SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
MTS SYSTEMS CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
MTS SYSTEMS CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Items 22(a)(2) of Schedule A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions 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:
[x] 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:
[LOGO]
MTS SYSTEMS CORPORATION
14000 Technology Drive
Eden Prairie, MN 55344-2290
Telephone 612-937-4000
Fax 612-937-4515, Telex 29-0521
Dear MTS Shareholder:
On behalf of your Board of Directors, I want to invite you to attend your
Company's Annual Meeting of Shareholders. The Annual Meeting will be held on
Tuesday, January 30, 1996, at 3:30 p.m.
Please note that the meeting will be held at the Marquette Hotel, 710 Marquette
Avenue, Minneapolis, Minnesota and not at the Company's main office in Eden
Prairie.
We would like all our shareholders to be represented at the Annual Meeting, in
person or by proxy. To that end, our staff works earnestly to follow up on
proxies which are not returned. Last year 94% of the shares were voted and we
thank our shareholders for that response. Please help us by taking the next few
minutes to complete the enclosed proxy and then drop it in the mail even if you
plan to attend the Annual Meeting. Shareholders who attend the Annual Meeting
may revoke their proxies and vote in person if they desire. Your promptness is
much appreciated.
Very truly yours,
/s/ Donald M. Sullivan
Donald M. Sullivan
Chairman and
Chief Executive Officer
December 21, 1995
MTS SYSTEMS CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 30, 1996
The Annual Meeting of Shareholders of MTS Systems Corporation (the "Company")
will be held on January 30, 1996 at the Marquette Hotel, 710 Marquette Avenue,
Minneapolis, Minnesota 55402. The meeting will convene at 3:30 p.m.
Central Standard Time for the following purposes:
1. To elect eight directors to hold office until the next Annual Meeting
of Shareholders or until their successors are elected and qualify.
2. To consider and act upon a proposed amendment to the Company's
Articles of Incorporation to increase the total number of authorized
shares of Common Stock from 16,000,000 shares to 32,000,000 shares.
3. To ratify and approve the appointment of independent public
accountants for the Company for the current fiscal year.
4. To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on December 1, 1995 as
the record date for the determination of shareholders entitled to notice of and
to vote at the meeting.
For the Board of Directors,
/s/ Patrick Delaney
Patrick Delaney
Secretary
MTS Systems Corporation
14000 Technology Drive
Eden Prairie, Minnesota 55344
December 21, 1995
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE SIGN, DATE, AND RETURN YOUR
PROXY WHICH IS LOCATED ON THE OUTSIDE OF THIS ENVELOPE. A POSTAGE-PAID ENVELOPE
IS ENCLOSED FOR THIS PURPOSE. THE PROXY IS SOLICITED BY MANAGEMENT AND MAY BE
REVOKED OR WITHDRAWN BY YOU AT ANY TIME BEFORE IT IS EXERCISED.
MTS SYSTEMS CORPORATION
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished to the shareholders of MTS Systems Corporation
(the "Company") in connection with the solicitation of proxies by the Board of
Directors of the Company to be voted at the Annual Meeting of Shareholders to be
held on January 30, 1996 or any adjournment thereof.
The cost of this solicitation will be borne by the Company. In addition to
solicitation by mail, officers, directors and employees of the Company may
solicit proxies by telephone, facsimile or in person. The Company may also
request banks and brokers to solicit their customers who have a beneficial
interest in shares registered in the names of nominees and will reimburse such
banks and brokers for their reasonable out-of-pocket expenses. The Company's
principal offices are located at 14000 Technology Drive, Eden Prairie, Minnesota
55344, its telephone number is 612-937-4000 and its facsimile number is
612-937-4515. The mailing of this Proxy Statement to shareholders of the Company
commenced on or about December 21, 1995.
Any proxy may be revoked by request in person at the Annual Meeting or by
written notice mailed or delivered to the Secretary of the Company at any time
before it is voted. If not revoked, proxies will be voted as specified by the
shareholders. The shares represented by proxies that are signed but which lack
any such specification will be voted in favor of the proposals set forth in the
Notice of Annual meeting of Shareholders and in favor of the slate of directors
proposed by the Board of Directors and listed herein.
