<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
ALTRON 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>
ALTRON INCORPORATED
NOTICE OF SPECIAL MEETING IN LIEU OF
THE 1998 ANNUAL MEETING OF STOCKHOLDERS
MAY 21, 1998
To the Stockholders:
A Special Meeting of the Stockholders of Altron Incorporated in lieu of the
1998 Annual Meeting will be held on Thursday, May 21, 1998 at 10:30 A.M. in
Room 3101 at the offices of Hutchins, Wheeler & Dittmar, 101 Federal Street,
Boston, Massachusetts, for the following purposes:
1. To elect Daniel A. Cronin, Jr. to serve as Director for a term of three
years as more fully described in the accompanying Proxy Statement.
2. To consider and approve the Altron Incorporated 1997 Stock Option Plan
for Non-Employee Directors.
3. To consider and approve the First Amendment to the Altron Incorporated
1995 Stock Purchase Plan.
4. To consider and approve the Altron Incorporated 1998 Stock Incentive
Plan.
5. To consider and act upon such other business as may properly come before
the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on April 14, 1998 as
the record date for the meeting. All stockholders of record on that date are
entitled to notice of and to vote at the meeting.
PLEASE COMPLETE AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING IN PERSON.
By order of the Board of Directors,
Anthony J. Medaglia, Jr., Clerk
Wilmington, Massachusetts
April 21, 1998
<PAGE>
ALTRON INCORPORATED
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Altron Incorporated (the "Company") for
use at the Special Meeting of Stockholders in lieu of the 1998 Annual Meeting
to be held on Thursday, May 21, 1998, at the time and place set forth in the
Notice of Meeting, and at any adjournment thereof. The approximate date on
which this Proxy Statement and enclosed form of proxy are first being sent to
stockholders is April 21, 1998.
If the enclosed proxy is properly executed and returned, it will be voted in
the manner directed by the stockholder. If no instructions are specified with
respect to any particular matter to be acted upon, proxies will be voted in
favor thereof. Any person giving the enclosed form of proxy has the power to
revoke it by voting in person at the meeting, or by giving written notice of
revocation to the Clerk of the Company at any time before the proxy is
exercised.
The holders of a majority in interest of all Common Stock issued,
outstanding and entitled to vote are required to be present in person or be
represented by proxy at the meeting in order to constitute a quorum for the
transaction of business. The election of nominees for Director will be decided
by plurality vote. Both abstentions and broker "non-votes" are counted as
present for the purposes of determining the existence of a quorum for the
transaction of business. However, for purposes of determining the number of
shares voting on a particular proposal, abstentions and broker "non-votes" are
not counted as votes cast or shares voting.
The Company will bear the costs of this solicitation. It is expected that
the solicitation will be made primarily by mail, but regular employees or
representatives of the Company (none of whom will receive any extra
compensation for their activities) may also solicit proxies by telephone,
telegraph and in person and arrange for brokerage houses and their custodians,
nominees and fiduciaries to send proxies and proxy material to their
principals at the expense of the Company.
The Company's principal executive offices are located at One Jewel Drive,
Wilmington, Massachusetts 01887, telephone number (978) 658-5800.
RECORD DATE AND VOTING SECURITIES
Only stockholders of record at the close of business on April 14, 1998 are
entitled to notice of and to vote at the meeting. On that date, the Company
had outstanding and entitled to vote 15,549,391 shares of Common Stock with a
par value of $.05 per share. Each outstanding share of the Company's Common
Stock entitles the record holder to one vote.
<PAGE>
ELECTION OF DIRECTORS
On February 2, 1998, the Board of Directors elected to be subject to Section
50A of Chapter 156B of the Massachusetts Business Corporation Law. In
accordance with the foregoing, the Board of Directors is divided into three
classes, with each class as nearly equal in number as possible. One class is
elected each year for a term of three years. It is proposed that the nominee
listed below, whose term expires at this meeting, be elected to serve a term
of three years and until his successor is duly elected and qualified or until
he sooner dies, resigns or is removed. The Company presently has a Board of
Directors of five members.
The persons named in the accompanying proxy will vote, unless authority is
withheld, for the election of the nominee named below. If such nominee should
become unavailable for election, which is not anticipated, the persons named
in the accompanying proxy will vote for such substitute as the Board of
Directors may recommend. The nominee is not related to any Executive Officer
of the Company.
<TABLE>
<CAPTION>
YEAR FIRST
POSITION WITH THE COMPANY OR PRINCIPAL OCCUPATION ELECTED A
NAME OF NOMINEE DURING THE PAST FIVE YEARS AGE DIRECTOR
--------------- ------------------------------------------------- --- ----------
<S> <C> <C> <C>
NOMINATED FOR A TERM ENDING IN 2001:
Daniel A. Cronin, Jr.... President of Northbridge Management Co., Inc., an 69 1979
investment management company. Director of C.R.
Bard, Incorporated.
SERVING A TERM ENDING IN 1999:
Burton Doo.............. Director since 1970 and Executive Vice President 67 1970
since 1983. President, Altron Systems Corporation
since June 1994.
Thomas M. Claflin, II... President of Claflin Capital Management, Inc., a 57 1970
venture capital management company. Director of
Zoll Medical Corporation.
SERVING A TERM ENDING IN 2000:
Samuel Altschuler....... President and a Director since 1970. Since 70 1970
December 1983, Chairman of the Board of Directors.
Director of MASSBANK Corp.
Anthony J. Medaglia, Attorney, stockholder in the law firm of Hutchins, 61 1970
Jr..................... Wheeler & Dittmar, a Professional Corporation.
