KOLLMORGEN CORPORATION
Reservoir Place
1601 Trapelo Road
Waltham, MA 02154
April 5, 1994
Dear Shareholder:
You are cordially invited to attend our Annual Meeting of Shareholders
on Wednesday, May 11, 1994, at 10:00 a.m. at the Guest Quarters Suite Hotel,
550 Winter Street, Waltham, Massachusetts. The proposal to be acted upon is
the election of directors.
As part of this year's Annual Meeting, you will have an opportunity to
hear a report on the operations of the Corporation, as well as ask questions
that you might have about Kollmorgen.
Your vote is important, regardless of the number of shares that you
hold. Accordingly, we would appreciate it if you would promptly execute and
return the proxy card enclosed with this material.
Sincerely,
George P. Stephan
Chairman of the Board
<PAGE>
<PAGE>2
KOLLMORGEN CORPORATION
Reservoir Place
1601 Trapelo Road
Waltham, MA 02154
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 5, 1994
To the Shareholders of
Kollmorgen Corporation:
The Annual Meeting of Shareholders of Kollmorgen Corporation will be
held at the Guest Quarters Suite Hotel, 550 Winter Street, Waltham,
Massachusetts, on Wednesday, May 11, 1994, at 10:00 a.m. local time, for the
following purposes:
1. To elect one Class I director and four Class II directors;
2. To transact such other business as may properly come before the
meeting or any adjournments or postponements thereof.
Only shareholders of record at the close of business on March 24, 1994,
will be entitled to vote at the Annual Meeting or any adjournments or
postponements thereof. Shareholders may vote in person or by proxy. The
stock transfer books of the Corporation will not be closed.
By order of the Board of Directors
James A. Eder
Secretary
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
* IMPORTANT *
* *
* It is important that your shares be represented at the *
* Annual Meeting. Please sign, date and return the enclosed *
* proxy card promptly in order that your shares will be *
* voted at the Annual Meeting. A return envelope which *
* requires no postage if mailed in the United States is *
* enclosed for your convenience. *
* *
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
<PAGE>
<PAGE>3
PROXY STATEMENT
GENERAL INFORMATION
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Kollmorgen Corporation (the
"Corporation") to be used in voting at the Annual Meeting of Shareholders of
the Corporation to be held on Wednesday, May 11, 1994, and at any
adjournments or postponements thereof. The close of business on March 24,
1994, is the record date for shareholders entitled to notice of and to vote
at the Annual Meeting of Shareholders of the Corporation. At such record
date, there were outstanding 9,637,822 shares of the Corporation's Common
Stock, par value $2.50 per share ("Common Stock"), each of which is entitled
to one vote on each matter to be presented before the shareholders of the
Corporation. In addition, at the record date there were outstanding 23,187.5
shares of Series D Convertible Preferred Stock ("Preferred Stock"), each of
which is entitled to 74.074 votes on each matter to be presented before the
shareholders of the Corporation, for an aggregate of 1,717,591 votes for the
holders of the Preferred Stock as a class. The shares of Common Stock and
the shares of Preferred Stock will vote together as one class at the Annual
Meeting and are hereinafter collectively referred to as the "Shares." This
Proxy Statement, the accompanying form of proxy and the 1993 Annual Report to
Shareholders are being first sent to shareholders on or about April 5, 1994.
VOTING
Shares may be voted by shareholders of record in person or by proxy, and
Shares represented by a properly executed proxy will be voted with respect to
all Shares represented by it in accordance with the instructions, if any,
given therein. If no instructions are given, the proxy will be voted in
favor of the election of the nominees named in the proxy statement, and, in
the discretion of the persons designated on the proxy card, the proxy will be
voted with respect to any other matter which may properly come before the
meeting.
The inspector of election will count shares represented by proxies that
withhold authority to vote for a nominee for election as a director or that
reflect abstentions and "broker non-votes" (i.e., shares represented at the
meeting held by brokers or nominees as to which (i) instructions have not
been received from the beneficial owners or persons entitled to vote, and
(ii) the broker or nominee does not have the discretionary voting power on a
particular matter) only as shares that are present and entitled to vote on
the matters for purposes of determining the presence of a quorum, but neither
proxies that withhold authority (without naming an alternative nominee),
abstentions nor broker non-votes will be counted as votes cast at the Annual
Meeting and therefore such proxies will not have any effect on the outcome of
voting on any of the matters to be considered at the meeting.
If a shareholder participates in the Corporation's Dividend Reinvestment
Plan, any shares of Common Stock held in his/her account will be voted in
accordance with the proxy returned by that person unless other instructions
are received.
<PAGE>
<PAGE>4
Any proxy received by the Board of Directors may be revoked by the
shareholder at any time prior to its use at the meeting by a subsequent
written instrument signed in the same manner as the proxy and received by the
Corporation either at the Annual Meeting or before the Annual Meeting at
Kollmorgen Corporation, Reservoir Place, 1601 Trapelo Road, Waltham, MA
02154, Attention: Secretary.
The vote of a plurality of votes cast at the Annual Meeting is required
for the election of directors.
SOLICITATION
The cost of this solicitation will be borne by the Corporation.
