SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. 1)
Filed by Registrant X
---
Filed by a Party other than the Registrant
Check the appropriate box:
Preliminary Proxy Statement
---
X Definitive Proxy Statement
---
X Definitive Additional Materials
---
Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
---
OPTICAL COATING LABORATORY, INC.
--------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
X $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
--- or 14a-6(j)(2)
$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 O-11
OPTICAL COATING LABORATORY, INC.
2789 Northpoint Parkway, Santa Rosa, California 95407-7397
Telephone 707/545-6440, Facsimile 707/525-7410
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 30, 1995
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders of
Optical Coating Laboratory, Inc. to be held on Thursday, March 30, 1995, at
4:00 p.m. in the Sonoma Ballroom of The Doubletree Hotel, 3555 Round Barn
Boulevard, Santa Rosa, California, for the following purposes:
1. To elect directors of the Company to serve for the ensuing
year and until their successors are elected.
2. To approve the 1995 Incentive Compensation Plan.
3. To ratify the appointment of Deloitte & Touche LLP as
independent auditors of the Company for the year ending
October 31, 1995.
4. To transact 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 January 31, 1995,
as the record date for determining those stockholders who will be entitled to
vote at the meeting.
Whether or not you plan to attend the meeting, please review this material,
decide how you wish to vote, execute the enclosed proxy card and return it
promptly in the envelope provided. If a sufficient number of stockholders do
this, the necessity for expensive and time consuming additional solicitation
will be avoided.
Thank you for your cooperation in returning your proxy card as soon as
possible.
By Order of the Board of Directors,
JOSEPH C. ZILS
General Counsel and Secretary
Santa Rosa, California
March 10, 1995
YOUR VOTE IS IMPORTANT
YOU ARE URGED TO DATE, SIGN AND PROMPTLY RETURN YOUR PROXY SO THAT YOUR SHARES
MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND IN ORDER THAT THE PRESENCE OF
A QUORUM MAY BE ASSURED. THE PROMPT RETURN OF YOUR SIGNED PROXY, REGARDLESS OF
THE NUMBER OF SHARES YOU HOLD, WILL AID THE COMPANY IN REDUCING THE EXPENSE OF
ADDITIONAL PROXY SOLICITATION. THE GIVING OF SUCH PROXY DOES NOT AFFECT YOUR
RIGHT TO VOTE IN PERSON IN THE EVENT YOU ATTEND THE MEETING.
OPTICAL COATING LABORATORY, INC.
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 30, 1995
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by
Management on behalf of the Board of Directors of Optical Coating Laboratory,
Inc. (hereinafter called "the Company") of proxies to be voted at the Annual
Meeting of Stockholders to be held at 4:00 p.m. on Thursday, March 30, 1995,
in the Sonoma Ballroom of The Doubletree Hotel, 3555 Round Barn Boulevard,
Santa Rosa, California. The Company's Annual Report to Stockholders was first
mailed to stockholders on or about February 24, 1995. This Proxy Statement
and proxy card were first mailed to stockholders on or about March 10, 1995.
VOTING RIGHTS AND SOLICITATION
The Board of Directors of the Company has fixed the close of business on
January 31, 1995, as the record date (hereinafter the "Record Date") for the
determination of the stockholders of the Company entitled to vote at the
Annual Meeting (the "Stockholders" or "Stockholders of Record"). As of the
Record Date, the Company had 8,978,152 shares of common stock, $.01 par value
(the "Common Stock"), issued and outstanding. All of the shares of the
Company's Common Stock outstanding on the Record Date are entitled to vote
at the Annual Meeting, and Stockholders of Record entitled to vote at the
meeting will have one vote for each share so held on the matters to be
voted upon.
Any Stockholder of Record executing a proxy retains the right to revoke it by
notice in writing to the Secretary of the Company at any time prior to its
use. All properly executed proxies received by Management and not revoked
will be voted as directed or, if no direction is indicated, will be voted for
the election of the nominees of Management and in favor of the other items
presented by Management.
The expense of soliciting proxies in the enclosed form will be paid by the
Company. In addition to the original and follow-on mailings of the proxies
and soliciting materials, employees of the Company may solicit proxies by
mail, telephone, facsimile and personal interviews. The Company will request
brokers, custodians, nominees and other record holders to forward the proxies
and soliciting materials to persons for whom they hold shares of the Company
and to request authority for the exercise of proxies; in such cases, the
Company will reimburse such holders for their reasonable expenses.
STOCKHOLDER PROPOSALS
Stockholder proposals to be presented at the Annual Meeting for 1996 must be
received by the Company no later than October 27, 1995, for inclusion in the
proxy statement relating to that meeting. No Stockholder proposals were
received for presentation at the Annual Meeting for 1995.
PROPOSAL 1:
ELECTION OF DIRECTORS
All proxies in the form enclosed received by Management will be voted (unless
authority to vote is withheld) for the election of the nominees listed on
pages 2 and 3 as the directors of the Company to hold office until the next
Annual Meeting of Stockholders and until their respective successors shall
be elected and qualified. So far as is known to Management, all of the
nominees will be candidates at the Annual Meeting, but should any of the
nominees not be a candidate at the Annual Meeting, all such proxies so
received will be voted in favor of the remainder of those nominated and for
such substitute nominees (if any) as shall be designated by the present Board
of Directors to fill the vacancy. In the event that additional persons are
nominated for election as directors, the proxies intend to vote all shares
in such a manner as will assure the election of as many of the nominees
listed below as possible. The specific nominees to be voted for will be
determined by the proxies.
Pursuant to the Company's By-Laws, unless waived by the Board of Directors,
to effect the nomination for director of any person other than the nominees
listed on pages 2 and 3, the Board of Directors must have received notice of
such person's candidacy at least 90 days before the date that had been the
Record Date of the Company's previous year's Annual Meeting. Accordingly,
notice of any such individual's candidacy must have been received by the
Company by October 30, 1994. No such notice was received.
(/R>
Biographical summaries and ages as of the Record Date of individuals nominated
by the Board of Directors for election as directors appear below and on page 3
of this Proxy Statement. Data with respect to the number of shares of the
Company's Common Stock beneficially owned by each of them, directly or
indirectly, as of the Record Date, appears on pages 5 and 6 of this Proxy
Statement.
NOMINEES
HERBERT M. DWIGHT, JR.; AGE 64; CHAIRMAN OF THE BOARD, PRESIDENT, CHIEF
EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER OF THE COMPANY.
Mr. Dwight was elected to the positions of Chairman of the Board, President
and Chief Executive Officer on August 19, 1991. He was appointed Chief
Financial Officer effective December 17, 1993. Mr. Dwight was President and
Chief Executive Officer of Spectra Physics from 1967 to 1988 and Chairman,
President and Chief Executive Officer of Superconductor Technologies, Inc.
from 1988 through August 1991 and continued to serve as Chairman from 1991
until his resignation in May 1994. Mr. Dwight also serves as a director of
Laserscope Surgical Systems, Applied Materials, Inc., Applied Magnetics
Corporation and Trans Ocean Limited.