Under Minnesota law, each item of business properly presented at a meeting of
shareholders generally must be approved by the affirmative vote of the holders
of a majority of the voting power of the shares present, in person or by proxy,
and entitled to vote on that item of business. However, if the shares present
and entitled to vote on that item of business would not constitute a quorum for
the transaction of business at the meeting, then the item must be approved by a
majority of the voting power of the minimum number of shares that would
constitute such a quorum. Votes cast by proxy or in person at the Annual Meeting
of Shareholders will be tabulated to determine whether or not a quorum is
present. Abstentions will be treated as shares that are present and entitled to
vote for purposes of determining the presence of a quorum and in tabulating
votes cast on proposals presented to shareholders for a vote but as unvoted for
purposes of determining the approval of the matter on which the shareholder
abstains. Consequently, an abstention will have the same effect as a negative
vote. If a broker indicates on the proxy that it does not have discretionary
authority as to certain shares to vote on a particular matter, those shares will
not be considered as present and entitled to vote with respect to that matter.
OUTSTANDING SECURITIES AND VOTING RIGHTS
The Company has outstanding only one class of stock, $.25 par value common stock
(the "Common Stock"), of which 4,678,644 shares were issued and outstanding on
December 1, 1995. Each share is entitled to one vote on all matters presented to
shareholders.
Shareholders have cumulative voting rights in the election of directors. If any
shareholder gives written notice to any officer of the Company before the
meeting, or to the presiding officer at the meeting, that shareholder may
cumulate votes for the election of directors by multiplying the number of votes
to which the shareholder is entitled by the number of directors to be elected
and casting all such votes for one nominee or distributing them among any two or
more nominees.
Only shareholders of record at the close of business on December 1, 1995 will be
entitled to vote at the meeting. The presence, in person or by proxy, of the
holders of a majority of the shares of Common Stock entitled to vote at the
Annual Meeting of Shareholders constitutes a quorum for the transaction of
business.
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth, as of December 1, 1995, the number and
percentage of outstanding shares of Common Stock of the Company beneficially
owned (i) by each person who is known to the Company to beneficially own more
than five percent (5%) of the Common Stock of the Company, (ii) by each director
of the Company, (iii) by each executive officer named in the Summary
Compensation Table below, and (iv) by all directors and executive officers of
the Company as a group:
NUMBER OF SHARES PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
Pioneering Management Corporation 448,350(1) 9.58%
60 State Street
Boston, MA 02114
State of Wisconsin Investment Board 400,200(2) 8.55%
c/o Keith Johnson, Acting General
Counsel
P. O. Box 7842
Madison, WI 53707
Mitchell Hutchins Institutional 392,115(3) 8.38%
Investors, Inc.
1255 Avenue of the Americas
New York, NY 10019
E. Thomas Binger 288,250(4) 6.16%
5575 Wayzata Boulevard
Minneapolis, MN 55412
Donald M. Sullivan 66,301(4)(5) 1.41%
Charles A. Brickman 46,000(4) *
Thomas E. Holloran 7,342(4) *
Thomas E. Stelson 8,000(4) *
Bobby I. Griffin 4,000(4) *
Linda Hall Whitman -0- -0-
Russell A. Gullotti -0- -0-
Marshall L. Carpenter 38,007(4)(6) *
Keith D. Zell 26,625(4)(7) *
Mauro G. Togneri 13,960(4) *
William G. Beduhn 18,225(4)(8) *
All directors and executive officers 602,690(4)(9) 12.57%
as a group (16 persons)
*Less than 1%
(1) Based upon information included in a Schedule 13G and Form 13F filed with
the Securities and Exchange Commission. Consists of sole voting power and
110,600 shares over which sole dispositive power is exercised and 337,750
shares over which shared dispositive power is exercised.
(2) Based upon information included in a Schedule 13D and Form 13F filed with
the Securities and Exchange Commission. Consists of sole voting and
dispositive power.
(3) Based upon information included in Schedule 13G and Form 13F filed with the
Securities and Exchange Commission. Consists of shared voting and
dispositive power.
(4) Includes the following number of shares which could be purchased under
stock options exercisable within sixty (60) days of the date hereof: Mr.