Solicitation will be made by use of the mails, except that, if necessary,
directors, officers and regular employees of the Corporation (none of whom
will receive any additional compensation therefor) may make solicitations of
proxies by telephone, telecopy, telegram or personal interview. The
Corporation has retained the firm of Georgeson & Company, Inc. to aid in the
solicitation of proxies, for which the Corporation has agreed to pay a
maximum fee of $6,000 plus out-of-pocket expenses. The Corporation will
reimburse brokers and other persons holding shares of Common Stock in their
names, or in the names of nominees, for their expenses incurred in sending
proxy materials to beneficial owners and obtaining their proxies.
ITEM 1. ELECTION OF DIRECTORS
THE BOARD OF DIRECTORS AND COMMITTEES
The business and affairs of the Corporation are managed under the
direction of the Board of Directors. Members of the Board serve on one or
more committees to carry out certain particular responsibilities. The
Chairman of the Board also chairs the Executive Committee and is a member
ex officio of all other Committees of the Board of Directors.
The Board of Directors held a total of six regular and special meetings
during 1993. Each director attended at least 75% of the aggregate number of
meetings of the Board and Board committees on which such director served.
The Audit Committee is responsible for overseeing and reviewing the
audit of the Corporation's books and accounts, for reviewing the audited
financial statements of the Corporation, for reviewing the Corporation's
internal control procedures and for reviewing and approving the independence
of the Corporation's independent public accountants. No member of this
Committee is an employee of the Corporation. The Audit Committee met three
times during 1993.
The Personnel and Compensation Committee generally is responsible for
reviewing the Corporation's compensation policies and practices, and
specifically for (i) reviewing and recommending to the Board of Directors the
total compensation and benefit programs applicable to the Corporation's key
employees, including corporate officers, and (ii) administering the
Corporation's stock option plans. In addition, this Committee reviews and
<PAGE>
<PAGE>5
makes recommendations on the policies and programs for the development of
management personnel throughout the Corporation. This Committee met four
times in 1993.
The Retirement Plans Committee advises the Board with respect to the
Corporation's retirement plans and trusts, reviews the selection of trustees,
recommends investment managers, and recommends action regarding the
establishment and amendment of the retirement plans and trusts. This
Committee held three meetings in 1993.
In addition to the regular meetings of the Audit, Personnel and
Compensation and Retirement Plans Committees, members of these Committees, as
part of their Committee responsibility, met periodically with the management
of the Corporation during 1993.
The Corporation does not have a standing nominating committee and
instead the Executive Committee of the Board convenes to select nominees for
directors.
The Executive Committee directs the management of the business of the
Corporation on behalf of the Board of Directors between meetings of the
entire Board. The Executive Committee met four times in 1993.
INFORMATION ON NOMINEES
The Corporation's By-Laws provide for two classes of directors, with
each class to serve a term of two years and to be composed of not less than
three nor more than four directors. The Board is presently composed of eight
directors. There are five nominees standing for election at this meeting.
The Executive Committee of the Board of Directors on March 14, 1994, elected
Jerald G. Fishman to fill a vacancy on the Board created upon the resignation
of Charles W. Grigg in February, 1994, and, according to applicable state
law, Mr. Fishman is standing for election at this Annual Meeting as a Class I
director. The term of all Class I directors expires in 1995. The four Class
II nominees standing for election at this Annual Meeting are Gideon Argov,
Allan M. Doyle, Jr., Eric M. Ruttenberg, and George P. Stephan whose terms
will expire in 1996. Biographical summaries of each nominee and of the
continuing directors appear on the following pages.
All nominees have consented to be so named and to serve if elected. If
a nominee becomes unavailable for election, it is the intention of the
persons named in the accompanying proxy card to vote for such other person,
if any, as the Board of Directors may designate.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION
OF EACH OF THE FOLLOWING NOMINEES:
NOMINEES
Class I Director, whose term expires in 1995:
JERALD G. FISHMAN, 48, is the President, Chief Operating Officer and a
director of Analog Devices, Inc., Norwood, Massachusetts. He has held these
<PAGE>
<PAGE>6
positions since November 1991, and served as the Executive Vice President
from 1988 to November 1991. He served as the Group Vice President-Components
of that company from 1981 to 1988. Mr. Fishman is a director of Chipcom
Corporation and Augat, Inc.
Class II Directors, whose terms expire in 1996:
GIDEON ARGOV, 37, is the President and Chief Executive Officer of the
Corporation. He has been a director of the Corporation since May 23, 1991,
and served as the Vice Chairman of the Board from that date until November
1991, when he was elected President and Chief Executive Officer. From 1988
to May, 1991 he was the President and Chief Executive Officer of High Voltage
Engineering Corporation. Previously he had been for five years a manager and
senior consultant with Bain and Company, San Francisco, California.
Mr. Argov is a member of the Executive Committee. He is a director of Golden
Systems, Inc.
ALLAN M. DOYLE, JR., 64, is a business consultant. He was an associate
professor at the Graduate Management Institute, Union College, Schenectady,
New York, from 1990 through 1993. He was a Vice Chairman of the Corporation
from July, 1982, until March, 1990. Mr. Doyle has been a director of the
Corporation since 1964 and is chairman of the Retirement Plans Committee and
a member of the Executive Committee of the Board. He is a trustee of Bay
Path College and a director of Millitech Corporation.
ERIC M. RUTTENBERG, 38, is the Executive Vice President of Tinicum
Incorporated, New York City, an investment management company.