</TABLE>
BOARD MEETINGS AND COMMITTEES OF THE BOARD
During fiscal 1997, there were ten meetings of the Board of Directors. Each
of the Directors attended at least 75% of such meetings.
The Board of Directors has an Audit Committee, comprised of Messrs. Cronin,
Claflin and Medaglia, which makes recommendations to the Board with respect to
selection of independent auditors and reviews with such auditors the scope of
the audit for each year, the results of the audit when completed and the
recommendations of such auditors. The Audit Committee met once during fiscal
1997 and all of its members attended that meeting.
2
<PAGE>
The Board of Directors has a Stock Option Committee, comprised of Messrs.
Cronin, Claflin and Medaglia, which administers the Company's 1991 Stock
Option Plan. The Stock Option Committee met nine times during fiscal 1997 and
all of its members attended at least 75% of such meetings.
The Company has neither a compensation committee nor a nominating committee.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth as of April 14, 1998, the number and
percentage of outstanding shares of Common Stock beneficially owned (as
defined in accordance with Rule 13d-3 under the Securities Exchange Act of
1934) by (i) all persons known by the Company to own beneficially more than 5%
of the Company's Common Stock, (ii) each Director of the Company, (iii) each
Executive Officer of the Company and (iv) all Directors and Executive Officers
as a group. Unless otherwise indicated, all persons listed hold sole voting
and investment power with respect to the shares listed opposite their
respective names.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
TITLE OF BENEFICIAL PERCENT
NAME CLASS OWNERSHIP OF CLASS
- - ---- ------------ ---------- --------
<S> <C> <C> <C>
Samuel Altschuler (1)(2)(3)(4)................ Common Stock 1,975,640 12.5%
One Jewel Drive
Wilmington, MA 01887
Nancy Altschuler (3).......................... Common Stock 700,312 4.4%
One Jewel Drive
Wilmington, MA 01887
Burton Doo (1)(2)(5).......................... Common Stock 466,466 3.0%
One Jewel Drive
Wilmington, MA 01887
Thomas M. Claflin, II (2)(6).................. Common Stock 172,108 1.1%
Anthony J. Medaglia, Jr. (2)(7)(8)............ Common Stock 124,714 *
Daniel A. Cronin, Jr. (2)(9).................. Common Stock 70,792 *
Peter D. Brennan (1)(10)...................... Common Stock 41,167 *
All Directors and Executive Officers as a
group (6 persons) (11)....................... Common Stock 2,850,887 18.0%
Wasatch Advisors, Inc. (12)................... Common Stock 937,291 6.0%
Sanford C. Bernstein & Co. (12)(13)........... Common Stock 997,900 6.4%
Mellon Bank Corporation (12)(14).............. Common Stock 803,243 5.2%
</TABLE>
- - --------
* Less than one percent
(1) Executive Officer of the Company.
(2) Director of the Company.
(3) Mr. and Mrs. Altschuler are general partners of a nominee partnership
which holds 700,312 shares, all of which are included in the shares
listed as owned by both Mr. and Mrs. Altschuler. Mr. Altschuler has sole
voting rights with respect to these shares and shares investment power
with his wife. Of the shares held of record by the nominee partnership,
232,875 shares are held as a nominee for Mrs. Altschuler as trustee of
trusts established for the benefit of her children, as to which shares
she disclaims beneficial interest. Does not include 192,159 shares held
by the Samuel Altschuler 1980 Irrevocable Trust, in which members of the
Altschuler family have an interest.
3
<PAGE>
(4) Includes 45,667 shares which can be acquired pursuant to options
currently exercisable or exercisable within sixty days.
(5) Includes 45,667 shares which can be acquired pursuant to options
currently exercisable or exercisable within sixty days.
(6) Includes 58,417 shares which can be acquired pursuant to options
currently exercisable or exercisable within sixty days.
(7) Includes 17,212 shares Mr. Medaglia holds as custodian for his children,
as to which he disclaims beneficial ownership.
(8) Includes 15,667 shares which can be acquired pursuant to options
currently exercisable or exercisable within sixty days.
(9) Includes 55,042 shares which can be acquired pursuant to options
currently exercisable or exercisable within sixty days.
(10) Includes 41,167 shares which can be acquired pursuant to options
currently exercisable or exercisable within sixty days.
(11) Includes 261,627 shares which Executive Officers and Directors have the
right to acquire through the exercise of options currently exercisable or
exercisable within sixty days.
(12) According to a Schedule 13G for the year ended December 31, 1997.
(13) Of these shares, 15,500 are held with shared voting power.
(14) Of these shares, 4,747 are held with shared investment power.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate future
filings, including this Proxy Statement, in whole or in part, the following
report and the Performance Graph on page 6 shall not be incorporated by
reference into any such filing.
BOARD OF DIRECTORS AND STOCK OPTION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Company has no formal compensation committee. The Board of Directors
determines and awards compensation for the Company's executive officers and
key employees. In addition, the Stock Option Committee of the Board of
Directors administers the Company's 1991 Stock Option Plan and determines
stock option awards for all employees of the Company, including the Company's
executive officers. Two of the five members of the Board of Directors are
executive officers of the Company. None of the members of the Stock Option
Committee are executive officers or employees of the Company.
The Company's compensation program utilizes a combination of base salaries
and stock option awards made under the Company's 1991 Stock Option Plan. Stock
options are intended to link corporate performance and stockholder return to
executive compensation by providing an incentive to executive officers to
increase the market value of the Company's Common Stock over the long-term.
