the three fiscal years preceding his termination; and (ii) the
continuation of life, disability, dental and group health insurance benefits for
a period of 24 months without charge to the employee. To the extent that
payments to the employee pursuant to the Agreement (together with any other
payments or benefits, such as the accelerated vesting of stock options or
restricted stock awards, received by the employee in connection with a Change in
Control) would result in the triggering of the provisions of Sections 280G and
4999 of the Internal Revenue Code of 1986, as amended (the "Code"), the
Agreement provides that the payments to be made pursuant to the Agreement will
be reduced to the largest amount that would result in no portion of such
payments being subject to the excise tax imposed by Section 4999 of the Code.
In addition to the foregoing agreements, the Company's stock option and
restricted stock plans provide for immediate lapse of the Company's repurchase
rights or vesting of all outstanding options and awards upon any Change in
Control (as defined in such plans) of the Company.
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 four non-employee directors under Rule 16b-3 of the Securities
Exchange Act of 1934 (the "Exchange Act"), is responsible for reviewing and
establishing the compensation of the executive officers of the Company, and for
authorizing grants under the Company's 1997 Stock Incentive Plan (previously
under the 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, 1998.
13
<PAGE> 17
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 1994 Restricted Stock
Plan.
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 determines base salary levels of executive officers by comparison to
other companies engaged in its industry, represented by those in the "peer
group" Index set forth in this Proxy Statement, or in similar industries,
subject to an evaluation of comparative overall performance of the companies.
The policy of the Company is to pay cash bonuses based on the achievement
of specified corporate, business unit and individual performance objectives. The
cash bonuses listed in the Summary Compensation Table earned by executive
officers, as well as by other senior officers, were earned under the Company's
Managerial Bonus Program. The Managerial Bonus Program considers both
quantitative and qualitative performance. Quantitative performance focuses on
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.
The Committee, after consideration of management's recommendations, may
elect to utilize restricted stock in lieu of a portion of any cash award that
might be payable under the Managerial Bonus Program. The Committee may also make
discretionary restricted stock awards.
Budgeted amounts for EBIT and EBIT return on average capital employed are
established for each business unit, and for the Company as a whole, early in
each fiscal year. At the same time, a corresponding cash bonus target is
established for each executive officer based on 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 on 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 on the degree of success
in achieving the qualitative objectives.
The Committee may make discretionary bonus awards in appropriate
circumstances in which an executive officer might merit a bonus based on other
considerations.
The 1998 base salary of Mr. Goldstein, the Company's Chief Executive
Officer, was established by the Committee in February 1998. In considering Mr.
Goldstein's base salary, which was established at $529,600, the Committee
compared it to that paid by peer companies and companies in similar industries.
In doing so, the Committee reviewed on a comparative basis the Company's
multi-year record of continuous improvement in financial results including
record revenues, net income and earnings per share; improvements in
organizational structure; and generally Mr. Goldstein's leadership in the
development of the Company's business.
Based on the Company's performance in 1998, and in consideration of such
performance in the context of the Company's Managerial Bonus Program discussed
above, the Committee approved bonuses as provided for under the program to Mr.
Goldstein and other executive officers and key employees on February 23, 1999.
Under the terms of the program, Mr. Goldstein was awarded a bonus of $50,000.
14
<PAGE> 18
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 stockholder value by creating a greater community of
interest between stockholders and management. Grants of stock options are now
made under the 1997 Stock Incentive Plan, approved by the stockholders at the
1997 Annual Meeting. The size of stock option grants made by the Committee is
based on evaluation of a recipient's performance, salary level and number of
options held as a result of prior grants. On August 19, 1998, the Committee
awarded Mr. Goldstein a stock option grant of 150,000 shares, based upon a
qualitative assessment since the last stock option granted to him in 1996,
including such factors as business development, success in building the
Company's marketing programs, strategic business restructuring and additions to
the management team. During the fiscal year ended December 31, 1998, options to
purchase an aggregate of 237,500 shares of Common Stock were granted to the
other executive officers of the Company.