Binger, 4,000 shares; Mr. Sullivan, 32,201 shares; Mr. Brickman, 4,000
shares; Mr. Holloran, 4,000 shares; Mr. Stelson, 3,000 shares; Mr. Griffin,
2,000 shares; Mr. Carpenter, 9,200 shares; Mr. Zell, 15,601 shares; Mr.
Togneri, 13,000 shares; Mr. Beduhn, 5,851 shares; and by all directors and
executive officers as a group, 117,330 shares.
(5) Includes 8,350 shares owned jointly with his spouse. The voting and
investment discretion over those shares are shared accordingly.
(6) Includes 28,807 shares owned jointly with his spouse. The voting and
investment discretion over those shares are shared accordingly.
(7) Includes 11,024 shares owned jointly with his spouse. The voting and
investment discretion over those shares are shared accordingly.
(8) Includes 7,714 shares held by his spouse and the beneficial ownership of
such shares is disclaimed. Also includes 3,900 shares owned jointly with
his spouse and the voting and investment discretion over those shares are
shared accordingly.
(9) Includes 78,653 shares owned jointly with a spouse, 7,714 shares owned
directly by a spouse and 1,234 shares which are owned directly by children.
ELECTION OF DIRECTORS
(PROPOSAL #1)
Eight directors will be elected at the Annual Meeting, each to serve until the
next Annual Meeting of Shareholders or until a successor is elected and
qualified. The Board of Directors has nominated for election the eight persons
named below and each has consented to being named a nominee. It is intended that
proxies will be voted for such nominees. Each of the nominees was elected at the
Annual Meeting of Shareholders on January 31, 1994, except for Linda Hall
Whitman and Russell A. Gullotti, who were elected by the Board of Directors in
March and May 1995, respectively. The Board of Directors believes that each
nominee named herein will be able to serve, but should any nominee be unable to
serve as a director, the persons named in the proxies have advised that they
will vote for the election of such substitute nominee as the Board of Directors
may propose. The proxies cannot be voted for a greater number of persons than
eight.
The names of the nominees, their principal occupations for at least the past
five years and other information is set forth below:
[PHOTO] President of Pinnacle Capital Corporation
CHARLES A. BRICKMAN Age 63 (a venture capital company) since 1990;
DIRECTOR SINCE 1968 with Kidder Peabody & Co., Inc., an
investment banking firm, from 1960 to 1990
(Vice President from 1964 to 1990 and a
director from 1975 to 1990); a director of
Illinois Consolidated Telephone Co. and a
number of small, privately held companies.
[PHOTO] Professor, Graduate School of Business,
THOMAS E. HOLLORAN Age 66 University of St. Thomas, St. Paul,
DIRECTOR SINCE 1971 Minnesota since 1985; Chairman,
Minneapolis-St. Paul Metropolitan Airports
Commission from 1989 to 1991; Chairman of
the Board of Directors and Chief Executive
Officer of the Inter-Regional Financial
Group, Inc. (holding company for various
financial enterprises) from 1976 to 1985; a
director of Flexsteel Industries, Inc.,
Medtronic, Inc., ADC Telecommunications
Inc., National City Bank of Minneapolis,
National City Bancorporation and Space
Center Company; Chairman and a director of
Malt-o-Meal Company and the Bush Foundation;
a director of the Minnesota Center for
Corporation Responsibility.
[PHOTO] Retired executive; General Partner of
E. THOMAS BINGER Age 72 Pittsburgh Pacific Company, Ltd., a
DIRECTOR SINCE 1975 privately held iron ore mining company and
personal investment company, from 1970 to
1994; a director of Bemis Company, Inc. from
1970 to 1994 and Investors Savings Bank from
1991 to 1995.
[PHOTO] Consulting Engineer, Executive Vice
THOMAS E. STELSON Age 67 President and Professor of Civil
DIRECTOR SINCE 1979 Engineering Emeritus, Georgia Institute of
Technology, Atlanta, Georgia since 1994;
Vice President and President-Elect, Center
for Rehabilitation Technology, Inc.; Pro
Vice Chancellor for Research and
Development, Hong Kong University of Science
and Technology from 1991 to 1994; previously
Professor and Vice President, Georgia
Institute of Technology.