The Board of Directors reviews the compensation arrangements of the
Company's executive officers on an annual basis. In determining compensation
for the Company's executive officers, the Board of Directors considers the
responsibility associated with and the skills required for the position, the
executive's performance history, the overall profitability of the Company, and
the level of compensation necessary, in the judgment of the Board, to attract
and retain the executive talent required for the success of the Company. In
setting the cash compensation of executives, the Board of Directors also
considers the size of option grants being made by the Stock Option Committee.
In 1993, the Internal Revenue Code of 1986, as amended (the "Code"), was
amended to limit the deduction a public company is permitted for compensation
paid in 1994 and thereafter to its chief executive officer and to the four
most highly compensated executive officers, other than the chief executive
officer. Generally, amounts paid in excess of $1 million to a covered
executive, other than performance-based compensation, cannot be
4
<PAGE>
deducted. In order to qualify as performance-based compensation under the new
tax law certain requirements must be met, including approval of the
performance measures by the stockholders. The Stock Option Committee intends
to consider ways to maximize deductibility of executive compensation, while
retaining the discretion the Stock Option Committee considers appropriate to
compensate executive officers at levels commensurate with their
responsibilities and achievements.
The Stock Option Committee, in determining the number of options granted to
executive officers, considers options granted to such executives in previous
years and the potential value which may be realized upon exercise of the
options as a result of appreciation of the Company's Common Stock during the
term of the option. During fiscal 1997, the Stock Option Committee granted to
each of Burton Doo and Peter D. Brennan, options to purchase 15,000 shares at
an exercise price of $14.75 per share. The exercise price of such options is
equal to the market price of the Company's Common Stock at the time of grant.
The options have a ten year term. The options vest in 33 1/3% increments on
October 22, 1998, 1999 and 2000. The vesting schedule of the options is
intended to provide the long-term incentives described above.
COMPENSATION OF SAMUEL ALTSCHULER, PRESIDENT AND CHAIRMAN
The Board of Directors established the compensation of Samuel Altschuler,
the President and Chairman of the Board of Directors of the Company, for the
fiscal year ended January 3, 1998 using the same criteria that were used to
determine the compensation of other executive officers as described above. Mr.
Altschuler's base compensation remained constant in the fiscal year ended
January 3, 1998.
During fiscal 1997, the Stock Option Committee granted Mr. Altschuler an
option for the purchase of 15,000 shares of the Company's Common Stock at an
exercise price of $16.23 per share. The exercise price is equal to 110% of the
fair market value of the Common Stock at the time of the grant. The option
expires after five years. The option vests in 33 1/3% increments on October
22, 1998, 1999 and 2000. In determining the number of shares subject to the
option granted to Mr. Altschuler, the Stock Option Committee considered the
options previously granted to him, as well as the potential appreciation in
the market price of the Company's Common Stock over the term of the option. In
granting an option with a delayed vesting date, the Stock Option Committee
intended to provide long-term incentives for continued improvement in the
Company's performance. The Stock Option Committee views the determination as
to the size of stock option grants to executive officers, including Mr.
Altschuler, to be an exercise of subjective judgment by the Stock Option
Committee.
The foregoing report has been approved by all members of the Board of
Directors and by all members of the Stock Option Committee.
STOCK OPTION COMMITTEE
BOARD OF DIRECTORS
Thomas M. Claflin, II
Samuel Altschuler Daniel A. Cronin, Jr.
Burton Doo Anthony J. Medaglia, Jr.
Thomas M. Claflin, II
Daniel A. Cronin, Jr.
Anthony J. Medaglia, Jr.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The Company has no formal compensation committee. During fiscal 1997,
Messrs. Altschuler and Doo, who are executive officers of the Company, served
as directors and participated in deliberations of the Company's Board of
Directors concerning executive compensation.
5
<PAGE>
PERFORMANCE GRAPH
The following graph sets forth a comparison of the cumulative total
stockholder return to the Company's stockholders with that of The Nasdaq
National Market Index and an industry index for Standard Industrial
Classification ("SIC") Code 3672, printed circuit boards, for the five-year
period ended January 3, 1998.
The graph assumes $100 was invested on January 3, 1993 in the Company's
Common Stock, in The Nasdaq National Market companies and in the industry
index and also assumes reinvestment of dividends.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
- - ------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Altron $100 $300 $525 $963 $1,011 $638
Nasdaq $100 $120 $126 $163 $ 203 $248
SIC Index $100 $146 $115 $185 $ 246 $336
- - ------------------------------------------------------------------
</TABLE>
6
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth all compensation awarded to, earned by or
paid to the Company's Chief Executive Officer and each of the Company's
Executive Officers (other than the Chief Executive Officer) whose total annual
salary and bonus exceeded $100,000 for all services rendered in all capacities
to the Company for the Company's three fiscal years ended January 3, 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION
COMPENSATION AWARDS
------------- ------------
INCENTIVE
STOCK
NAME AND OPTIONS ALL OTHER
PRINCIPAL POSITION YEAR SALARY (SHARES)(1) COMPENSATION(2)
------------------ ---- -------- ------------ ---------------
<S> <C> <C> <C> <C>
Samuel Altschuler................... 1997 $288,066 15,000 $5,214
Chairman and President 1996 275,610 12,500 5,283
1995 250,455 22,500 3,033
Burton Doo.......................... 1997 $259,477 15,000 $4,760
Executive Vice President 1996 247,488 12,500 4,500
1995 224,148 22,500 2,250
Peter D. Brennan.................... 1997 $169,618 15,000 $4,712
Vice President, Chief Financial Of-
ficer 1996 152,437 12,500 3,923
and Treasurer 1995 137,643 15,000 1,970
</TABLE>
- - --------
(1) Incentive stock options granted for 1995 reflect the 3-for-2 split of the
Company's common stock distributed May 10, 1996.