DOUGLAS C. CHANCE; AGE 53; PRESIDENT AND CHIEF EXECUTIVE OFFICER, WYSE
TECHNOLOGY.
Mr. Chance has been a director of the Company since 1973. He was appointed
President and Chief Executive Officer of Wyse Technology in November 1994
where he continues to serve in those capacities. Mr. Chance served as
President, Chief Executive Officer and director of Octel Communications
Corporation from October 1990 to November 1993. Following his resignation
as President and Chief Executive Officer, Mr. Chance served as a consultant
and director of Octel Communications Corporation until November 1994. Mr.
Chance was Executive Vice President, Networked Systems Sector, Hewlett-
Packard Company, from May 1987 to October 1990 and held various executive
and administrative positions with Hewlett-Packard Company from 1966 to 1987.
JOHN MCCULLOUGH; AGE 62; VICE PRESIDENT OF THE COMPANY
Mr. McCullough has been a director of the Company since 1985 and has been a
Vice President of the Company since January 1992. Mr. McCullough served as
Executive Vice President of the Company from December 1988 to January 1992
and as Senior Vice President of the Company from 1978 to December 1988.
JULIAN SCHROEDER; AGE 48; VICE PRESIDENT, CORPORATE FINANCE, B D S SECURITIES
CORPORATION
Mr. Schroeder has been a director of the Company since 1989. He has been Vice
President, Corporate Finance, of B D S Securities Corporation (formerly Smith
Management Corp.) since March 1989. He was a principal of Schroeder Consulting
Company, a financial consulting firm, from January 1985 to February 1989.
RENN ZAPHIROPOULOS; AGE 68; RETIRED PRESIDENT AND CHIEF EXECUTIVE OFFICER OF
VERSATEC, INC. (A XEROX COMPANY)
Mr. Zaphiropoulos has been a director of the Company since 1988. Mr.
Zaphiropoulos was President and Chief Executive Officer of Versatec, Inc. (A
Xerox Company) from 1969 until his retirement on January 1, 1988, and
Corporate Vice President of Xerox Corporation from 1984 until his retirement
on January 1, 1988. He currently is a director of various privately-held
corporations and holds executive seminars in management worldwide.
COMPENSATION OF DIRECTORS
Directors who are not otherwise employees of the Company were paid an annual
retainer in fiscal 1994 of $12,000 and received an additional fee of $1,250
per day for attendance at any meetings of the Board or a Committee of the
Board. Directors who are employees of the Company receive no separate
compensation for serving as a director. Directors may be reimbursed for
any expenses related to membership on the Board.
The Board of Directors has established an ongoing annual award of Common Stock
of the Company to the three outside, non-employee directors. Under this
program, 1,000 shares of the Common Stock of the Company, plus payment of
associated withholding taxes, are awarded annually to each of the outside
directors as part of their remuneration for their services as directors.
The term of this award is five years beginning April 1992 and expiring
April 1997. Accordingly, for fiscal 1994, Directors Chance, Schroeder and
Zaphiropoulos were each awarded 1,000 shares of the Common Stock of the
Company with a fair market value at the time of award of $6,750, plus
payment of related withholding taxes.
BOARD MEETINGS AND COMMITTEES
During fiscal 1994, there were four regular meetings of the Board of
Directors. Attendance by each director at the meetings of the Board and
its Committees during fiscal 1994 was 100%.
Audit Committee. The Board of Directors has an Audit Committee consisting of
the three outside, non-employee directors: Julian Schroeder (Chairman),
Douglas C. Chance and Renn Zaphiropoulos, who also serve as members of the
Compensation and Stock Option Committee. The Audit Committee met four times
in fiscal 1994. The Audit Committee meets independently with representatives
of the Company's independent auditors and with representatives of Management.
The Committee recommends the engagement of the Company's independent
auditors, consults with the auditors as to the adequacy of internal
accounting procedures and reviews and approves financial statements and
reports.
Compensation and Stock Option Committee. The Board of Directors has a
Compensation and Stock Option Committee consisting of the three outside, non-
employee directors with Mr. Zaphiropoulos serving as Chairman. The Committee
met three times during fiscal 1994. The Committee is responsible for
reviewing and reporting to the Board on incentive compensation plans, stock
option grants and the administration of the Company's various incentive
compensation and stock option plans, as well as reviewing and reporting to
the Board on recommended annual compensation for officers, including
salaries, bonuses, the Company's Management Incentive Plan and other
forms of compensation and remuneration.
Executive Committee. The Company has an Executive Committee consisting
of three directors: Herbert M. Dwight, Jr. (Chairman), Douglas C. Chance
and John McCullough. Pursuant to the Company's By-Laws, the Executive
Committee has all the powers and authority of the Board of Directors in
the management of the business and affairs of the Company, except those
powers which by law cannot be delegated by the Board of Directors. The
Executive Committee did not meet during fiscal 1994.
There is no nominating committee of the Board or any committee performing the
functions of such a committee.
COMMON STOCK OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table provides certain information as of the Record Date
regarding beneficial ownership of the Company's Common Stock by (i) each
person or group who, to the Company's knowledge, beneficially owns more than
5% of the outstanding shares of the Company's Common Stock; (ii) each of
the Company's directors; (iii) the Chief Executive Officer and each of the
Company's four other most highly compensated executive officers (the "Named
Executive Officers"); and (iv) all directors and executive officers as a
group:
<TABLE>
COMMON STOCK
NO. OF SHARES PERCENT OF
BENEFICIALLY OUTSTANDING
OWNED STOCK
DIRECTORS, OFFICERS AND 5% STOCKHOLDERS
PRINCIPAL STOCKHOLDERS:
<S> <C> <C>
Employee Stock Ownership Plan
of the Company (1) 1,577,104 17.6%
c/o Optical Coating Laboratory, Inc.
2789 Northpoint Parkway
Santa Rosa, California 95407-7397
Hakuto Co., Ltd. 907,440 10.1%
1-13 Shinjuku 1-Chome
Shinjuku-ku, Tokyo 150, Japan
The TCW Group, Inc.(2) 517,500 5.8%
865 South Figueroa Street
Los Angeles, CA 90017
Dimensional Fund Advisors Inc.(3) 450,414 5.0%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
DIRECTORS:
Douglas C. Chance 17,200 .2%
John McCullough(4) 48,590 .5%
Julian Schroeder 18,500 .2%
Renn Zaphiropoulos 7,000 *
NAMED EXECUTIVE OFFICERS:
Herbert M. Dwight, Jr.(5) 614,658 6.4%
Klaus F. Derge(6) 83,500 .9%
Laurence D. Parson (7) 38,899 .4%
Norman E. Strandlund(8) 90,434 1.0%
Josef Wally(9) 21,264 .2%
All Directors and Executive Officers
as a group (13 persons)(10) 1,133,702 11.5%
</TABLE>
_________________
* Represents less than 0.1% of the outstanding Common Stock
(1) Pursuant to the terms of the Trust Agreement under the Company's
Employee Stock Ownership Plan ("ESOP+"), the Trustees vote the shares held in
the ESOP+ upon instructions given by individual participants as to the
individual participant's vested shares, and in the discretion of the Trustees
otherwise.