[PHOTO] Chairman of the Board of the Company since
DONALD M. SULLIVAN Age 60 May 1994; Chief Executive Officer of the
DIRECTOR SINCE 1982 Company since 1987; President of the
Company since 1982; Executive Vice President
of the Company from 1980 to 1982; Vice
President of the Company from 1976 to 1980;
employed by (Emerson) Rosemount, Inc. from
1965 to 1976 (most recently Senior Vice
President of Industrial Instrument and
International Business); a director of ADC
Telecommunications, Inc. and TSI, Inc.;
member of Northwestern University's
Materials Science Department Advisory
Committee; formerly a director of Minnesota
High Technology Council.
[PHOTO] President, Medtronic Pacing Business
BOBBY I. GRIFFIN Age 58 (manufacturer of pacing arrhythmia
DIRECTOR SINCE 1993 products and the largest business unit
within Medtronic, Inc.) since 1991;
Executive Vice president, Medtronic, Inc.
(medical technology company) since 1988;
held various management positions in the
pacing business since joining Medtronic in
1973; involved in bio-medical research and
development since 1961 with General
Electric-Hanford Laboratories, Batelle
Memorial Institutes, and with
McDonnell-Douglas Corporation-Donald W.
Douglas Laboratories; a director of The
Lutheran Brotherhood Board and Tentmakers
Youth Ministry; member of the Concordia
College Board of Trustees and the North
American Association for Pacing and
Electrophysiolgy.
[PHOTO] Vice President, Business Integration,
LINDA HALL WHITMAN Age 47 Ceridian Corporation, since October 1995;
DIRECTOR SINCE MARCH 1995 management and executive positions with
Honeywell Inc. from 1980 to 1995 culminating
in Vice President, Consumer Business Group
from 1993 to 1995; consultant, psychologist,
social worker and special education teacher
in Minnesota and Michigan schools from 1969
to 1980; Minnesota 100 mentor since 1994;
Member, Minnesota Women's Economic
Roundtable; a director of Minnesota Zoo;
former director of CAPITOL AIR, Inc. from
1994 to 1995 and Home Energy Systems Rating
Council from 1993 to 1995.
[PHOTO] President and Chief Executive Officer of
RUSSELL A. GULLOTTI Age 53 National Computer Systems (NCS) (provider
DIRECTOR SINCE MAY 1995 of data collection systems and services)
since October, 1994; Chairman of the NCS
Board of Directors since May, 1995;
management and executive positions with
Digital Equipment Corporation from 1977 to
1994 (President Sales/Service for Americas
from 1992 to 1994 and Vice President Digital
Services from 1988 to 1992); a director of
GenRad, Inc. and the Minnesota Business
Partnership.
OTHER INFORMATION REGARDING THE BOARD
Meetings. The Board of Directors met five times during fiscal year 1995, which
ended September 30, 1995. None of the directors attended fewer than 75% of the
aggregate of the total number of Board meetings and Committee meetings on which
he or she served during fiscal year ended 1995. The Board of Directors also took
action in writing in lieu of a meeting four times during fiscal 1995, which all
of the directors signed.
Board Committees. The Audit Committee of the Board of Directors, which at
September 30 1995 was composed of Messrs. Brickman (chair), Binger, Stelson and
Holloran, met two times during fiscal year 1995. Among other duties, the Audit
Committee reviews and evaluates significant matters relating to the audit and
internal controls of the Company, reviews the scope and results of the audits
by, and the recommendations of, the Company's independent auditors and approves
services provided by the auditors.
The Audit Committee also reviews the audited financial statements of the
Company. The Human Resources Committee of the Board of Directors, which at
September 30, 1995 was composed of Messrs. Binger and Holloran and Ms. Whitman,
met two times and took three actions in writing during fiscal year 1995. Ms.
Whitman joined the Human Resources Committee on August 15, 1995, prior to which
Mr. Brickman served on the Committee. The Human Resources Committee makes
recommendations to the Board of Directors regarding the employment practices and
policies of the Company and the compensation paid to Company officers.
The Company does not have a Nominating Committee.