Mr. Ruttenberg has been a director of the Corporation since March, 1990, and
is a member of the Executive Committee and Personnel and Compensation
Committee of the Board. The Board of Directors nominated Mr. Ruttenberg for
election as a director in accordance with the terms of the Preferred Stock
Purchase Agreement dated March 27, 1990, among the Corporation and the
purchaser parties thereto ("Preferred Stock Agreement"). Mr. Ruttenberg is a
director of SPS Technologies, Inc.
GEORGE P. STEPHAN, 60, Chairman of the Board, is a business consultant. From
February 1992 through 1993, he also acted in an of-counsel capacity to
Murtha, Cullina, Richter and Pinney of Hartford, Connecticut. Mr. Stephan
was elected Chairman of the Board on January 24, 1991, and performed various
duties as an employee of the Corporation during 1991, including leading the
search for a new president of the Corporation. From April 15, 1990, to
January 24, 1991, Mr. Stephan was an independent business consultant. Prior
to April 15, 1990, Mr. Stephan held various executive management positions
with the Corporation for 21 years, the last of which was as Vice Chairman
from December 1984 to April 1990. Mr. Stephan, a director of the Corporation
since July 1982, is the chairman of the Executive Committee. He is a
director of Barr Laboratories, Inc., a trustee of Hartwick College, and a
member of the Board of Advisors of the Hartwick Humanities in Management
Institute.
<PAGE>
<PAGE>7
CONTINUING DIRECTORS
Class I Directors, whose terms expire in 1995:
JAMES H. KASSCHAU, 42, is the President of Tinicum Incorporated, New York
City, an investment management company. He is also President of Tinicum
Enterprises, Inc., Garden City, New York. Mr. Kasschau has been a director
of the Corporation since March, 1990, and is chairman of the Audit Committee
and a member of the Retirement Plans Committee. The Board of Directors
nominated Mr. Kasschau for election as a director in accordance with the
terms of a Preferred Stock Agreement.
J. DOUGLAS MAXWELL, JR., 52, is Chairman of the Board and Chief Executive
Officer of Empower, Inc., a distributor of medical products. From 1984 to
1988, he was President of Chemco Technologies, Inc., a manufacturer of
graphic art film, paper, chemicals and related equipment, located in Glen
Cove, New York. He has been a director of the Corporation since April, 1983,
and is a member of the Audit Committee and Personnel and Compensation
Committee of the Board. Mr. Maxwell is a director of First National Bank of
Long Island.
ROBERT N. PARKER, 65, is a business consultant. From February 1991 to
January 1992, he was the Executive Vice President of LTV Aerospace and
Defense Corporation. From November, 1986, to January, 1991, he was President
of the LTV Missiles and Electronics Group of The LTV Corporation. From 1983
until November, 1986, he was President of the Missiles Division of The LTV
Corporation. Mr. Parker has been a director of the Corporation since
April 2, 1990, and is chairman of the Personnel and Compensation Committee
and a member of the Retirement Plans Committee. He is a director of
Perceptronics, Inc., Woodland Hills, California.
DIRECTORS COMPENSATION
Pursuant to the By-Laws of the Corporation, directors who are not
employees of the Corporation receive an annual retainer of $12,000. In
addition, outside directors receive (a) $800 for attendance at each meeting
of the Board, and for attendance at each meeting of a Committee on which they
serve, and (b) $800 per day for attendance at the Corporation's annual
planning meeting and for participating in any special assignments requested
by the Corporation. Outside directors also are reimbursed for their
reasonable expenses incurred in connection with Board meetings and special
assignments.
At the Annual Meeting held on May 13, 1992, the shareholders approved
the 1992 Stock Ownership Plan for Non-Employee Directors. The purpose of the
Plan is to attract and retain as directors qualified persons who are not
employees of the Corporation. The Plan provides that at least 50% of the
yearly retainer of each non-employee director will be paid in shares of
Common Stock in lieu of cash on a quarterly basis. In addition, the Plan
provides for the automatic grant of an option to purchase 2,000 shares of
Common Stock every other year. 150,000 shares of Common Stock were reserved
for issuance under this Plan.
<PAGE>
<PAGE>8
All non-employee directors participate in a post-retirement arrangement.
Under this arrangement, any non-employee director who retires after reaching
the age of 55 and has at least three years of continuous service may enter
into a consulting agreement with the Corporation to provide such consulting
services to the Corporation as the Board of Directors may request from time
to time, at a yearly compensation level equal to the amount of the annual
retainer (currently $12,000) in effect on the date of a non-employee
director's retirement. The term of each such agreement would be for a period
equal to the number of years of his Board service, up to a maximum of ten
years. Under this arrangement, each retired director would have to agree not
to engage in any competitive activity with the Corporation during the period
that payments are made and not to disclose to others any trade secrets or
confidential information relating to the Corporation or its business.
The Corporation, as permitted by the Corporation's By-Laws and New York
law, has purchased directors and officers liability insurance from Federal
Insurance Company and Home Insurance Company covering all of the
Corporation's directors and officers during 1993. The aggregate premium for
these policies was approximately $330,000.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information, as of March 30,
1994, with respect to all persons known to the Corporation to be the
beneficial owner of more than 5% of any class of shares of the capital stock
of the Corporation:
<PAGE>
<PAGE>9
<TABLE>
<CAPTION>
Amount and
Nature
Name and Address of Beneficial Percentage
of Beneficial Owner Title of Class Ownership of Class
- -------------------------------- -------------- ------------- ----------
<S> <C> <C> <C>
The "Gabelli Group" consisting of: Common Stock 2,727,733 (1) 27.6%
Gamco Investors, Inc.("GAMCO")
Gabelli Funds, Inc.("GFI")
Gabelli Performance Partnership("GPP")
Gabelli International Limited("GIL")
Gabelli Securities, Inc.("GSI")
Gabelli & Company, Inc.