(2) The number of shares shown above as owned by The TCW Group, Inc.
was communicated to the Company by copy of a Schedule 13G filing under the
Securities Exchange Act of 1934 (the "1934 Act") filed by The TCW Group, Inc.
on February 15, 1995. In this Schedule 13G, The TCW Group, Inc., identifying
itself as a Parent Holding Company in accordance with Sec. 240.13d(b)(1)(ii)
(G) of the 1934 Act, reported that it had sole voting and dispositive power
with respect to 517,500 Shares of the Company's Common Stock. The Schedule 13G
further states that the filing by The TCW Group, Inc. shall not be construed
as an admission by The TCW Group, Inc. that it is the beneficial owner of
these shares.
(3) The number of shares shown above as owned by Dimensional Fund
Advisors Inc. ("Dimensional"), was communicated to the Company by copy
of a Schedule 13G filing under the Securities Exchange Act of 1934 (the
"1934 Act") filed by Dimensional on January 30, 1995. Dimensional, a
registered investment advisor, is deemed to have beneficial ownership of
450,414 shares of the Company's Common Stock as of December 31, 1994, all
of which shares are held in portfolios of DFA Investment Dimensions Group
Inc., a registered open-end investment company, or in series of the DFA
Investment Trust Company, a Delaware business trust, or the DFA Group Trust
and DFA Participation Group Trust, investment vehicles for qualified employee
benefit plans, as to all of which Dimensional Fund Advisors Inc. serves as
investment manager. Dimensional disclaims beneficial ownership of all such
shares.
(4) Includes 12,000 shares under options exercisable within 60 days of
the Record Date and 19,091 shares held for the benefit of Mr. McCullough
in the Company's Employee Stock Ownership Plan.
(5) Includes 567,000 shares under options exercisable within 60 days of
the Record Date and 3,399 shares held for the benefit of Mr. Dwight in the
Company's Employee Stock Ownership Plan.
(6) The 83,500 shares shown for Mr. Derge are shares under options
exercisable within 60 days of the Record Date.
(7) Includes 27,937 shares under options exercisable within 60 days of
the Record Date and 7,728 shares held for the benefit of Mr. Parson in the
Company's Employee Stock Ownership Plan.
(8) Includes 39,834 shares under options exercisable within 60 days of
the Record Date and 10,502 shares held for the benefit of Mr. Strandlund in
the Company's Employee Stock Ownership Plan.
(9) Includes 11,750 shares under options exercisable within 60 days of
the Record Date and 9,514 shares held for the benefit of Mr. Wally in the
Company's Employee Stock Ownership Plan.
(10) Includes 852,404 shares under options exercisable within 60 days of
the Record Date and 87,752 shares held for the benefit of all officers in the
Company's Employee Stock Ownership Plan.
COMPENSATION OF EXECUTIVE OFFICERS
I. SUMMARY COMPENSATION TABLE
The following table discloses compensation received by the Company's Chief
Executive Officer and the four other most highly paid executive officers for
the three fiscal years ended October 31, 1994:
<TABLE> LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
OTHER ANNUAL OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($)(2) COMPENSATION($)(3) (#) COMPENSATION(4)
<S> <C> <C> <C> <C> <C> <C>
Herbert M. Dwight, Jr.(5) 1994 $323,920 $33,448 $3,169 600,000 $ 5,889
Chairman of the Board, 1993 314,051 20,589 10,366 -- 4,537
President and 1992 299,998 41,700 7,166 -- 10,040
Chief Executive Officer
Klaus F. Derge (6) 1994 176,900 12,164 12,000 10,000 --
Vice President, 1993 158,400 7,472 11,686 -- --
International Operations 1992 60,000 -- -- 80,000 40,000
Laurence D. Parson(7) 1994 130,327 3,915 2,441 10,000 4,729
Vice President and 1993 121,660 6,013 8,207 6,000 19,088
General Manager, 1992 -- -- -- -- --
Glare/Guard Division
Norman E. Strandlund 1994 170,034 17,960 2,092 10,000 5,458
Vice President and 1993 161,417 4,392 10,544 8,000 14,503
General Manager, 1992 153,459 16,719 8,156 20,000 5,611
Santa Rosa Division
Josef Wally 1994 130,286 9,296 3,135 5,000 5,147
Vice President, 1993 123,010 5,812 12,247 5,000 2,877
Corporate Controller 1992 121,926 12,171 7,813 10,000 4,581
and Secretary
</TABLE>
_________________
(1)In January 1994, the Company chose to include an automobile allowance
benefit in the base salaries of all participants of the program, including
the Named Executive Officers. Thus, the base salaries shown for the Named
Executive Officers, excluding Mr. Derge, include the fiscal 1994 annual
automobile allowances aggregating $7,621 for each of the Named Executive
Officers.
(2)Bonuses were paid to the Named Executive Officers under the Company's
1994, 1993 and 1992 Management Incentive Plans.
(3)Includes for fiscal 1994, 1993 and 1992, for the Named Executive
Officers, excluding Mr. Derge, a special medical expense reimbursement
benefit and an automobile allowance benefit paid in the first two months
of fiscal 1994 under the Company's prior automobile allowance program.
<TABLE>
AUTOMOBILE
MEDICAL ALLOWANCE PAID
FOR FISCAL 1994: REIMBURSEMENT UNDER 1993 PROGRAM
<S> <C> <C>
Herbert M. Dwight, Jr. $919 $2,250
Laurence D. Parson 941 1,500
Norman E. Strandlund 592 1,500
Josef Wally 1,635 1,500
</TABLE>
Mr. Derge participates in separate medical and automobile expense
reimbursement programs through the Company's subsidiary in Reinheim, Germany.
For fiscal 1994, he received $2,461 in medical expense payments. For
automobile expenses, Mr. Derge is reimbursed for actual expenses incurred
for business purposes.
(4)Includes for fiscal 1994, 1993 and 1992, for each Named Executive
Officer, excluding Mr. Derge, a life insurance benefit and contributions made
by the Company under the Employee Stock Ownership Plan (ESOP+).
<TABLE>
LIFE INSURANCE ESOP+
FOR FISCAL 1994: PREMIUM CONTRIBUTION
<S> <C> <C>
Herbert M. Dwight, Jr. $702 $5,187
Klaus Derge(6) -- --
Laurence D. Parson 174 4,555
Norman E. Strandlund 271 5,187
Josef Wally 425 4,722
</TABLE>
(5)During fiscal 1994, options for 500,000 shares held by Mr. Dwight were
canceled and reissued to extend the expiration date. The options were
regranted effective July 1, 1994 for a period of five years. No change
was made to the option prices, and all other terms of the original
option agreements were unchanged.