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows, for the fiscal years ending September 30, 1995, 1994
and 1993, the cash compensation paid by the Company, as well as certain other
compensation paid or accrued for those years, to Donald M. Sullivan, the
Company's Chairman, Chief Executive Officer and President, and each of the four
other most highly compensated executive officers of the Company as of September
30, 1995 (together with Mr. Sullivan, the "Named Executives"), in all capacities
in which they served:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
SECURITIES
UNDERLYING ALL OTHER
SALARY BONUS OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($)(1) (#) ($)(2)
<S> <C> <C> <C> <C> <C>
D. M. Sullivan 1995 $226,978(3) $58,584 9,000 $10,076
Chairman, Chief Executive 1994 218,494 33,755 9,000 17,111
Officer and President 1993 210,648 48,860 9,600 12,461
Keith D. Zell 1995 155,747 27,225 6,000 10,076
Executive Vice President 1994 150,104 7,468 6,000 11,449
1993 131,020 15,555 3,000 8,968
M. L. Carpenter 1995 152,701 31,618 3,000 10,076
Vice President and Chief 1994 146,779 11,942 3,000 11,927
Financial Officer 1993 140,345 28,135 3,000 8,309
M. G. Togneri 1995 145,580(4) 96,560 3,000 10,076
Vice President 1994 144,376 93,840 -0- 9,746
1993 140,342 6,466 -0- 7,648
William G. Beduhn 1995 130,773 52,710 2,250 10,076
Vice President 1994 123,926 55,951 2,250 11,388
1993 116,697 40,973 2,100 8,725
</TABLE>
(1) Represents earnings under the Management Variable Compensation Plan. The
amounts listed were earned in the fiscal year shown and were paid or will
be paid in the following year, unless deferred by the Named Executive.
(2) Represents contributions by the Company to the Company's Profit Sharing
Retirement Plan and the Company's 401(K) Plan on behalf of the Named
Executives.
(3) Includes $11,381 of compensation earned in the fiscal year shown and
deferred by the Named Executive to a later date.
(4) Includes $6,004 of compensation earned in the fiscal year shown and
deferred by the Named Executive to a later date.
STOCK OPTIONS
The following table contains information concerning grants of stock options
under the Company's Stock Option Plans to the Named Executives during the fiscal
year ending September 30, 1995:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
NUMBER OF VALUE AT ASSUMED
SECURITIES % OF TOTAL ANNUAL RATE OF STOCK
UNDERLYING OPTIONS PRICE
OPTIONS GRANTED APPRECIATION FOR
GRANTED TO EMPLOYEES EXERCISE PRICE EXPIRATION OPTION TERM
NAME (#) IN FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C>
D. M. Sullivan 9,000(1) 7.2% $23.125 01/31/02 $84,728 $197,452
K. D. Zell 6,000(1) 4.7% 23.125 01/31/02 56,485 131,634
M. L. Carpenter 3,000(1) 2.4% 23.125 01/31/02 28,243 65,817
M. G. Togneri 3,000(1) 2.4% 23.125 01/31/02 28,243 65,817
W. G. Beduhn 2,250(1) 1.8% 23.125 01/31/02 21,182 49,363
</TABLE>
(1) Each option becomes exercisable in equal installments over a period of
three years, commencing one year after the date of grant.
OPTION EXERCISES AND HOLDINGS
None of the Named Executives exercised stock options during fiscal 1995. The
following table sets forth information with respect to the Named Executives
concerning unexercised options held as of September 30, 1995:
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT FY-END (#) OPTIONS AT FY-END ($)(1)
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE(2)
<S> <C> <C> <C> <C>
D. M. Sullivan 27,001 18,199 $175,200 $81,586
K. D. Zell 10,600 11,000 71,525 43,428
M. L. Carpenter 6,200 6,000 32,050 20,130
M. G. Togneri 10,000 3,000 90,000 24,318
W. G. Beduhn 4,651 4,449 25,168 15,460
</TABLE>
(1) Based on closing price of $28.25 per share of the Company's Common Stock on
September 30, 1995.
HUMAN RESOURCES COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This is the report of the Company's Human Resources Committee, which is composed
of the undersigned Board members. Messrs. Holloran and Binger have been
non-employee directors of the Company since the close of 1994. Ms. Whitman is a
non-employee director and was elected as a Committee member in August 1995. This
report shall not be deemed incorporated by reference into any filing under the
Securities Exchange Act of 1933 or the Securities Exchange Act of 1934.
The Human Resources Committee is responsible for executive compensation, the
Management Variable Compensation and Stock Option Plans, and certain other
employee benefit plans. The compensation philosophy of the Company is to be
competitive with comparable and directly competitive companies to attract and
motivate highly qualified employees.