Mario J. Gabelli
c/o The Gabelli Group, Inc.
655 Third Avenue
New York, NY 10017
Tinicum Enterprises, Inc. Common Stock 722,291 (2) 7.50%
RUTCO Incorporated Preferred Stock 23,187.5 100.00%
James H. Kasschau
Putnam L. Crafts, Jr.
RIT Capital Partners plc
J. Rothschild Holdings plc
J. Rothschild Capital Mgmt Ltd.
St. James Place Capital plc
c/o Tinicum Enterprises, Inc.
990 Stewart Avenue
Garden City, NY 11530
<FN>
(1) According to a Schedule 13D filed on December 1, 1989, as amended, the Gabelli Group
reported that the number of shares of Common Stock beneficially owned by the Gabelli
Group includes 246,038 shares of Common Stock receivable by the Gabelli Group if they
were to convert all of the Corporation's 8-3/4% Convertible Subordinated Debentures Due
2009 (the "Debentures") beneficially owned by them.
The Gabelli Group beneficially owns shares of Common Stock as follows:
<PAGE>
<PAGE>10
<CAPTION>
Percent
Shares of of Shares of
Percent Common Stock, Common Stock,
Shares of (Assuming (Assuming
of Common Class of Conversion of Conversion of
Name Stock Common Debentures) Debentures)
-------------- --------- -------- ------------- -------------
<S> <C> <C> <C> <C>
GAMCO 2,046,395 21.23% 2,225,189 22.51%
Gabelli & Co.
-- Principal -0- 0% 0 0.00%
-- Agency 19,300 .20% 24,540 0.25%
GFI
-- Principal 0 0% 0 0.00%
-- Agency 226,000 2.35% 286,985 2.90%
GIL 23,000 .24% 23,000 0.23%
GPP 155,000 1.61% 155,000 1.57%
GSI 500 .01% 500 0.00%
Mario Gabelli 11,500 .12% 12,519 0.13%
According to the Gabelli Group's Schedule 13D, as amended, each member of the Gabelli
Group has the sole power to vote or direct the vote and sole power to dispose or to
direct the disposition of the Common Stock or Convertible Debentures reported for it,
either for its own benefit or for the benefit of its investment clients or its
partners, as the case may be, except that GAMCO Investors, Inc. does not have authority
to vote 140,500 of the shares of Common Stock beneficially owned by it, and except that
GFI shares with the Board of Directors of each of The Gabelli Asset Fund, The Gabelli
Growth Fund, The Gabelli Convertible Securities Fund, The Gabelli Value Fund Inc., The
Gabelli Small Cap Growth Fund and/or The Gabelli Equity Income Fund voting power with
respect to the 286,985 shares of Common Stock held by such funds, and except that
Gabelli & Company shares with the clients for whose accounts such Common Stock or
Debentures were purchased the voting and dispositive power with respect to the 22,540
shares of Common Stock purchased for such accounts. Mr. Gabelli is deemed to have
beneficial ownership of the Common Stock and Debentures owned by each of the above
persons and GFI is deemed to have beneficial ownership of the securities owned
beneficially by each of the above persons other than Mr. Gabelli.
(2) According to a Schedule 13D filed on April 6, 1990, as amended, by Tinicum Enterprises,
Inc. ("Enterprises"), RUTCO Incorporated ("Rutco"), Mr. James H. Kasschau,
Mr. Putnam L. Crafts, Jr., RIT Capital Partners plc ("RIT" and, collectively with
Enterprises, Rutco, Mr. Kasschau, and Mr. Crafts, the "Investor Group"), J. Rothschild
Holdings plc ("JRH") a wholly owned subsidiary of St. James Place Capital plc ("SJPC"),
and J. Rothschild Capital Management Limited ("JRCML"), the Investor Group owns in the
aggregate 23,187.5 shares of Preferred Stock, which constitutes 100% of the outstanding
shares of Preferred Stock. Subject to antidilution provisions, each share of Preferred
Stock is convertible at any time into 74.074 shares of Common Stock or a total of
1,717,591 shares of Common Stock.
<PAGE>
<PAGE>11
The Investor Group beneficially owns Preferred Stock and Common Stock as shown in the
table which follows. The attribution of beneficial ownership of some of the outstanding
shares of capital stock is duplicative because the term "beneficial ownership" includes
both the power to vote and the power to dispose of such shares, which, with respect to
certain of such shares, are not held by the same person. See the explanation following
the table below.