(6)Mr. Derge does not participate in the Company's life insurance benefit
program or ESOP+. Mr. Derge joined the Company in July 1992 which is
reflected in his fiscal 1992 base salary. "All Other Compensation" for
fiscal 1992 includes reimbursement of extraordinary travel expenses
incurred by Mr. Derge in his efforts to establish the Company's German
subsidiary, OCLI Optical Coating Laboratory GmbH (OCLI GmbH).
(7)Mr. Parson was appointed Vice President in June 1993. For fiscal 1993,
"All Other Compensation" includes a payment of $18,931 for accrued vacation
time that was not used prior to Mr. Parson's appointment as an officer of
the Company.
<TABLE>
II. OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
PERCENT OF POTENTIAL
TOTAL REALIZABLE VALUE
OPTIONS AT ASSUMED RATES
GRANTED TO OF STOCK PRICE
OPTIONEES EMPLOYEE'S EXERCISE APPRECIATION FOR
GRANTED IN FISCAL PRICE EXPIRATION OPTION TERM(4)
NAME (#)(1) YEAR(2) ($/SHARE)(3) DATE 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Herbert M. Dwight, Jr. 400,000 48.8% $ 6.875 7/01/99 $759,774 $1,678,903
100,000 12.2% 10.250 7/01/99 0 82,226
100,000 12.2% 6.125 12/17/98 169,223 373,937
Klaus F. Derge 10,000 1.2% 6.125 12/17/98 16,922 37,394
Laurence D. Parson 10,000 1.2% 6.125 12/17/98 16,922 37,394
N.E. Rick Strandlund 10,000 1.2% 6.125 12/17/98 16,922 37,394
Josef Wally 5,000 .6% 6.125 12/17/98 8,461 18,697
</TABLE>
(1)The 400,000 option shares shown in the above table for Mr. Dwight were
originally granted on 8/19/91 and would have expired on 8/19/96 and 100,000
option shares were originally granted on 9/18/92 and would have expired on
9/18/97. Effective July 1, 1994, the 500,000 total option shares were canceled
and regranted for the purpose of extending the expiration dates. The exercise
prices and all other terms and conditions of the original grants were
unchanged. The options listed in the table for the four other Named Executive
Officers, and the remaining 100,000 option shares shown for Mr. Dwight, were
granted on December 17, 1993, pursuant to the Company's 1993 Incentive
Compensation (Stock Option) Plan. The options become exercisable in three
annual installments commencing one year from the date of grant. The options
have a maximum term of five years, subject to earlier termination of unvested
options in the event of the optionee's cessation of service with the Company.
(2)The Company granted options totaling 819,900 shares to employees in
fiscal 1994. This amount includes the aforementioned 500,000 option shares
regranted to Mr. Dwight during fiscal 1994.
(3)The exercise price of each option may be paid in cash, in existing
shares of Common Stock valued at fair market value on the exercise date or
through a cashless exercise procedure involving a same-day-sale of the
purchased shares.
(4)The 5% and 10% assumed rates of appreciation are stipulated by the
Securities and Exchange Commission and do not represent the Company's
estimate or projection of the future price of its Common Stock. There is
no assurance provided to any executive officer or any other holder of the
Company's securities that the actual stock price appreciation over the
option term will be at the assumed levels or at any other defined level.
Unless the market price of the Company's Common Stock does, in fact,
appreciate over the option term, no value will be realized from the option
grants.
III. OPTION EXERCISES AND YEAR-END VALUE TABLE
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table provides information on option exercises in fiscal
1994 by the Named Executive Officers and the value of such officers'
unexercised options at October 31, 1994.
<TABLE>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FISCAL YE (#): FISCAL YE ($):(1)
VALUE
SHARES ACQUIRED ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) ($) UNEXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C>
Herbert M. Dwight, Jr. 0 0 567,000/ $12,563/
33,000 6,188
Klaus F. Derge 0 0 83,500/ $ 656/
6,500 1,219
Laurence D. Parson 0 0 27,937/ $ 6,421/
16,000 1,219
Norman E. Strandlund 0 0 39,834/ $14,199/
16,750 1,219
Josef Wally 0 0 11,750/ $ 1,594/
8,250 563
</TABLE>
(1)The Company's fiscal year ended October 31, 1994. The closing price of
the Company's Common Stock on the NASDAQ National Market System on October
31, 1994 was $6.3125 per share.
COMPENSATION AND STOCK OPTION COMMITTEE REPORT
The report of the Compensation and Stock Option Committee shall not be deemed
incorporated by reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of 1933, as
amended (the "Securities Act"), or under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), except to the extent that the Company
specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
COMPENSATION PHILOSOPHY
The Compensation and Stock Option Committee has two principal objectives in
determining executive compensation policies: first, to attract, develop,
reward and retain key executive talent; and second, to motivate executive
officers to perform to the best of their abilities and to achieve short-term
and long-term corporate objectives that will contribute to the overall goal
of enhancing stockholder value. The Compensation and Stock Option Committee
has adopted the following executive compensation policies in the furtherance
of these objectives:
o The Company will compensate competitively with the practices
of other leading technology companies of similar size;
o Performance at the corporate, division and individual executive
officer level will determine the bonus portion of compensation;
o The attainment of realizable but challenging objectives will
determine performance based compensation; and
o The Company will encourage executive officers to hold
substantial, long-term equity stakes in the Company so that
the interests of executive officers will be aligned with the
interests of stockholders. Accordingly, stock or stock options
will constitute a portion of compensation.
Each of the foregoing policies assists the Compensation and Stock Option
Committee in the determination of appropriate compensation for its executive
officers. The policy relating to competitive compensation with other leading
companies provides one objective standard with which the Company's compensa-
tion practices can be compared. The Company's emphasis on stock based
performance provides the single most important link between executive
compensation, stockholder return and Company performance since the effects
of changes in the Company's performance are ultimately reflected in the
market value of the Company's stock.
ELEMENTS OF EXECUTIVE COMPENSATION
(I) BASE SALARY. In establishing base salaries for the Company's
executive officers, the Committee compares salary levels in effect for
comparable positions with other US technology companies of similar size
using data from the Radford Benchmark Salary Survey and the American
Electronics Association (AEA) Executive Compensation Survey. In addition,
the Committee gives consideration to the specific functional responsibilities
of the position. The Company's executive officers' base salaries are currently
set near the median range of the comparison groups for officers in corporate
areas and slightly above the median range for officers responsible for an
operating division.
The Committee believes that the comparison of executive officer base
compensation to the indices of the Radford Benchmark Salary Survey and AEA
Executive Compensation Survey groups is applicable since the Company
competes against this broader group of companies for executive management
talent. The Committee believes that the Company's most direct competitors for
executive talent are not necessarily only the companies that would be
included in a peer group established to compare stockholder returns. In
recruiting executive management personnel, the Company searches for
executives with experience in innovative and advanced management practices of
outstanding companies in different industries. Thus, the compensation
comparison groups are not the same as the peer group companies used in the
Comparison of Five Year Cumulative Total Return graph included in this Proxy
Statement.