The Company uses various compensation surveys -- international, national and
local -- to develop its compensation strategy and plans; this practice is also
used by the Human Resources Committee for executive compensation. In general,
the Committee does not use outside consultants to prepare specific studies for
it unless it judges the available survey data to be incomplete or
unrepresentative.
There are four components to the Company's executive compensation program: (1)
base salary; (2) management variable compensation (referred to in the Summary
Compensation Table above as "Bonus"); (3) stock options; and (4) profit
sharing/retirement. The Committee may adjust the mix of these components from
year to year according to survey data. In general, as is true for all the
Company's compensation programs, salaries and retirement compensation are
somewhat lower than average survey data, and bonus and stock options (i.e.,
potential annual and longer term variable compensation) are somewhat higher.
This proportionality increases as responsibility and compensation increase.
Base Salary. Executive base salary is adjusted annually in January based on the
prior fiscal year's financial results and performance on developmental
objectives the Committee believes are critical to the Company's long term
progress. These objectives include, but are not limited to, progress on the
Company's Total Quality Management objectives and staff development.
Management Variable Compensation. The Human Resources Committee annually
approves the Management Variable Compensation Plan, which includes executives,
managers, and key functional and technical leaders. It also recommends to the
full Board the corporate earnings and growth objectives upon which the Chief
Executive Officer's variable compensation is principally based. These objectives
are a mix of earnings per share, return on average net assets and revenue
growth.
Variable compensation is paid to each recipient by December 15 following the
close of the fiscal year unless the executive elects to defer a portion in the
Company's non-qualified, non-secured compensation deferral plan.
Stock Options. The Company's current Stock Option Plans include executives,
managers, and key functional and technical leaders. Stock options are priced and
granted annually on the date of the January Board of Directors meeting. In
addition, Company officers from time to time recommend to the Human Resources
Committee for its approval at regular Board of Directors meetings stock option
grants to employees who have shown exceptional service. These discretionary
stock options do not exceed a total of 12,000 shares for the fiscal year and are
priced as of the date of approval. Executive award levels are based on the
matters discussed above. Options outstanding under current plans fully vest in
three or four years and expire in five to seven years.
Profit Sharing/Retirement. The Company sponsors an all employee Profit
Sharing/Retirement Plan for U.S. employees, except certain subsidiary employees
who are covered by subsidiary plans. All of the executives listed in the above
tables are included in this Profit Sharing Plan. The full Board annually
approves the contribution formula for all employees, including executives.
The Company also has a 401(k) Plan for U.S. employees, including executives,
under which the Company partially matches employee contributions at a proportion
set by the Company. The Human Resources Committee annually approves the
corporate matching formula for all employees.
Chief Executive Officer Compensation. Mr. Sullivan's compensation for
1993-1995 is shown in the Summary Compensation Table above. The Human
Resources Committee believes Mr. Sullivan has managed the Company well in a
highly competitive industry. Mr. Sullivan's compensation is consistent with
this evaluation and with the Company's overall management compensation
strategy.
Board Action. The full Board of Directors approves new stock option plans for
submittal for shareholder vote and approves the annual corporate earnings and
growth objectives for inclusion into the Management Variable Compensation Plan.
The full Board reviews all components of executive compensation and the Profit
Sharing/Retirement Plan every two to three years.
SUBMITTED BY THE HUMAN RESOURCES COMMITTEE
OF THE COMPANY'S BOARD OF DIRECTORS:
Thomas E. Holloran, Chairman
E. Thomas Binger
Linda Hall Whitman
SHAREHOLDER RETURN PERFORMANCE
The graph below sets forth a comparison of the cumulative shareholder return of
the Company's Common Stock over the last five fiscal years with the cumulative
total return over the same periods for the Nasdaq Market Index and the
Laboratory Apparatus and Analytical, Optical, Measuring, and Controlling
Instruments Index (the "Analytical Instruments Index") (SIC Code 382, which
includes 110 companies). The graph below compares the cumulative total return of
the Company's Common Stock over the last five fiscal years assuming a $100
investment on October 1, 1990 and assuming reinvestment of all dividends.