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 the 1997
Stock Incentive Plan, will not be subject to the deduction limit if certain
requirements set forth in Section 162(m) are met.
Respectfully submitted by the
Compensation Committee
Allen S. Wyett, Chairman
John J. Shields
Carl S. Sloane
Mark S. Wrighton
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee is a former or current officer or
employee of the Company or any of its subsidiaries. To the Company's knowledge,
there were no relationships involving members of the Committee or other
directors of the Company requiring disclosure in this Proxy Statement.
15
<PAGE> 19
STOCK PERFORMANCE GRAPH
The Securities and Exchange Commission (the "Commission") requires that the
Company include in this Proxy Statement a line-graph presentation comparing
cumulative, five-year return to the Company's stockholders (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, 1993 to December 31, 1998, 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, 1993, and that any cash dividends paid by any constituent
company (none have been paid by the Company) were reinvested in the same
security.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG
IONICS, INCORPORATED, S&P 500 INDEX AND "PEER GROUP" INDEX OF COMPARABLE
COMPANIES
<TABLE>
<CAPTION>
IONICS, INCORPORATED S&P 500 PEER GROUP
-------------------- ------- ----------
<S> <C> <C> <C>
'1993' 100.00 100.00 100.00
'1994' 126.45 101.32 98.99
'1995' 175.31 139.37 143.44
'1996' 193.45 171.35 159.30
'1997' 157.68 228.50 138.68
'1998' 120.65 293.79 132.42
</TABLE>
DIRECTOR COMPENSATION
Each director who is not an employee of the Company receives an annual
retainer of $10,000, plus a fee of $1,000 for each regular meeting of the Board
of Directors attended. In addition, each non-employee Director who is a member
of a Committee also receives a fee of $500 for each meeting of the Committee
16
<PAGE> 20
attended, if held on the same day as a Board meeting, or $1,000 per meeting if
held on a day on which the Board does not meet. A Committee chairman receives a
fee of $1,000 for each Committee meeting attended.
On August 19, 1998, the Board of Directors adopted the 1998 Non-Employee
Directors' Fee Plan ("Fee Plan"). The Fee Plan permits non-employee directors to
elect to receive payment of the annual retainer fee in cash or in Common Stock.
The valuation of the Common Stock is based on the last reported sales price of
the Common Stock on the New York Stock Exchange on the trading date next
preceding the date of the Board meeting at which payment will be made. Annual
retainer fees are paid in two equal annual installments.
Under the Company's 1986 Stock Option Plan for Non-Employee Directors (the
"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 automatically
entitled to receive an option for 2,000 shares of Common Stock upon his or her
initial election (or, if elected by the Board of Directors, at the time of the
next annual meeting of stockholders), and an option to acquire 2,000 additional
shares upon completion of each next successive year in office. Options granted
under the 1986 Plan have an exercise price equal to the fair market value 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 Company's 2000 Annual Meeting is presently expected to be held on May
5, 2000. Proposals of stockholders intended to be presented at the 2000 Annual
Meeting must be received no later than November 30, 1999, for inclusion in the
Company's Proxy Statement and proxy for that meeting, except that if the date of
the 2000 Annual Meeting is changed by more than 30 calendar days from the
presently expected date, the Company must receive such proposal within a
reasonable time before the Board of Directors makes its proxy solicitation.
Under the Company's By-Laws, stockholder proposals submitted for action at
the annual meeting but not proposed for inclusion in the Company's Proxy
Statement must be given to the Clerk of the Company not less than 80 nor more
than 120 days prior to the anniversary date of the immediately preceding annual
meeting. Therefore, stockholders who wish to make a proposal at the 2000 Annual
Meeting (other than one that will be included in the Company's proxy materials)
must notify the Company no later than February 15, 2000 and no earlier than
January 7, 2000. In the case of a special meeting of stockholders, or in the
event the annual meeting is called for a date more than 60 days prior to the
anniversary date, a stockholder must give such notice no later than 20 days
following the date on which notice of the meeting date was mailed or publicly
disclosed. Stockholder proposals for nomination of candidates to the Board of
Directors are subject to similar time constraints. Articles V and VII of the
Company's By-Laws contain certain requirements for the content of such
proposals.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and holders of more than 10% of the Company's Common Stock
(collectively, "Reporting Persons") to file with the Commission initial reports
of ownership and reports of changes in ownership of Common Stock of the Company.