(2) "All Other Compensation" consists of the Company's contributions to its
401(k) Plan and insurance premiums paid by the Company for the benefit of
the named Executive Officer.
7
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on option grants in fiscal 1997 to
the named Executive Officers. Pursuant to applicable regulations of the
Securities and Exchange Commission, the following table also sets forth the
hypothetical value which might be realized with respect to such options based
on assumed rates of stock appreciation of 5% and 10% compounded annually from
date of grant to the end of the option terms.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED ANNUAL
RATES OF STOCK
PRICE
APPRECIATION
FOR OPTION TERM
INDIVIDUAL GRANTS (1)
---------------------------------------------------- -----------------
PERCENTAGE
OF TOTAL MARKET
NUMBER OF OPTIONS PRICE
SECURITIES GRANTED TO AT
UNDERLYING EMPLOYEES EXERCISE OR DATE
OPTIONS IN FISCAL BASE PRICE OF EXPIRATION
NAME GRANTED 1997 (PER SHARE) GRANT DATE 5% 10%
---- ---------- ---------- ----------- ------ ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Samuel Altschuler....... 15,000(2) 2.4% $16.225 $14.75 10/22/02 $ 39,002 $112,950
Chairman and President
Burton Doo.............. 15,000(3) 2.4% $14.75 $14.75 10/22/07 $139,143 $352,616
Executive Vice Presi-
dent
Peter D. Brennan........ 15,000(3) 2.4% $14.75 $14.75 10/22/07 $139,143 $352,616
Vice President,
Chief Financial Officer
and Treasurer
</TABLE>
- - --------
(1) These values are based on assumed rates of appreciation only. Actual
gains, if any, on shares acquired on option exercises are dependent on the
future performance of the Company's Common Stock. There can be no
assurance that the values reflected in this table will be achieved.
(2) Granted on October 22, 1997. The option has a five-year term and vests in
33 1/3% increments on October 22, 1998, 1999 and 2000.
(3) Granted on October 22, 1997. The option has a ten-year term and vests in
33 1/3% increments on October 22, 1998, 1999 and 2000.
8
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST
FISCAL YEAR AND 1/3/98 OPTION VALUES
The following table provides information on option exercises and on the
value of the named Executive Officers' unexercised options at January 3, 1998.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT 1/3/98 OPTIONS AT 1/3/98(1)
ACQUIRED VALUE ------------------------- -------------------------
NAME ON EXERCISE REALIZED(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Samuel Altschuler....... 33,750 $410,156 40,167 32,333 $216,858 $34,694
Chairman and President
Burton Doo.............. 50,625 $949,394 40,167 32,333 $235,028 $47,026
Executive Vice Presi-
dent
Peter D. Brennan........ -- -- 35,667 32,333 $272,799 $47,026
Vice President,
Chief Financial Officer
and Treasurer
</TABLE>
- - --------
(1) Value of unexercised in-the-money stock options represents the difference
between the exercise prices of the stock options and the closing price of
the Company's Common Stock on The Nasdaq National Market on January 3,
1998.
(2) Value realized on exercise represents the difference between the exercise
prices of stock options exercised and the trading price of the Company's
Common Stock on The Nasdaq National Market on the date of such exercise.
APPROVAL OF AMENDMENT TO ALTRON INCORPORATED
1995 EMPLOYEE STOCK PURCHASE PLAN
There will be presented at the meeting a proposal to approve an amendment to
the Altron Incorporated 1995 Employee Stock Purchase Plan (the "Employee
Plan"), which was adopted by the Company's Board of Directors on March 23,
1998, whereby the provision shall be removed which requires that an individual
be employed by the Company for one year in order to be eligible under the
Employee Plan.
The Board of Directors recommends that the stockholders approve the
amendment to the Employee Plan. The affirmative vote of the holders of at
least a majority of a quorum of the voting stock of the Company voting in
person or by proxy at the meeting will be required for such approval. Set
forth below is a summary of the principal provisions of the Employee Plan. A
copy of the entire plan is available from the Clerk of the Company upon
request.
Number of Shares. The Employee Plan provides that 450,000 shares of the
Company's common stock (subject to proportional adjustment for capital
changes) may be purchased by eligible employees. Shares issued under the
Employee Plan may be either authorized but unissued shares or Treasury shares.
If any Stock Purchase Agreement of any employee participating in the Employee
Plan expires or is terminated, the shares covered thereby which are not
purchased may again be subject to purchase under the Employee Plan.
9
<PAGE>
Eligibility and Administration. All persons employed by the Company or any
participating subsidiary of the Company are eligible to participate in the
Employee Plan, except persons whose customary employment is not more than
twenty hours per week or not more than five months in any calendar year. In
addition, no employee may be granted an option if such employee, immediately
after the option was granted, would own stock possessing five percent or more
of the total combined voting power or value of all classes of stock of the
Company or of any parent corporation or subsidiary corporation. The Employee
Plan is administered by the Stock Option Committee consisting of not less than
three members appointed from time to time by the Board of Directors. Committee
members are ineligible to participate in the Employee Plan. The present
members of the Committee are Thomas M. Claflin, II, Daniel A. Cronin, Jr. and
Anthony J. Medaglia, Jr.