[GRAPH]
<TABLE>
<CAPTION>
FISCAL YEAR ENDING
1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
MTS SYSTEMS CORPORATION $100.00 $127.06 $146.37 $172.01 $141.88 $168.96
ANALYTICAL INSTRUMENTS INDEX 100.00 150.03 165.95 204.07 217.85 317.09
NASDAQ MARKET INDEX 100.00 134.19 131.96 171.62 181.61 220.50
</TABLE>
The Company's Common Stock closed at $28.25 per share on September 30, 1995.
EMPLOYMENT AGREEMENTS
Messrs. Sullivan, Zell, Carpenter, Togneri and Beduhn, individually, have
agreements with the Company under which, upon the termination of their
employment with the Company other than for cause, such officers will receive
monthly payments over periods ranging from 12 to 18 months or until age 65,
whichever occurs first, based upon their highest annual salaries and the average
management variable compensation and benefits they received during the previous
three years. As of the date hereof, the maximum aggregate amounts of such
payments to each of Messrs. Sullivan, Zell, Carpenter, Togneri and Beduhn are
$432,794, $182,705, $281,098, $222,156 and $191,331, respectively. As a
condition to such payments, the officer must agree to not render services to any
competing entity concerning any similar or competing product for periods ranging
from nine to twelve months.
DIRECTOR COMPENSATION
Directors who served during all of 1995 and were not otherwise directly or
indirectly compensated by the Company (Messrs. Binger, Brickman, Holloran,
Griffin and Stelson) were each paid directors fees in the form of an annual
retainer of $14,000 during 1995. Ms. Whitman and Mr. Gullotti were each paid
$7,000, which was the pro rata portion of director retainers according to the
portions of 1995 during which they served. The payment of annual retainers is
not dependent upon board meeting attendance. In addition, non-employee directors
who attended over a total of five board or committee meetings not held on the
same day as a regular board meeting were compensated at the rate of $750 per
half day meeting and $1,500 per full day meeting. Messrs. Binger and Holloran
each attended six meetings and will each receive $750.
Each of the non-employee directors who were elected at last year's Annual
Meeting of Shareholders (Messrs. Binger, Brickman, Holloran, Griffin and
Stelson) were automatically granted options to purchase 1,000 shares each of
Common Stock upon their reelection to the Board of Directors at the Company's
Annual Meeting of Shareholders for fiscal year 1995, and will, together with Ms.
Whitman and Mr. Gullotti, each be granted an option to purchase 1,000 shares of
Common Stock upon their re-election to the Board of Directors at the Company's
Annual Meeting of Shareholders to be held on January 30, 1996 at the fair market
value on such date. Mr. Brickman and Mr. Stelson were also reimbursed for travel
expenses to Board of Directors' meetings.
AMENDMENT TO THE COMPANY'S
ARTICLES OF INCORPORATION
(PROPOSAL #2)
The Board of Directors has approved an amendment to Article VI of the Company's
Articles of Incorporation which would increase the number of authorized shares
of Common Stock from 16,000,000 shares to 32,000,000 shares. The Board believes
adoption of this amendment is in the best interests of the shareholders and
recommends that shareholders vote in favor of this proposal. At December 1,
1995, there were 4,678,644 shares of Common Stock issued and outstanding and
994,173 shares reserved for future issuance under the Company's stock option
plans, leaving 10,327,183 shares available for corporate purposes.
The Company has no present plans, understandings or agreements for the issuance
or use of the proposed additional shares of Common Stock. However, the Board of
Directors believes the Company needs additional authorized shares to provide the
Company with the flexibility, as the need arises, to use common stock, or
securities convertible into common stock, without the expense and delay of a
special shareholders meeting, for any future equity financings, acquisitions,
stock dividends or stock splits, and for other purposes. Such activities could
require more shares of common stock than are available to the Company.
The newly authorized common stock would be identical to the existing authorized
common stock in all respects. Holders of common stock are entitled to one vote
per share and have the right to cumulate their votes in an election of
directors. All holders of common stock have no conversion rights and no
preemptive or other rights to subscribe for additional securities. Upon
liquidation of the Company, the holders of common stock will be entitled to
share ratably in all assets available for distribution after the payment or
provision for payment of all debts and liabilities and subject to the rights of
the holders of preferred stock which may be outstanding. Each share of common
stock is entitled to such dividends as may from time to time be declared by the
Board of Directors out of funds legally available therefor.