<CAPTION>
Total % of
Shares of Shares of
Common Common
Stock, Stock,
(Assuming (Assuming
% of % of Conversion Conversion
Shares of Class of Shares of Class of of of
Preferred Preferred Common Common Preferred Preferred
Name Stock Stock Stock Stock Stock) Stock)
------------ --------- -------- --------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Enterprises 23,187.5 100.0% 707,100 7.35% 2,424,691 21.38%
Rutco 23,187.5 100.0% 707,100 7.35% 2,424,691 21.38%
Mr. Kasschau 414.5 1.8% 13,912 0.13% 44,616 0.38%
Mr. Crafts 2,484 10.7% 75,749 0.79% 259,749 2.29%
RIT 7,867 33.9% 239,901 2.49% 822,641 7.25%
Mr. Ruttenberg 0 0.0% 1,279 0.00% 1,279 0.00%
Enterprises has sole power to vote with respect to the 9,938 shares of Preferred Stock and
303,058 shares of Common Stock it owns. In addition, pursuant to the terms of a
shareholders agreement among Enterprises, Rutco, Mr. Kasschau, Mr. Crafts and RIT,
Enterprises has the power to vote, except in certain limited circumstances, the 10,765.5
shares of Preferred Stock and 328,293 shares of Common Stock owned by Mr. Kasschau, Mr.
Crafts and RIT.
Messrs. Kasschau and Ruttenberg have informed the Corporation that they disclaim
beneficial ownership of the shares of Preferred Stock and Common Stock owned by other
members of the Investor Group.
For further information concerning the Preferred Stock Agreement, see page 19.
</TABLE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of March 30, 1994, the shares of each
class of stock of the Corporation beneficially owned by each nominee,
director, and executive officer, and all nominees, directors and executive
officers of the Corporation as a group:
<PAGE>
<PAGE>12
<TABLE>
<CAPTION>
Share Percent
Name of Beneficial Owner Title of Class Ownership of Class
- ------------------------ -------------- --------- --------
<S> <C> <C> <C>
Gideon Argov (1) Common Stock 134,000 1.3%
Robert J. Cobuzzi (1) Common Stock 35,000 *
Allan M. Doyle, Jr. (3) Common Stock 22,414 *
James A. Eder (1) Common Stock 45,621 *
Jerald G. Fishman Common Stock 100 *
James H. Kasschau (3) Common Stock 15,912 *
Preferred Stock 414.5 (2) 1.80% (2)
J. Douglas Maxwell, Jr. (3) Common Stock 36,287 *
Robert N. Parker (3) Common Stock 3,371 *
Eric M. Ruttenberg (3) Common Stock 3,279 *
Preferred Stock -- (2) -- (2)
George P. Stephan (3) Common Stock 44,942 *
Robert W. Woodbury, Jr. (1) Common Stock 4,000 *
All directors and
executive officers of
the Corporation, as a
group Common Stock 344,926 (3)(1) 3.5%
Preferred Stock 414.5 (2) 1.8% (2)
<FN>
* less than 1%.
(1) Reflects the number of shares that could be purchased by the exercise of options available
as of March 30, 1994, or within 60 days thereafter under the Corporation's stock option
plans. Accordingly, these numbers are inclusive of (i) 120,000 shares of Common Stock
which Mr. Argov has the right to acquire under the Kollmorgen 1991 Long Term Incentive
Plan ("LTIP"), (ii) 30,000 shares of Common Stock which Mr. Cobuzzi has the right to
acquire under the LTIP and Kollmorgen 1982 Stock Option Plan ("1982 Plan"), (iii) 45,200
shares of Common Stock which Mr. Eder has the right to acquire under the 1982 Plan and the
LTIP, and (iv) 4,000 shares which Mr. Woodbury has the right to acquire under the LTIP.
(2) Each share of Preferred Stock is convertible into 74.074 shares of Common Stock. See
footnote (2) to "Security Ownership of Certain Beneficial Owners" concerning the ownership
of shares of Preferred Stock by Messrs. Kasschau and Ruttenberg.
(3) Inclusive of 2,000 shares of Common Stock which each named non-employee director has the
present right to acquire under the Non-Employee Director Stock Ownership Plan.
</TABLE>
<PAGE>
<PAGE>13
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information concerning compensation of
the Corporation's Chief Executive Officer and the Corporation's three other
executive officers during the last three fiscal years, where applicable.
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
----------------------------------------- ------------
Number of
Stock
Name and Principal Options
Position Year Salary ($) Bonus ($) Awarded
--------------------- ---- ------------ --------- ------------
<S> <C> <C> <C> <C>
Gideon Argov 1993 $275,000 $ - 0 -
President and 1992 275,000 - 0 -
Chief Executive Officer 1991 167,800(1) - 0 - 200,000
Robert J. Cobuzzi 1993 $190,000 $ - 0 - 50,000
Senior Vice President, 1992 190,000 - 0 -
Treasurer and Chief 1991 80,000(1) - 0 - 75,000
Financial Officer
James A. Eder 1993 $155,000 $ - 0 -
Vice President, Secretary 1992 155,000 - 0 -
and General Counsel 1991 135,000 - 0 - 50,000
Robert W. Woodbury, Jr. 1993 $109,000 $ - 0 - 25,000
Vice President, Controller 1992 99,917(1) - 0 - 10,000
and Chief Accounting
Officer
<FN>
(1) Messrs. Argov, Cobuzzi and Woodbury joined the Corporation in May 1991,
July 1991, and February 1992, respectively.
</TABLE>
<PAGE>
<PAGE>14
Option Grants in Last Fiscal Year
The following table shows the individual grant of stock options to the
named executive officers of the Corporation during 1993 pursuant to the
Kollmorgen 1991 Long Term Incentive Plan.