The Committee reviews executive officers' base salaries annually in December,
and adjustments are made on the basis of the executive officers' personal
performance for the year, the overall financial performance of the Company and
changes in the general level of base salaries of persons in comparable
positions in the comparison groups surveyed. In determining increases in
base salaries for executive officers, the Committee places the greatest weight
on the individual's personal performance against previously established
objectives and the performance of the Company for the fiscal year. For
fiscal 1994, the Committee established a Company-wide wage and salary
budget consisting of a maximum of 4% for merit increases plus 1% for
promotional and equity adjustments. However, due to the losses sustained
by the Company in the prior fiscal year, no merit increases were awarded
to Mr. Dwight or any other executive officer.
(II) INCENTIVE COMPENSATION. The Company's executive officers partici-
pate in a Management Incentive Plan approved annually by the Compensation and
Stock Option Committee. The total budget for the 1994 Management Incentive
Plan (the "Plan" or "1994 Plan") was set at a maximum of 15% of 1994 pretax
profits. The 1994 Plan provides for 80% of a participant's potential payout
to be based on the Company meeting certain prescribed quantitative operating
profit and pretax earnings targets. Twenty percent (20%) of a participant's
potential payout was based upon the achievement of previously established,
individual qualitative objectives. Under the Plan, the participant's "base
bonus" was the amount they would earn if their division and/or the Company
as a whole achieved budgeted profit levels for each quarter and for the
entire year and the individual achieved all qualitative objectives. Under
the Plan, the CEO's "base bonus" was set at 35% of his actual base salary.
Other executive officer participants' "base bonus" was set at 25% of their
actual base salary. Participants could earn up to 10% of their base bonus
each quarter depending on the quarterly profit performance of their
Division/the Company and up to 40% of their annual base bonus depending on
their Division's/the Company's profits for the fiscal year. Executive officer
participants had the potential to earn up to 20% of their base bonus at
year-end depending upon the rating of their performance against their
qualitative objectives for the year.
(III) LONG-TERM STOCK OPTION AWARDS. The Company's stock option program
was established to increase the commitment of key employees to the Company,
to align their interests with those of other stockholders and to reward them
for superior performance. Annual Company-wide option grants are set at
approximately 2% of total outstanding shares. Stock option grants for the
Company's executive officers are reviewed annually by the Compensation and
Stock Option Committee at its December meeting. Awards to executive officers
and all other eligible participants (the "Participants") are approximated by
multiplying the mid-point of the Participant's salary range by a constant
factor which results in an "option dollar value." The option dollar value is
then prorated to adjust for the number of shares available for grant under
the option Plans and to meet the guidelines of the Company's Stock Option
Policy. The actual number of options granted to a Participant using these
guidelines is adjusted by measuring the Participant's performance against
preestablished goals.
CEO COMPENSATION
The Compensation and Stock Option Committee applies the foregoing principles
and policies in determining the compensation of Mr. Dwight, the Company's
chief executive officer. Under these guidelines, Mr. Dwight was not eligible
to receive a merit increase at the beginning of fiscal 1994, nor were any
other of the Named Executive Officers, due to the operating losses of the
Company reported for the prior fiscal year. As described in footnote (3) of
the Summary Compensation Table, the base salaries for fiscal 1994 shown for
Mr. Dwight and the other Named Executive Officers include an automobile
allowance paid under a new Company program which became effective in January
1994. As a result, Mr. Dwight's salary for fiscal 1994 includes an automobile
allowance of $7,621. Mr. Dwight also received $2,250 during the first two
months of fiscal 1994 under the Company's former program for automobile
allowance payments. Mr. Dwight received quantitative quarterly bonuses
totaling $16,333 under the guidelines of the Company's 1994 Management
Incentive Plan on the basis of the Company achieving its performance
objectives during the first and second quarters of fiscal 1994. No bonuses
were earned by Mr. Dwight in the third and fourth quarters of fiscal 1994.
Mr. Dwight earned an annual, qualitative bonus of $17,115 for fiscal 1994
for leading the Company to profitable performance for the year.
The Compensation and Stock Option Committee awarded Mr. Dwight an option for
100,000 shares of Common Stock to fulfill the commitment made by the Company
to Mr. Dwight in its offer of employment. Also during fiscal 1994, the
Committee elected to extend the expiration dates of two of Mr. Dwight's
earlier option awards as recognition of Mr. Dwight's performance under the
difficult business situation prevailing since 1991. The options were
extended for a period of five years beginning July 1, 1994. The option prices
and all other terms and conditions of the original option grants were
unchanged.
Mr. Dwight received an automobile allowance, a special medical expense
reimbursement annual benefit of up to $10,000, and an excess life insurance
premium payment. Mr. Dwight also participated in the standard employee
benefit programs of the Company.
COMPENSATION AND STOCK OPTION COMMITTEE
RENN ZAPHIROPOULOS, CHAIRMAN
DOUGLAS C. CHANCE
JULIAN SCHROEDER
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation and Stock Option Committee is a former or
current officer or employee of the Company or any of its subsidiaries.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's executive officers and directors
and persons who own more than ten percent of the Common Stock of the Company
to file reports of ownership on Form 3 and changes in ownership on Forms 4
or 5 with the Securities and Exchange Commission (the "Commission"). Such
officers, directors and ten percent stockholders are also required to
furnish the Company with copies of all Section 16(a) reports they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that Forms 3, 4 and 5
have been filed as required or were not required to be filed, the Company
believes that, during the fiscal year ended October 31, 1994, all Section
16(a) filing requirements were complied with that were applicable to its
officers, directors and ten percent stockholders, with the exception of
one late filing on Form 4 made by Herbert M. Dwight, Jr., the Company's
Chief Executive Officer, during fiscal 1994.
PERFORMANCE GRAPH
The stock price Preformance Graph below shall not be deemed incorporated
by reference by any general statement incorporating by reference this
proxy statement into any filing under the Securities Act or under the
Exchange Act, except to the extent the Company specifically incorporates
this information by reference, and shall not otherwise be deemed filed
under such acts.
The graph below compares cumulative total return of the Company's Common
Stock with the cumulative total return of the NASDAQ Stock Market-US Index
and a Peer Group. In establishing the Peer Group, the Company has selected
public companies which are competitors or manufacture products or serve
markets in the Company's opto-electronics field and which have a market
valuation similar in range to that of the Company's. The Peer Group
consists of Donnelly Corporation, which is traded on the American Stock
Exchange, and Coherent, Inc., Newport Corporation, Opto Mechanical
Corporation, Southwall Technologies, Inc. and Zygo Corporation, all of
which are traded on the NASDAQ National Market System. The graph assumes
$100 was invested on October 31, 1989 in each of (i) the Company's Common
Stock, (ii) the stocks comprising the NASDAQ Index and (iii) the stock
comprising the Peer Group, and assumes the reinvestment of dividends.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG OPTICAL COATING LABORATORY, INC.(OCLI),
THE NASDAQ STOCK MARKET-US INDEX AND A PEER GROUP
<TABLE>
CUMULATIVE TOTAL RETURN
10/89 10/90 10/91 10/92 10/93 10/94
<S> <C> <C> <C> <C> <C> <C>
Optical Coating Laboratory, Inc. 100 65 99 124 94 86
Peer Group 100 64 91 81 98 96
NASDAQ Stock Market-US 100 74 126 141 181 182
</TABLE>
CERTAIN TRANSACTIONS WITH MANAGEMENT
TRANSACTION WITH KLAUS F. DERGE
The Company's subsidiary in Germany, OCLI Optical Coating Laboratory GmbH, is
located in an office suite in Reinheim, Germany, that was leased by Mr. Klaus
F. Derge, the Company's Vice President, International Operations, for Mr.
Derge's personal business use. The Company utilizes these offices and pays Mr.