Operation of the Plan. There are two purchase periods within each fiscal
year of the Company during which the Employee Plan is in effect, the first
commencing on the first day of the fiscal year and ending on the last day of
the second fiscal quarter, and the second commencing on the first day of the
third fiscal quarter and continuing through the end of the Company's fiscal
year. Eligible employees may elect to become participants in the Employee Plan
for a purchase period by completing a Stock Purchase Agreement prior to the
first day of the purchase period for which the election is made. There is no
limit on the number of purchase periods for which an eligible employee may
elect to become a participant in the Employee Plan. In the Stock Purchase
Agreement, the participating employee authorizes regular payroll deductions
amounting to such full percentage of the participant's base compensation as
the participant shall designate. Such payroll deductions cannot amount to less
than five percent or more than ten percent of the participant's basic
compensation. Each participating employee receives an option, effective on the
first day of the purchase period, to purchase shares of common stock on the
exercise date, which is the last business day of the purchase period. The
number of shares which a participant may purchase under the option, up to a
maximum of 500 shares per purchase period, is the quotient of the aggregate
payroll deductions in the purchase period authorized by the participant,
divided by the purchase price. No employee can be granted an option under the
Employee Plan to purchase in any one calendar year shares of the Company's
common stock having a fair market value (as of the date the option to purchase
is granted) in excess of $25,000. The purchase price of shares of the
Company's stock under the Employee Plan is the lesser of (i) 90% of the
average fair market value of the shares of common stock of the Company for the
five business days immediately preceding the first day of the relevant
purchase period or (ii) 90% of such value for the five business days
immediately preceding the relevant exercise date.
Termination of Participation. A participant has the right to cancel
participation in the Employee Plan for a purchase period by delivering a
notice of cancellation to the Company not later than ten days before the
exercise date for such purchase period. In the event of such cancellation, the
participant will receive in cash the amount credited to his or her account.
Upon a participant's death or other termination of employment, participation
in the Employee Plan shall automatically cease and the entire balance credited
to such participant's account shall be automatically refunded to him or her,
or, in the event of death, to the participant's designated beneficiary, if
any, under a Company group insurance plan, or otherwise to his or her estate.
Termination and Amendment of the Plan. The Employee Plan shall continue in
effect through the end of the Company's 2004 fiscal year, although the Board
of Directors has the right to terminate the Employee Plan at any time, but
such termination shall not affect options then outstanding under the Employee
Plan. The Board of Directors may also amend the Employee Plan at any time but
no such amendment shall adversely affect the options previously granted under
the Employee Plan without the consent of the participants and no such
10
<PAGE>
amendment may either increase the total number of shares of common stock which
may be purchased by all participants, change the class of employees eligible
to participate, decrease the purchase price, extend the purchase period, or
extend the term of the Employee Plan, without the approval of the Company's
shareholders.
APPROVAL OF ALTRON INCORPORATED 1998 STOCK INCENTIVE PLAN
There will be presented at the meeting a proposal to approve the Altron
Incorporated 1998 Stock Incentive Plan (the "1998 Incentive Plan"), which was
adopted by the Company's Board of Directors on March 23, 1998. The Board of
Directors recommends that the stockholders approve the 1998 Incentive Plan.
The affirmative vote of the holders of at least a majority of a quorum of the
voting stock of the Company voting in person or by proxy at the meeting will
be required for such approval. Set forth below is a summary of the principal
provisions of the 1998 Incentive Plan. A copy of the entire plan is available
from the Clerk of the Company upon request.
The 1998 Incentive Plan permits the grant of stock options, which may be
either incentive stock options ("ISOs") meeting the requirements of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code") or
nonqualified options which are not intended to meet the requirements of the
Code, and stock awards. The maximum number of shares available for stock
options and stock awards granted under the 1998 Incentive Plan is 1,500,000
shares of the Company's Common Stock subject to adjustment for capital
changes. Shares issued under the 1998 Incentive Plan may be either authorized
but unissued shares or shares held in treasury. To the extent that any stock
option lapses, terminates, expires or otherwise is canceled without the
issuance of shares of Common Stock, or any stock award is settled in cash, the
shares of Common Stock covered by such option or award shall again be
available for the granting of stock options or awards under the 1998 Incentive
Plan.
Following approval of the 1998 Incentive Plan by the stockholders, no
further options will be granted under the Company's 1991 Stock Option Plan.
Administration. At the discretion of the Company's Board of Directors, the
1998 Incentive Plan is administered either (i) by the full Board of Directors
of the Company or (ii) by a Committee (the "Committee") consisting of two or
more members of the Company's Board of Directors. The present members of the
Committee are Thomas M. Claflin, II, Daniel A. Cronin, Jr. and Anthony J.
Medaglia, Jr. If the Board administers the 1998 Incentive Plan, references to
the Committee include the Board. The Committee has the authority to adopt,
amend and rescind such rules and regulations as, in its opinion, may be
advisable in the administration of the 1998 Incentive Plan.
Termination and Amendment. Unless sooner terminated, the 1998 Incentive Plan
shall terminate ten years from March 23, 1998, the date upon which it was
adopted by the Board of Directors of the Company. The Board of Directors may
at any time terminate the 1998 Incentive Plan or make such modification or
amendment thereof as it deems advisable; provided, however, that the Board of
Directors may not, without the approval of the shareholders of the Company,
increase the maximum number of shares for which options may be granted or
change the designation of the class of persons eligible to receive options
under the 1998 Incentive Plan. The Committee may terminate, amend or modify
any outstanding option without the consent of the option holder, provided,
however, that without the consent of the optionee, the Committee shall not
change the number of shares subject to an option, nor the exercise price
thereof, nor extend the term of such option.