Such persons are required by regulations of the Commission to furnish the
Company with copies of all such filings. Based on its review of the copies of
such filings received by it with respect to the fiscal year ended December 31,
1998 and written representations from certain Reporting Persons, the Company
believes
17
<PAGE> 21
that all Reporting Persons complied with all Section 16(a) filing requirements
in the fiscal year ended December 31, 1998.
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. Discretionary authority, if conferred by the enclosed Proxy, will
include authority to vote on matters concerning which the Company did not
receive timely notice pursuant to the provisions of the Company's By-Laws (see
"Stockholder Proposals").
EXPENSES AND SOLICITATION
The cost of solicitation of proxies will be borne by the Company. In
addition to soliciting stockholders by mail, certain of the Company's directors,
officers and employees, without additional remuneration, may solicit proxies in
person or by telephone or other means of electronic communication. Brokers and
other custodians, nominees and fiduciaries will be requested to forward
proxy-soliciting material to the owners of stock held in their names, and the
Company will reimburse such brokers and other custodians, nominees and
fiduciaries for their reasonable out-of-pocket costs. Solicitation by directors,
officers and employees of the Company may also be made of some stockholders in
person or by mail, telephone or other means of electronic communication
following the original solicitation. The Company may, if appropriate, retain an
independent proxy solicitation firm to assist in soliciting proxies. If the
Company does so, it will pay such firm's customary fees and expenses.
By Order of the Board of Directors
STEPHEN KORN, Clerk
Watertown, Massachusetts
March 30, 1999
18
<PAGE> 22
IONCM-PS-99
<PAGE> 23
IONICS, INCORPORATED
65 GROVE STREET, WATERTOWN, MASSACHUSETTS 02472
PROXY FOR ANNUAL MEETING TO BE HELD MAY 6, 1999
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 full 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 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 6, 1999, or at 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 AND 2, WITH DISCRETIONARY AUTHORITY TO VOTE UPON SUCH
OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
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, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Please sign exactly as your name(s) appear(s) on the books of the Corporation.
Joint owners should each sign personally. Trustees and other fiduciaries 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 or her title.
- --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
_____________________________________ _______________________________________
_____________________________________ _______________________________________
_____________________________________ _______________________________________
<PAGE> 24
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
------------------------
IONICS, INCORPORATED
------------------------
RECORD DATE SHARES:
401(K) PLAN SHARES:
1. Election of all four Class I Directors listed below.
For All With- For All
Nominees hold Except
Douglas R. Brown
Kathleen F. Feldstein [ ] [ ] [ ]
Arthur L. Goldstein
Carl S. Sloane
NOTE: IF YOU DO NOT WISH YOUR SHARES VOTED "FOR" A PARTICULAR NOMINEE, MARK THE
"FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH THE NAME(S) OF THE NOMINEE(S).
YOUR SHARES WILL BE VOTED FOR THE REMAINING NOMINEE(S).
For Against Abstain
2. Proposal to ratify the selection of
PricewaterhouseCoopers LLP as auditors [ ] [ ] [ ]
for fiscal year ended December 31, 1999.
3. To consider and act upon such other matters as may properly come before the
meeting.
Mark box at right if an address change or comment has been noted on [ ]
the reverse side of this card.
DETACH CARD
Please be sure to sign and date this Proxy. Date
-----------------------------
- ----Stockholder sign here--------------------------Co-owner sign here----------
DETACH CARD