Derge approximately $126,000 per year for its occupancy of the office suite
and for office services. It is the Company's opinion that the terms of
this arrangement are as fair as could have been obtained from unaffiliated
persons.
TRANSACTION WITH WILLIAM C. BURGESS
In association with its efforts to recruit Mr. Burgess as Vice President,
Human Resources, the Company entered into a loan agreement to cover the
losses he incurred in selling his home and relocating to Santa Rosa,
California. Under the terms of the agreement, the Company has loaned Mr.
Burgess the sum of $92,000 under a promissory note which will be secured by
a deed of trust on his new residence in Santa Rosa. The principal and accrued
interest under the note will be forgiven by the Company on a prorata basis
over the next eight years of Mr. Burgess' employment. In the event Mr. Burgess
should choose to terminate his employment during the eight year period, the
balance on the note shall become immediately due and payable.
INDEMNIFICATION AGREEMENTS
The Company has entered into indemnification agreements with each of its
directors and officers. Such agreements require the Company to indemnify such
individuals to the full extent permitted by Delaware law if certain claims are
brought against them in their capacities with the Company.
EMPLOYMENT CONTRACTS, CHANGE IN CONTROL AND SEVERANCE ARRANGEMENTS
Effective August 19, 1991, Mr. Dwight accepted an employment offer from the
Company and entered into an agreement to serve as the Company's Chairman,
President and Chief Executive Officer at the pleasure of the Board of
Directors. Under the terms of the agreement, Mr. Dwight's base salary was
set at $300,000 per year, to be adjusted annually at the discretion of the
Compensation and Stock Option Committee based upon the Company's performance
and Mr. Dwight's contribution thereto. Among other provisions, the agreement
included a grant to Mr. Dwight of an option to purchase 400,000 shares of
Company Common Stock. Under this option award, 100,000 shares were vested
upon grant and 150,000 option shares vested in each of the two years
thereafter. The option is now fully vested. Also, included in the agreement
was consideration for additional options in amounts up to 100,000 option
shares annually to be awarded to Mr. Dwight at the discretion of the
Compensation and Stock Option Committee based upon the performance of the
Company and Mr. Dwight's contribution thereto for the two years following
the date of his employment. Mr. Dwight was granted an additional option in
fiscal 1992 for 100,000 shares. No stock options were granted to Mr. Dwight
in fiscal 1993. The agreement also provides that in the event of a Change in
Control of the Company (as defined in the Company's Restated Certificate of
Incorporation), all unvested options held by Mr. Dwight will immediately vest.
Mr. John McCullough entered into an Employment Agreement with the Company
effective August 19, 1991, pursuant to which Mr. McCullough agreed to perform
services at the officer level for approximately 75 days per year through
October 31, 1992 at a base salary of $135,000 per year and for approximately
50 days per year from November 1, 1992 through October 31, 1995 at a base
salary of $90,000 per year.
Effective November 20, 1987, the Company entered into Employment Agreements
with certain executive officers of the Company, including Messrs. Laurence D.
Parson, Norman E. Strandlund and Josef Wally. On November 20, 1991, the
Agreements were extended for an additional term of two years and again, on
November 20, 1993, the Agreements were extended for a two year term expiring
on November 20, 1995. At November 20, 1993, Messrs. Dwight and Derge also
entered into Employment Agreements with the Company. These Employment
Agreements, among other provisions, provide that the officer has the right to
terminate his employment at any time during the period beginning three months
after the occurrence of a "Change in Control"1 and ending twelve months after
the occurrence of such Change in Control and upon such termination shall be
paid an amount equal to eighteen months of his maximum salary in effect
within twelve months of the termination. Except in the case of a termination
by the Company for cause or a voluntary termination in accordance with the
preceding paragraph, if at any time within two years after the occurrence of
a Change in Control either (i) the Company terminates the employment of an
officer who is party to an Employment Agreement or (ii) such officer
terminates his employment following a "Constructive Dismissal"2 by the
Company, then that officer shall be paid an amount equal to thirty-six months
of the officer's maximum salary in effect within twelve months of termination.
The Employment Agreements provide that no amount shall be paid under the
Employment Agreements which would be classified as an "excess parachute
payment" within the meaning of Section 280G(b)(1) of the Internal Revenue
Code.
_______________
1 "Change in Control" is defined in the Agreements to mean the occurrence
of any of the events described in subparagraph (i) or (ii) below:
(i) the acquisition by any person, entity or group (other than the
Company, any subsidiary of the Company, any employee benefit plan of the
Company or any subsidiary of the Company, or any person or entity organized,
appointed or established by the Company for or pursuant to the terms of any
such plan) alone, or together with any affiliate or associate, of beneficial
ownership of 20% of the shares, and the adoption by the Board of Directors
of a resolution (x) disapproving such acquisition, or (y) declaring operative
the provisions of the respective Employee Security Agreement regarding a
change of control;
(ii) the failure of a majority of the Board of Directors to be
"Continuing Directors," as defined below.
"Continuing Director" means (i) any member of the Board who was a member of
the Board prior to November 20, 1987, or (ii) any person who subsequently
becomes a member of the Board if such person's nomination for election or
reelection is approved by a majority of the Continuing Directors.
2 "Constructive Dismissal" shall occur if the Company demotes an employee,
reduces an employee's duties, decreases an employee's benefits or compensation
or relocates an employee to a location outside of the community where the
employee is employed as of the date of a Change in Control.
PROPOSAL 2:
APPROVAL OF 1995 INCENTIVE COMPENSATION PLAN
For the reasons set forth below, the Board recommends that the Stockholders
approve the Optical Coating Laboratory, Inc. 1995 Incentive Compensation Plan
(the "Plan"). The full text of the Plan is set forth as Exhibit A hereto, and
the reader is urged to refer to it for a complete description of the proposed
Plan. The summary of the principal features of the Plan, which follows, is
qualified entirely by such reference.
The purpose of the Plan is to encourage Common Stock ownership in the Company
by key personnel whose long-term employment is considered essential to the
Company's continued progress, thereby providing them with an additional
incentive to continue in the employ of the Company or its subsidiaries. The
Board has determined that the additional incentive provided by the Plan to
those employees whose efforts have the most effect on the Company's success
will promote the welfare of the Company's Stockholders generally.