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Eligibility to Participate. Options designated as incentive stock options
may be granted only to employees of the Company or any subsidiary. Non-
qualified options may be granted to any officer, employee, consultant or
director of the Company or any of its subsidiaries. No option designated as an
incentive stock option shall be granted to any employee of the Company or any
subsidiary if such employee owns, immediately prior to the grant of an option,
stock representing more than 10% of the combined voting power of all classes
of stock of the Company or a parent or a subsidiary, unless the purchase price
for the stock under such option is at least 110% of its fair market value at
the time the option is granted and the option, by its terms, is not
exercisable more than five years from the date it is granted.
The maximum number of shares of the Company's Common Stock with respect to
which an option or options may be granted to any employee in any calendar year
shall not exceed 250,000 shares, taking into account shares subject to options
granted and terminated, or repriced, during such calendar year.
Terms and Provisions of Options. Options granted under the 1998 Incentive
Plan are exercisable at such times and during such periods as set forth in the
option agreement, but no incentive stock option granted under the 1998
Incentive Plan can have a term in excess of ten years from the date of grant,
and no non-qualified stock option granted under the 1998 Incentive Plan can
have a term in excess of 15 years from the date of grant. The option agreement
may contain such provisions and conditions as may be determined by the
Committee. The option exercise price for options designated as non-qualified
stock options granted under the 1998 Incentive Plan is determined by the
Committee. The option exercise price for ISOs granted under the 1998 Incentive
Plan shall be no less than fair market value of the Common Stock of the
Company at the time the option is granted. Options granted under the 1998
Incentive Plan may provide for the payment of the exercise price by delivery
of cash or shares of Common Stock of the Company owned by the optionee having
a fair market value equal in amount to the exercise price of the options being
exercised, or any combination thereof, provided however that the payment of
the exercise price by delivery of shares of Common Stock of the Company owned
by the optionee may be made only if the payment does not result in a charge to
earnings for financial accounting purposes, as determined by the Committee.
The right of any optionee to exercise an option granted to him or her shall
not be assignable or transferable by the optionee other than by will or the
laws of descent and distribution, except that an optionee may transfer options
that are not incentive stock options to the optionee's spouse or children or
to a trust for the benefit of the optionee or the optionee's spouse or
children. ISOs are exercisable during the lifetime of the optionee only by the
optionee. Any option granted under the 1998 Incentive Plan is null and void
and without effect upon the bankruptcy of the optionee to whom the option is
granted, or upon any attempted assignment or transfer, except as otherwise
provided in the 1998 Incentive Plan.
An option granted to any employee optionee who ceases to be an employee of
the Company or one of its subsidiaries shall terminate one month after the
date such optionee ceases to be an employee of the Company or one of its
subsidiaries. If such termination of employment is because of dismissal for
cause or because the employee is in breach of any employment agreement, such
an option will terminate immediately on the date the optionee ceases to be an
employee of the Company or one of its subsidiaries. If such termination of
employment is because the optionee has become permanently disabled, the option
shall terminate on the last day of the twelfth month from the date such
optionee ceases to be an employee. In the event of the death of the optionee,
the option shall terminate on the last day of the twelfth month from the date
of death. In no event shall an option be exercisable after the date upon which
it expires by its terms. The Committee has the authority to extend the
expiration date of any outstanding option in circumstances in which it deems
such action to be appropriate,
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provided that no such extension shall extend the term of an option beyond the
date on which the option would have expired if no termination of the
optionee's employment had occurred.
An option granted to an employee optionee who ceases to be an employee of
the Company or one of its subsidiaries shall be exercisable only to the extent
that the right to purchase shares under such option has accrued and is in
effect on the date such optionee ceases to be an employee of the Company or
one of its subsidiaries. In the event of the death of any optionee, the option
granted to such optionee may be exercised by the estate of such optionee, or
by any person or persons who acquired the right to exercise such option by
bequest or inheritance or by reason of the death of such optionee.
Recapitalization; Reorganization; Change in Control. The 1998 Incentive Plan
provides that the number and kind of shares as to which options or stock
awards may be granted thereunder and as to which outstanding options or awards
then unexercised shall be exercisable shall be adjusted to prevent dilution in
the event of any reorganization, merger, consolidation, recapitalization,
reclassification, stock split-up, combination of shares or dividends payable
in capital stock. In addition, unless otherwise determined by the Committee in
its sole discretion, in the case of any sale or conveyance to another entity
of all or substantially all of the property and assets of the Company or a
Change in Control as defined in the 1998 Incentive Plan, the purchaser of the
Company's assets or stock may deliver to the optionee the same kind of
consideration that is delivered to the shareholders of the Company as a result
of the sale, conveyance or Change in Control or the Committee may cancel all
outstanding options in exchange for consideration in cash or in kind, which
consideration shall be equal in value to the value of those shares of stock or
other securities the optionee would have received had the option been
exercised (to the extent then exercisable) and no disposition of the shares
acquired upon such exercise been made prior to such sale, conveyance or Change
in Control, less the option price therefor.
The Committee shall also have the power to accelerate the exercisability of
any options, notwithstanding any limitations in the 1998 Incentive Plan or in
the option agreement, upon such a sale, conveyance or Change in Control. Upon
such a sale, conveyance or a Change in Control the Committee may, in its sole
discretion, amend any award agreement issued under the 1998 Incentive Plan in
such manner as it deems appropriate, including without limitation, by
amendments that advance the dates upon which any or all outstanding awards
shall become free of restrictions or shall become issued or payable, or that
advance the dates upon which any or all outstanding awards shall terminate.