<TABLE>
<CAPTION>
Potential
Realizable Value
at Assumed Annual
Rates of Stock
Price Appreciation
Individual Grants for Option Term (2)
------------------------------------------------------ -------------------
Number
of Percent
Securities of Total
Under- Options
lying Granted to Exercise
Options Employees or Base
Granted in Fiscal Price Expiration
Name (#) (1) Year ($/Share) Date 5% ($) 10% ($)
- ---------------------- ------- ---------- --------- ----------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Cobuzzi 50,000 28.6% $ 7.75 10/20/2003 $243,500 $617,500
Robert W. Woodbury, Jr. 25,000 14.3% $ 6.625 07/20/2003 $104,125 $263,875
<FN>
(1) 10% of the options granted in 1993 are exercisable starting 12 months after the grant
date, an additional 10% of the options are exercisable after 18 months, and an
additional 20% of the options on the second, third, fourth and fifth anniversary dates
thereafter. All options were granted at 100% of the Fair Market Value on the date of
grant.
(2) As required by rules of the Securities and Exchange Commission ("SEC"), potential values
stated are based on the prescribed assumption that the Corporation's Common Stock will
appreciate in value from the date of grant to the end of the option term (ten years from
the date of grant) at annualized rates of 5% and 10% (total appreciation of 63% and
159%), respectively, and therefore are not intended to forecast possible future
appreciation, if any, in the price of the Corporation's Common Stock.
</TABLE>
<PAGE>
<PAGE>15
<TABLE>
<CAPTION>
Option Values at December 31, 1993 (1)
Number of
Securities Underlying Value of Unexercised
Unexercised Options at "In-the-money" Options at
December 31, 1993 December 31, 1993 (2)
-------------------------- --------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ------------------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Gideon Argov 80,000 120,000 $ 0 $ 0
Robert J. Cobuzzi 30,000 95,000 $ 0 $ 0
James A. Eder 45,200 30,000 $ 0 $ 0
Robert W. Woodbury, Jr. 4,000 31,000 $ 0 $ 21,875
<FN>
(1) No stock options were exercised by any named executive officer during 1993.
(2) Based upon the December 31, 1993, Fair Market Value share price of $7.50 less the
share price to be paid upon exercise.
</TABLE>
Pension Plan
All salaried employees with one year of service, including executive
officers of the Corporation, are participants in the Kollmorgen Corporation
Salaried Employees Retirement Plan (the "Plan"). The Plan is a defined
benefit plan, and the benefits are not reduced by Social Security benefits or
by payments from other sources. In the event of a termination of the Plan
following a Change in Control (as defined in the Plan), any assets of the
Plan remaining after provision is made for all benefits thereunder will be
used to supplement such benefits. This provision may not be amended or
terminated following a Change in Control. Benefits under the Plan are based
upon years of service and the highest consecutive five year average annual
base salaries during the final ten calendar years of service up to age 65.
For the year ended December 31, 1993, the credited years of service of
Messrs. Argov, Cobuzzi, Eder and Woodbury under the plan are 2, 2, 17, and 1
respectively.
The following table sets forth the annual benefits which would become
payable at age 65 under the Plan based upon a straight life annuity form of
benefit and various levels of covered compensation and years of service:
<PAGE>
<PAGE>16
Years of Service at Retirement in 1994
Final Average
Earnings at
Retirement 15 20 25 30 or more
------------- ------- ------- ------- ----------
$100,000 $25,155 $33,540 $41,925 $50,310
125,000 31,905 42,540 53,175 63,310
150,000 38,655 51,540 64,425 77,310
175,000 38,655 51,540 64,425 77,310
200,000 38,655 51,540 64,425 77,310
250,000 38,655 51,540 64,425 77,310
300,000 38,655 51,540 64,425 77,310
Annual benefits provided by the Corporation under this Plan are subject
to certain restrictions and limitations under the Internal Revenue Code of
1986, as amended (the "Code"), and applicable regulations, as in effect from
time to time. Currently the Code prohibits tax-qualified defined benefit
pension plans from taking into account for benefit calculation any
compensation in excess of $150,000 per annum and limits annual benefit
payments under such plans to $118,800. These limits and prohibitions are
indexed for inflation.
Employment Contracts, Termination of Employment and Change in Control
Arrangements
The Corporation has entered into employment agreements with three
current executive officers. Each agreement protects the Corporation from
disclosure of confidential information by the executive and contains the
executive's covenant not to compete with the Corporation following
termination of employment under certain circumstances.
The agreement with Mr. Argov, the Corporation's President and Chief
Executive Officer, provides for an annual base salary of $275,000, describes
the employee benefit plans under which he is entitled to participate, and
provides that if the Corporation terminates his employment other than for
"Cause" (as defined in the agreement) he will be entitled to receive an
amount equal to his current base salary, in a lump sum. The agreement with
Mr. Cobuzzi, the Corporation's Chief Financial Officer, Treasurer and a Vice
President, provides for an annual base salary of $190,000 and otherwise is
substantially identical to Mr. Argov's agreement.
The agreement with Mr. Eder provides for an annual base salary of
$155,000. In the event of a termination by the Corporation without Cause (as
defined in the agreement), by the executive with Good Reason (as defined in
the agreement) or by the executive under certain limited circumstances, the
executive will receive a lump sum cash payment equal to two times his highest
annual base salary (the "High Base Salary"), will receive life and medical
benefits until the earlier of acceptance of other employment or two years
from termination, and his options under the Corporation's stock option plans
will continue to become exercisable for two years (unless the agreement is
<PAGE>
<PAGE>17
terminated by the executive under certain limited circumstances, in which
event, the options granted to the executive in July, 1991 shall terminate
immediately). In the event of a termination of the executive for certain
reasons after a change in control, the executive will receive the value of
his life and medical benefit continuation in a cash lump sum and an
additional cash payment equal to the difference between (i) 2.99 times his
current salary and (ii) the sum of twice his High Base Salary and the amount
of the cash lump sum payment for his life and medical benefit continuation.