The resolution to be considered and acted upon by the shareholder at the annual
meeting is as follows:
RESOLVED, that Article VI of the Articles of Incorporation of the Company be
amended to read as follows:
ARTICLE VI.
"The number of shares of the total authorized capital stock of the corporation
shall be thirty-two million (32,000,000), all of which are common shares of
capital stock. Each common share of capital stock shall have the par value of
twenty-five cents ($.25). Each share shall entitle the holder thereof to one
vote for each share held by the shareholder, but shareholders shall have no
pre-emptive right to subscribe for or purchase securities of the corporation;
and all shares shall be equal in all respects and shall confer equal rights upon
the holders thereof, including equal rights in and to dividends and
distributions and upon dissolution."
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE APPROVAL
OF THE AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION.
APPROVAL OF AUDITORS
(PROPOSAL #3)
Arthur Andersen LLP , independent certified public accountants, have been the
auditors for the Company since 1966. They have been reappointed by the Board of
Directors, on recommendation of its Audit Committee, as the Company's auditors
for the current fiscal year and shareholder approval of the appointment is
requested. In the event the appointment of Arthur Andersen & Co. should not be
approved by the shareholders, the Board of Directors will make another
appointment to be effective at the earliest feasible time.
A representative of Arthur Andersen LLP is expected to be present at the Annual
Meeting of Shareholders, will have an opportunity to make a statement if he or
she desires to do so, and will be available to respond appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE PROPOSAL
TO APPROVE THE APPOINTMENT OF ARTHUR ANDERSEN LLP
SHAREHOLDER PROPOSALS
In order for a shareholder proposal to be considered for inclusion in the Proxy
Statement for the January 1996 Annual Meeting of Shareholders, the proposal must
be received by the Secretary of the Company in writing no later than August 23,
1996.
GENERAL
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors to file initial reports of ownership and
reports of changes in ownership with the Securities and Exchange Commission and
the NASD. Executive officers and directors are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file. Based
solely on a review of the copies of such forms furnished to the Company and
written representations from the Company's executive officers and directors, the
Company notes that all such reports have been filed in a timely manner.
The management of the Company knows of no matters other than the foregoing to be
brought before the meeting. However, the enclosed proxy gives discretionary
authority in the event that any additional matters should be presented.
The Annual Report of the Company for the fiscal year ended September 30, 1995 is
enclosed herewith.
PROXY
MTS SYSTEMS CORPORATION
ANNUAL MEETING OF SHAREHOLDERS -- JANUARY 30, 1996
The undersigned hereby appoints Donald M. Sullivan and Patrick Delaney (the
"Proxies"), each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated below, all the shares of common
stock of MTS Systems Corporation, held of record by the undersigned on December
1, 1995, at the ANNUAL MEETING OF SHAREHOLDERS to be held on January 30, 1996,
or any adjournment thereof.
(1) ELECTION OF DIRECTORS:
[ ] FOR all nominees
(except as marked below)
[ ] WITHHOLD AUTHORITY
to vote for nominees listed
E. THOMAS BINGER, CHARLES A. BRICKMAN, BOBBY I. GRIFFIN, THOMAS E. HOLLORAN,
RUSSELL A. GULLOTTI, THOMAS E. STELSON, DONALD M. SULLIVAN, LINDA HALL WHITMAN
(INSTRUCTION: To withhold authority to vote for any individual nominee write
that nominee's name on the space provided below.)
(2) The proposal to approve an amendment to the Company's Articles of
Incorporation to increase the number of authorized shares of Common Stock
from 16,000,000 shares to 32,000,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) The proposal to ratify and approve the appointment of Arthur Anderson LLP
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
(continued, and to be completed and signed on the reverse side)
(continued from the other side)
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH PROPOSAL.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THE PROXY WILL BE
VOTED IN FAVOR OF THE PROPOSALS.
Dated: _________________________
Signed: _________________________
Signature of Shareholder
Signed: _________________________
Signature of Shareholder
Please vote, date and sign this
proxy statement as your name is
printed hereon. When signing as
attorney, executory
administrator, trustee, guardian,
etc. give full title as such. If
the stock is held jointly, each
owner should sign. If a
corporation, please sign in full
corporate name by President or
other authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