Change in Control is defined in the 1998 Incentive Plan.
Upon dissolution or liquidation of the Company, all options granted under
the 1998 Incentive Plan shall terminate, but each optionee shall have the
right, immediately prior to such dissolution or liquidation, to exercise his
or her option to the extent then exercisable. The Committee shall have the
right to accelerate the vesting of any award or take such other action with
respect thereto as the Committee shall in its sole discretion determine in the
event of any contemplated dissolution or liquidation of the Company.
Stock Awards. The Committee may grant, subject to the limitation on the
number of shares of Common Stock available under the 1998 Incentive Plan,
stock awards to employees and other key individuals engaged to provide
services to the Company and its subsidiaries. A stock award may be made in
stock or denominated in
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stock subject to final settlement in cash or stock. Each stock award granted
will be subject to such terms and conditions as the Committee, in its sole
discretion, shall determine and establish.
It is not possible to identify the non-employee directors who will receive
stock options or awards under the 1998 Incentive Plan in the future, nor the
amount of options or awards which will be granted thereunder.
APPROVAL OF ALTRON INCORPORATED
1997 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
There will be presented at the meeting a proposal to approve the Altron
Incorporated 1997 Stock Option Plan for Non-Employee Directors (the "Director
Plan"), which was adopted by the Company's Board of Directors on October 22,
1997.
Under Nasdaq regulations, any plan for over 25,000 shares, any of which may
be granted to a Director, is to be approved by the stockholders. The Board of
Directors recommends the stockholders approve the Director Plan. The
affirmative vote of the holders of at least a majority of the voting stock of
the Company voting in person or by proxy at the meeting will be required for
such approval. Set forth below is a summary of the principal provisions of the
Director Plan.
The Director Plan provides for a one-time grant of non-qualified stock
options of the Company to the non-employee directors of the Company. Options
granted under the Director Plan vest on October 22, 1998 with respect to one-
third of the shares granted under such options, with an additional one-third
vesting on each subsequent anniversary date. Additionally, the Director Plan
provides that upon a Change in Control of the Company, all options will
accelerate and be immediately fully vested and exercisable.
On October 22, 1997, options to purchase 15,000 shares of Common Stock of
the Company were granted to each of Thomas M. Claflin, II, Daniel A. Cronin,
Jr. and Anthony J. Medaglia, Jr., at an exercise price of $14.75 per share.
The high and low sales prices of the Company's Common Stock on the Nasdaq
National Market on April 14, 1998 were $14.50 and $14.00, respectively.
TAX EFFECTS OF PLAN PARTICIPATION
Options granted under the 1998 Incentive Plan are intended to be either
incentive stock options, as defined in Section 422 of the Code, or non-
qualified stock options. Options under the Director Plan are intended to be
non-qualified stock options.
Incentive Stock Options. Except as provided below with respect to the
alternative minimum tax, the optionee will not recognize taxable income upon
the grant or exercise of an incentive stock option. In addition, if the
optionee holds the shares received pursuant to the exercise of the option for
more than one year after the date of transfer and for more than two years
after the option is granted, the optionee will recognize long-term capital
gain or loss upon the disposition of the stock measured by the difference
between the option exercise price and the amount received for such shares upon
disposition.
In the event that the optionee disposes of the stock prior to the expiration
of the required holding periods (a "disqualifying disposition"), the optionee
generally will realize ordinary income to the extent of the lesser of (i) the
fair market value of the stock at the time of exercise over the exercise
price, or (ii) the amount received for
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the stock upon disposition over the exercise price. The basis in the stock
acquired upon exercise of the option in such event will equal the amount of
income recognized by the optionee plus the option exercise price. Upon
eventual disposition of the stock, the optionee will recognize long-term or
short-term capital gain or loss, depending on the holding period of the stock
and the difference between the amount realized by the optionee upon
disposition of the stock and his basis in the stock.
For alternative minimum tax purposes, generally, the excess of the fair
market value of stock on the date of the exercise of the incentive stock
option over the exercise price of the option is included in alternative
minimum taxable income for alternative minimum tax purposes. If the
alternative minimum tax does apply to the optionee, an alternative minimum tax
credit may reduce the regular tax of the optionee on future income including
gain upon eventual disposition of the stock.
The Company will not be allowed an income tax deduction upon the grant or
exercise of an incentive stock option. Upon a disqualifying disposition by the
optionee of shares acquired upon exercise of the incentive stock option, the
Company will be allowed a deduction in an amount equal to the ordinary income
recognized by the optionee.
Under proposed regulations issued by the Internal Revenue Service, the
exercise of an option with previously acquired stock of the Company will be
treated as, in effect, two separate transactions. Pursuant to Section 1036 of
the Code, the first transaction will be a tax-free exchange of the previously
acquired shares for the same number of new shares. The new shares will retain
the basis and, except, as provided below, the holding periods of the
previously acquired shares. The second transaction will be the issuance of
additional new shares having a value equal to the difference between the
aggregate fair market value of all of the new shares being acquired and the
aggregate option exercise price for those shares. Because the exercise of an
incentive stock option does not result in the recognition by the optionee of
income, this issuance will also be tax-free (unless the alternative minimum
tax applies, as described above). The optionee's basis in these additional
shares will be zero and the optionee's holding period for these shares will
commence on the date on which the shares are transferred. For purposes of the
one and two-year holding period requirements which must be met for favorable
incentive stock option tax treatment to apply, the holding periods of
previously acquired shares are disregarded.