Pursuant to the terms of the Corporation's stock option plans, in the
event of extraordinary corporate events, including a substantial change in
the ownership or control of the Corporation, the Committee may, in its
discretion, accelerate the vesting and exercise period for all or some of the
outstanding options.
Board Compensation Report on Executive Compensation
The Personnel and Compensation Committee (the "Committee") of the
Corporation's Board of Directors is composed of independent directors who are
not employees of the Corporation and who qualify as disinterested persons for
purposes of Rule 16b-3 adopted under the Securities Exchange Act of 1934.
The Committee is responsible for developing and implementing the compensation
programs which relate the pay levels of the Corporation's executive officers
and certain other key employees. The Committee strives to establish
performance criteria, evaluate performance and determine base salary and
incentive payments for the Corporation's key decision makers to insure the
Corporation's ability to attract and retain high caliber executives by
providing appropriate incentives to deliver the maximum short- and long-term
financial results for the benefit of shareholders. The Committee also
approves compensation matters involving other key employees of the
Corporation, periodically reviews the annual salaries of all key employees,
including executive officers, and establishes the Corporation's policy with
respect to merit salary increases.
The Committee also administers and approves the grant of awards under
the Kollmorgen 1991 Long Term Incentive Plan ("LTIP") and other incentive
compensation plans of the Corporation for executive officers and certain
other key employees of the Corporation. From time to time, the Corporation,
on the recommendation of the Committee, has retained the services of
independent compensation consultants to evaluate the Corporation's executive
compensation programs.
In order to meet its objectives, the Committee has chosen three
components of its compensation program to meet the Corporation's pay
philosophy. Base salaries, the fixed regular periodic component of pay, are
based on the average level of base salaries among a competitive peer group of
companies of comparable size. The bonus plan for executive officers, which
is directly linked to the financial performance of the Corporation, is
designed to provide additional cash compensation when specific financial
performances are achieved or exceeded. The 1994 bonus plan for executive
officers provides cash awards when the Corporation meets its operating plan
in terms of primary earnings per share. Finally, the LTIP plan rewards
<PAGE>
<PAGE>18
executive officers and key employees for delivering long-term value to the
Corporation's shareholders. This plan is structured in such a way as to
reward executives only to the extent that shareholders have benefited over
some measurable period of time. Historically, the Corporation has used the
grant of stock options that vest over specified periods, currently five
years, to accomplish this objective. In determining a grant of stock
options, the Committee considers the amount and terms of outstanding options
previously granted to executive officers.
Mr. Argov joined the Corporation in May 1991 as Vice Chairman of the
Board and was elected President and Chief Executive Officer in November 1991.
His May 1991 compensation package, consisting of a base salary of $275,000,
participation in the corporate bonus plan, and the grant of 200,000 non-
qualified stock options issued under the LTIP and vesting over five years, is
designed to encourage short- and long-term performance consistent with the
interests of the shareholders. Mr. Argov's annual salaries in 1992 and 1993
continued at the same level as in 1991 and he did not receive any form of
incentive compensation.
Members of the Personnel and Compensation Committee:
Robert N. Parker J. Douglas Maxwell, Jr. Eric M. Ruttenberg
PERFORMANCE GRAPH
The following performance graph compares the five-year cumulative total
shareholder return, assuming reinvestment of dividends, on $100 invested on
December 31, 1988, in each of Kollmorgen Corporation Common Stock, Standard &
Poors 500 Stock Index, and the Standard & Poors Electrical Equipment Index.
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
KOLLMORGEN CORPORATION COMMON STOCK, S&P 500 INDEX
AND S&P ELECTRICAL EQUIPMENT
Measurement Period Kollmorgen S&P Electrical
(Fiscal Year Covered) Corporation S&P 500 Index Equipment Index
- --------------------- ----------- ------------- ---------------
Measurement Pt.
12/31/88 $100.00 $100.00 $100.00
FYE 12/31/89 $ 57.00 $132.00 $141.00
FYE 12/31/90 $ 37.00 $128.00 $130.00
FYE 12/31/91 $ 28.00 $166.00 $172.00
FYE 12/31/92 $ 30.00 $179.00 $188.00
FYE 12/31/93 $ 38.00 $197.00 $227.00
<PAGE>
<PAGE>19
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to the Preferred Stock Agreement, on March 27, 1990, the
Corporation sold 23,187.5 shares of Preferred Stock for $1,000 per share, or
an aggregate purchase price of approximately $23.2 million, to the Investor
Group. The Preferred Stock has a dividend rate of 9.5% per year and is
convertible into an aggregate of 1,717,591 shares of Common Stock, subject to
antidilution provisions, which would constitute approximately 15.1% of the
outstanding shares of Common Stock (after giving effect to the conversion of
all the shares of Preferred Stock).