A total of 600,000 shares of the Company's Common Stock are to be reserved
for issuance pursuant to the Plan.
PRINCIPAL FEATURES OF THE PLAN
Under the proposed Plan, certain executives and other key employees (expected
to be approximately 100 people), designated as participants by a Committee
composed of the members of the Compensation and Stock Option Committee of the
Board of Directors (the "Committee"), would be eligible to receive, in
addition to a fixed salary, periodic awards based on their performance and
that of the Company as a whole. The Committee is composed of directors who
are not eligible to participate in the Plan. The performance measurement
would involve a variety of factors, including personal achievement,
contribution to the Company, business volume growth and attainment of
financial objectives. Special supplemental awards for extraordinary
achievement may be made to any participant.
Awards may be in the form of stock options, unrestricted stock bonuses,
restricted stock bonuses, stock paid for with a recourse or non-recourse
promissory note ("loan stock"), or any combination thereof. Stock bonuses
may be restricted against sale for varying periods, as determined by the
Committee. Upon award of restricted stock or loan stock, certificates for
such shares will be deposited in escrow with the Company's Secretary. The
employee will retain voting and dividend rights with respect to the shares,
but will not have the right to transfer the shares until all restrictions
pertaining to the shares have terminated or until payment of the promissory
note.
An employee who has been granted restricted stock, stock options or loan
stock may also be permitted under the Plan to elect that the tax liability
(as described below) arising from the lapse of restrictions on restricted
stock, exercise of stock options, or payment of a non-recourse note used to
purchase loan stock be satisfied by the Company withholding from the shares
to be delivered to the employee that number of shares the fair market value
of which is closest to, without exceeding, such tax liability. For these
purposes, "tax liability" means the minimum federal and state income taxes
required to be withheld, or, in the Company's discretion, any greater amount
of taxes (including taxes other than income taxes) required to be withheld.
Stock options granted under the Plan will be designated either as incentive
stock options ("ISO's") eligible for special tax treatment under Section 422
of the Code or as non-qualified options. The option price of each option
issued under the Plan will be the fair market value of the Company's Common
Stock subject to the option on the date of grant. Fair market value, for
purposes of the Plan, shall be determined by the Committee. The term of
the options cannot exceed 10 years, and in all other respects, the material
terms of the options will be similar to options granted under the Company's
existing Stock Option Plans. See Exhibit A, Part 2., VI.
MODIFICATION OF THE PLAN
The Board of Directors or the Committee will be authorized to suspend or
discontinue the Plan or modify or amend it in any respect whatsoever; however,
without approval of the Stockholders, no revision or amendment may change the
number of shares subject to the Plan except in the event of a change in the
capital structure of the Company affecting its stock.
TAX TREATMENT
There are no tax consequences to the employee or the Company upon grant of a
stock option. Upon exercise of an option not qualified as an ISO, the employee
will be required to recognize taxable income equal to the difference between
the exercise price and the fair market value of the shares on the date of
exercise (the "spread"), and the Company will be entitled to a federal income
tax deduction equal to the income recognized by the employee. Except for
inclusion of the spread as an item of tax preference for alternative minimum
tax purposes, there are no federal tax consequences for the employee or the
Company upon exercise of an ISO. Moreover, if the employee holds the shares
purchased through the exercise of an ISO for more than one year from the
date of exercise and two years from the date the option was granted (the
"required holding period"), the spread and all other appreciation in the
shares over the exercise price will be long-term capital gain at the time the
shares are sold. The Company will not receive a deduction if an employee
holds stock acquired through the exercise of an ISO for the required holding
period. If the employee sells such stock before the expiration of the required
holding period, the employee will be required to recognize taxable income
equal to the lesser of the spread or the difference between the amount
realized and the employee's basis in the stock. The Company will receive a
deduction equal to the taxable income recognized by the employee.
Recipients of unrestricted stock bonuses will be taxed on an amount equal
to the fair market value of the shares at the time of grant. The Company will
receive a federal tax deduction equal to the amount of income recognized by
recipients of unrestricted stock bonuses. Recipients of loan stock purchased
with a recoursenote will not be taxed upon grant of the loan stock if the fair
market value of the loan stock on the date it is granted equals the face
amount of the promissory note used by the recipient to purchase the loan
stock. Moreover, recipients of loan stock purchased with a non-recourse note
will be taxed only as the note is paid off and then only to the extent that
the fair market value of the shares corresponding to the paid off principal
portion of the note exceeds such principal portion.
A recipient of a restricted stock bonus will recognize taxable income equal
to the fair market value of the shares at the time the restrictions lapse.
However, the employee may elect to include in income for the year of the
award the fair market value of the restricted stock at the time of grant.
If the election is made, any subsequent appreciation recognized on eventual
sale or disposition of the shares will be capital gain. If the shares are
forfeited following such an election, the recipient obtains no tax benefit
with respect to the forfeiture or prior tax payment. The Company will be
entitled to a federal tax deduction equal to the amount of income recognized
by the employee either when the employee makes such an election or, if no
election is made, if and when the restrictions on the stock lapse.
VOTES REQUIRED AND BOARD RECOMMENDATION
The Board of Directors believes that the grant of stock options and stock
awards will provide significant incentives to selected key employees who
contribute and are expected to contribute materially to the continued success
of the Company. The favorable vote of a majority of shares present and voting
at the Annual Meeting on this proposal (as long as those shares voting
affirmatively also constitute a majority of the required quorum) is required
for approval of the Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE PLAN
PROPOSAL 3:
SELECTION OF INDEPENDENT AUDITORS
The Board of Directors, upon the recommendation of the Audit Committee, has
appointed Deloitte & Touche LLP as the Company's independent auditors to audit
the Company's consolidated financial statements for the 1995 fiscal year. The
ratification of this appointment by the Stockholders is being sought as a
matter of good corporate practice, although it is not required. The affirma-
tive vote of the holders of a majority of the shares represented and voting
at the Annual Meeting will be required to ratify the selection of
Deloitte & Touche LLP.
In the event Stockholders fail to ratify the appointment, the Board of
Directors will reconsider its appointment of Deloitte & Touche LLP. Even if
the selection is ratified, the Board in its discretion may direct the
appointment of a different accounting firm at any time during the year if
the Board feels that such a change would be in the best interests of the
Company and its Stockholders.
Representatives of Deloitte & Touche LLP are expected to be present at the
meeting, will have the opportunity to make a statement if they desire to
do so and will be available to respond to appropriate questions.
OTHER MATTERS
Management does not intend to bring any other business before the meeting, and
so far as is known to Management, no matters are to be brought before the
meeting except as specified in the notice of the meeting. However, as to any
other business which may properly come before the meeting, it is intended that
proxies in the form enclosed will be voted in respect thereof, in accordance
with the judgment of the persons voting such proxies.
March 10, 1995
Santa Rosa, California
By Order of the Board of Directors,
JOSEPH C. ZILS
General Counsel and Secretary
EXHIBIT A
OPTICAL COATING LABORATORY, INC.