Non-Qualified Stock Options. As in the case of incentive stock options, no
income is recognized by the optionee on the grant of a non-qualified stock
option. On the exercise by an optionee of a non-qualified option, generally
the excess of the fair market value of the stock when the option is exercised
over its cost to the optionee will be (a) taxable to the optionee as ordinary
income and (b) generally deductible for income tax purposes by the Company.
The Internal Revenue Service will treat the exercise of a non-qualified
stock option with already owned stock of the Company as two transactions.
First, there will be a tax-free exchange of the old shares for a like amount
of new shares under Section 1036 of the Code, with the new shares retaining
the basis and holding periods of the old shares. Second, the issuance of
additional new shares (representing the spread between the fair market value
of all the new shares and the option price) is taxable to the employee as
ordinary income under Section 83 of the Code, as is the case with any non-
qualified option. The new shares will have a basis equal to the spread between
the fair market value of the new shares and the option price.
The optionee's tax basis in his stock will equal his cost for the stock plus
the amount of ordinary income he had to recognize with respect to the non-
qualified stock option. Accordingly, upon a subsequent disposition of stock
acquired upon the exercise of a non-qualified option, the optionee will
recognize short-term or long-term
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capital gain or loss, depending upon the holding period of the stock, equal to
the difference between the amount realized upon disposition of the stock by
the optionee and his basis in the stock.
Stock Awards. An employee who receives an award of stock that is not subject
to a substantial risk of forfeiture will recognize ordinary income on the
award date in an amount equal to the fair market value of the stock on the
award date less the purchase price, if any, paid for such stock. If the stock
is subject to a substantial risk of forfeiture, the employee will recognize
ordinary income on the date such forfeiture restriction lapses in an amount
equal to the fair market value of stock on that date less the purchase price,
if any, paid for such stock, unless the employee makes a so-called Section
83(b) election. If a Section 83(b) election is made, the employee will
recognize ordinary income on the award date in an amount equal to the fair
market value of the stock on the award date less the purchase price, if any,
paid for such stock. Income tax withholding will be required by the Company
with respect to income recognized by the employee. The employee's basis in a
stock award will include the cost of such stock, if any, increased by the
amount of income recognized by the employee. Upon eventual sale of the stock,
the employee will recognize capital gain or loss, as the case may be, measured
by the difference between the amount realized on the sale and the employee's
basis in the stock.
The Company will be allowed a deduction in an amount equal to the income
recognized by the employee. The deduction will be allowed in the Company's tax
year in which the date that the employee recognized such income occurs.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Arthur Andersen LLP, certified public
accountants, to act as independent public auditors to examine the financial
statements of the Company for the fiscal year ending January 2, 1999. A
representative of Arthur Andersen LLP is expected to be present at the meeting
and will have the opportunity to make a statement if he or she so desires and
to respond to appropriate questions.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE
ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Executive Officers and Directors and persons owning more than 10% of the
outstanding Common Stock of the Company to file reports of ownership and
changes in ownership with the Securities and Exchange Commission. Executive
Officers, Directors and greater than 10% holders of Common Stock are required
by SEC regulation to furnish the Company with copies of all Section 16(a)
forms they file.
Based solely on copies of such forms furnished as provided above, or written
representations that no Forms 5 were required, the Company believes that all
Section 16(a) filing requirements applicable to its Executive Officers,
Directors and owners of greater than 10% of its Common Stock were complied
with in fiscal 1997, except that, through inadvertence, each of Peter D.
Brennan, Thomas M. Claflin, II and Daniel A. Cronin, Jr. did not timely file a
Form 5, regarding option grants.
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STOCKHOLDER PROPOSALS
Under regulations adopted by the Securities and Exchange Commission,
stockholder proposals must be submitted to the Clerk of the Company not later
than December 14, 1998 in order to be considered for inclusion in the proxy
materials for the Annual Meeting to be held in 1999. Receipt by the Company of
any such proposal from a qualified stockholder in a timely manner will not
ensure its inclusion in the proxy material because there are other
requirements in the proxy rules for such inclusion.
OTHER MATTERS
Management knows of no other matters which may properly be and are likely to
be brought before the meeting. However, if any other matters properly come
before the meeting, the persons named in the enclosed proxy will vote said
proxy in accordance with their best judgment.
10-K REPORT
THE COMPANY WILL PROVIDE EACH BENEFICIAL OWNER OF ITS SECURITIES WITH A COPY
OF ITS ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND
SCHEDULES THERETO, REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION FOR THE COMPANY'S MOST RECENT FISCAL YEAR WITHOUT CHARGE UPON
RECEIPT OF A WRITTEN REQUEST FROM SUCH PERSON. SUCH REQUESTS SHOULD BE
DIRECTED TO PETER D. BRENNAN, VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND
TREASURER, ALTRON INCORPORATED, ONE JEWEL DRIVE, WILMINGTON, MASSACHUSETTS
01887.
VOTING PROXIES
The Board of Directors recommends an affirmative vote on the proposals
specified. Proxies will be voted as specified. If signed proxies are returned
without specifying an affirmative or negative vote on any proposal the shares
represented by such proxies will be voted in favor of the Board of Directors'
recommendations.
By order of the Board of Directors,
Anthony J. Medaglia, Jr., Clerk
Wilmington, Massachusetts
April 21, 1998
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