Subject to certain conditions contained in the Preferred Stock
Agreement, the Investor Group is entitled to propose to the Board of
Directors two Purchaser Nominees (as defined in the Preferred Stock
Agreement) and the Corporation has agreed to exercise all authority under
applicable law to cause such Purchaser Nominees to be represented on the
Board of Directors (in separate classes of the Board of Directors). If any
Purchaser Nominee elected to the Corporation's Board of Directors shall cease
to serve as a director for any reason, the vacancy resulting therefrom will
be filled by the Board of Directors with a substitute Purchaser Nominee. The
Investor Group has agreed that the Purchaser Nominees on the Corporation's
Board of Directors shall not participate in any action taken by the Board of
Directors relating to the Preferred Stock Agreement.
The Investor Group has also agreed that so long as it or any of its
affiliates beneficially own any Shares, such persons will be present, in
person or represented by proxy, at all shareholder meetings of the
Corporation so that all Shares beneficially owned by the Investor Group and
its affiliates may be counted for the purpose of determining the presence of
a quorum at such meetings.
The Preferred Stock is entitled to vote together with the Common Stock
based on the number of shares of the Common Stock into which the Preferred
Stock is convertible. In addition, in certain circumstances, the holders of
shares of Preferred Stock are entitled to vote as a single class. Without
the consent of the holders of at least a majority of the shares of the
Preferred Stock then outstanding, the Corporation has agreed, among other
things, not to issue any capital stock of the Corporation other than Common
Stock and securities issuable on exercise of the preferred stock purchase
rights issued pursuant to the Corporation's Shareholders' Rights Plan.
The Corporation may elect to redeem the Preferred Stock on or after
April 1, 1995, at $1,100 per share, and is required to redeem all outstanding
Preferred Stock on April 1, 2000, at $1,000 per share, in each case plus
accrued and unpaid dividends. On the occurrence of certain events, including
the acquisition by any third party of 50% or more of the outstanding voting
securities of the Corporation, or certain events relating to the composition
<PAGE>
<PAGE>20
of the Board of Directors of the Corporation, the holders of the Preferred
Stock may require the Corporation to redeem the Preferred Stock at $1,000 per
share, plus accrued and unpaid dividends. The Preferred Stock Agreement also
includes certain financial and other covenants applicable to the Corporation,
and certain restrictions applicable to the Investor Group on the disposition,
acquisition or the taking of other specified actions with respect to the
voting securities of the Corporation.
During the first seven months of 1993, Mr. Stephan, a Class II director,
acted in an of-counsel capacity to Murtha, Cullina, Richter and Pinney, which
law firm from time to time performs legal services for the Corporation.
AUDITORS
Coopers & Lybrand serves as the independent auditors for the
Corporation. Representatives of Coopers & Lybrand will be present at the
Annual Meeting and will be given an opportunity to make a statement if they
desire to do so. They will be available to respond to questions of
shareholders.
PROPOSALS FOR THE 1995 ANNUAL MEETING
In accordance with the rules of the Securities and Exchange Commission,
shareholder proposals for inclusion in the Corporation's proxy statement for
the 1995 Annual Meeting must be received at the Office of the Secretary,
Kollmorgen Corporation, Reservoir Place, 1601 Trapelo Road, Waltham, MA
02154, no later than November 30, 1994.
OTHER MATTERS
The Board of Directors does not intend to present any other matters
before the meeting and is not informed of any other business which others may
bring before the meeting. However, if any other matters should properly come
before the meeting, or any adjournments or postponements thereof, it is the
intention of the persons named in the accompanying Proxy Card to vote on each
such matter as they, in their sole discretion, may determine.
<PAGE>
<PAGE>21
KOLLMORGEN CORPORATION
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints GIDEON ARGOV, GEORGE P. STEPHAN,
JAMES A. EDER, and each or any of them, with full power to act without the
other and with full power of substitution, proxies to represent the
undersigned at the Annual Meeting of Shareholders of Kollmorgen Corporation
to be held at the Guest Quarters Suite Hotel, 550 Winter Street, Waltham,
Massachusetts, at 10:00 a.m. on Wednesday, May 11, 1994, and at any
adjournments or postponements thereof, to vote all shares of the Corporation
shown on the other side of this card (whether Common Stock or Series D
Convertible Preferred Stock) with all the powers the undersigned would
possess if personally present, in the following manner.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED FOR PROPOSAL 1.
Please mark votes
/ X / as in this example.
IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSAL 1.
1. ELECTION OF FIVE DIRECTORS - Class I Nominee is Jerald G. Fishman and
Class II Nominees are Gideon Argov,
Allan M. Doyle, Jr., Eric M. Ruttenberg,
and George P. Stephan
FOR ALL NOMINEES /__/ WITHHELD FROM /__/
ALL NOMINEES
/__/ ______________________________________________________________
(INSTRUCTION: To withhold authority to vote for any nominee, write
such nominee's name(s) above.)
(Continued, and to be signed, on other side.)
<PAGE>
<PAGE>22
2. In their discretion, upon the transaction of other business as may
properly come before the meeting.
/__/ MARK HERE FOR ADDRESS
CHANGE AND NOTE AT RIGHT.
/__/ MARK HERE IF YOU PLAN
TO ATTEND THE MEETING.
Please sign exactly as imprinted herein. When
signing as attorney, administrator, executor,
guardian or trustee, please give your full
title as such. If a corporation, please sign
by president or other authorized officer and
indicate title. If shares are registered in
the names of joint tenants or trustees, each
tenant or trustee is required to sign. Please
complete, sign and return in the enclosed
envelope.
..............................................
Signature of Shareholder Date
..............................................
Signature of Shareholder Date