1995 INCENTIVE COMPENSATION PLAN
PART 1. PLAN PURPOSE, ADMINISTRATION AND ELIGIBILITY
I. PURPOSE
The purpose of this 1995 Incentive Compensation Plan (the "Plan") of
Optical Coating Laboratory, Inc. (the "Company") is to encourage ownership
in the Company by key personnel whose long-term employment is considered
essential to the Company's continued progress and thus to provide them with
a further incentive to continue in the employ of the Company. In adopting the
Plan, the Board of Directors has determined that the additional incentive
provided by the Plan to those employees whose efforts have the most effect on
the Company's success will promote the welfare of the Stockholders in general.
II. ADMINISTRATION
The members of the Compensation and Stock Option Committee, acting as a
separate committee (the "Committee") consisting of three or more directors of
the Company who are not eligible to participate in the Plan, shall supervise
and administer the Plan. The Committee shall, from time to time, designate
the key employees of the Company who shall be granted stock options ("Stock
Options") or stock awards ("Stock Awards") under the Plan and the amount and
nature of the award to be granted to each such employee. All questions of
interpretation of the Plan or of any Stock Options or Stock Awards issued
under it shall be determined by the Committee and such determination shall
be final and binding upon all persons having an interest in the Plan. Any
or all powers and discretion vested in the Committee under this Plan may
be exercised by any subcommittee so authorized by the Committee.
III. PARTICIPATION IN THE PLAN
Directors, officers and other salaried employees of the Company in key
positions shall be eligible to participate in the Plan.
IV. STOCK SUBJECT TO THE PLAN
The maximum number of shares which may be optioned or awarded under the
Plan shall be Six Hundred Thousand (600,000) shares of the Company's Common
Stock. The limitation on the number of shares which may be optioned or awarded
under the Plan shall be subject to adjustment as provided in Section XVII of
the Plan.
The grant of a Stock Award not pursuant to a Stock Option under the Plan
shall be subject to such restrictions as the Committee shall determine to be
appropriate, including but not limited to restrictions on resale, repurchase
provisions, special vesting requirements or forfeiture provisions.
If any outstanding Stock Option under the Plan for any reason expires or
is terminated without having been exercised in full, or if any Stock Awards
are forfeited, the forfeited share or shares allocable to the unexercised
portion of such Stock Option shall again become available for grant pursuant
to the Plan.
Upon the grant of a Stock Award or the exercise of a Stock Option, the
Company may issue new shares or reissue shares previously repurchased by or
on behalf of the Company.
PART 2. STOCK OPTIONS
V. NON-QUALIFIED STOCK OPTIONS AND INCENTIVE STOCK OPTIONS
Any Stock Option granted under the Plan shall be designated by the
Committee as a non-qualified stock option or as an incentive stock option
("ISO") within the meaning of Section 422A of the Internal Revenue Code of
1986, as amended (the "Code").
No options granted hereunder shall be exercisable unless the Plan is
approved by the Stockholders of the Company within twelve (12) months before
or after the date such plan is adopted.
VI. TERMS OF STOCK OPTIONS
Each Stock Option granted under the Plan shall be for a period determined
by the Committee not to exceed ten (10) years from the date of grant, shall be
evidenced by a stock option agreement between the Company and the person to
whom such Stock Option is granted, and shall be subject to the following
additional terms and conditions:
A. CONTINUATION OF EMPLOYMENT. An employee to whom such Stock Option is
granted must agree in writing, as a condition to the granting of the Stock
Option, that he or she will remain in the employ of the Company following the
date of granting of the Stock Option for a period of twelve (12) months.
B. EXERCISE OF THE STOCK OPTION. Prior to its termination, such Stock
Option may be exercised by the person then entitled to do so, at such time or
times and in such amounts as shall be specified in the stock option agreement.
A Stock Option is exercised (i) by giving written notice of exercise to the
Company, specifying the number of full shares of Common Stock to be purchased
and accompanied by full payment of the option price therefor; provided,
however, that to the extent authorized by the Committee, an optionee may make
all or any portion of any payment due to the Company upon exercise of a Stock
Option by delivery of any property (including securities of the Company or
promissory notes) other than cash, so long as such property constitutes valid
consideration for the Common Stock under applicable law; and (ii) by giving
assurances satisfactory to the Company that the shares of Common Stock to be
purchased upon such exercise are being purchased for investment and not with
a view to resale in connection with any distribution of such shares in
violation of the Securities Act of 1933; provided, however, that in the
event the Common Stock subject to the Stock Option is registered under the
Securities Act of 1993, as amended, or in the event a resale of such Common
Stock without such registration would otherwise be permissible, this condition
shall be inoperative if in the opinion of counsel for the Company such
condition is not required under the Securities Act of 1933, or any other
applicable law, regulation or rule of any governmental agency.
C. OPTION PRICE. The option price under each Stock Option shall be
determined by the Committee but shall not be less than one hundred percent
(100%) of the fair market value of the Company's Common Stock at the time of
granting the Stock Option.
D. TERMINATION OF THE STOCK OPTION. To the extent not previously
exercised, each Stock Option shall terminate on the date fixed therefor in
the stock option agreement; provided, however, that (i) in the event that an
employee who has been granted a Stock Option shall cease to be employed by the
Company or a subsidiary for any reason other than death, the Stock Option
shall terminate to the extent such employee shall fail to exercise such Stock
Option within the time period fixed by the Committee at the time of grant, but
only to the extent his or her rights to exercise such Stock Option have
accrued pursuant to the terms hereof and have not previously been exercised
at the date of such termination; provided, however, that if such employee
shall have his or her employment terminated for cause the Stock Option shall
terminate simultaneously with such employee's effective date of termination,
and any unexercised portion of the Stock Option shall thereupon expire; and
(ii) in the event the employee shall die while in the employ of the Company
or after the termination of his employment for any reason other than for
cause, and shall not have exercised the Stock Option, it shall be exercisable
at any time within the period fixed by the Committee at the time of its grant,
by the executors or administrators of the employee by bequest or inheritance.
Termination of employment "for cause", as used herein, shall mean discharge by
the Company or any of its subsidiaries for (i) dishonesty, (ii) commission of
a crime, or (iii) divulging trade secrets to competitors or others not
entitled to receive them. The foregoing provisions shall apply with equal
force and effect and equivalent meaning, with such changes as may be
necessary, to a director who has been granted options hereunder.
E. STOCK OPTIONS NOT TRANSFERABLE. Any Stock Option shall be
nontransferable by the optionee otherwise than by will or the laws of descent
and distribution, and shall be exercisable during the optionee's lifetime only
by the optionee, or in the event of death, by the optionee's representative or
any person designated by the optionee in his stock option agreement.
F. QUALIFICATION OF STOCK. The right to exercise the Stock Options shall
be further subject to the requirement that if at any time the Board shall
determine, in its discretion, that the listing, registration or qualification
of the shares covered by the Stock Option upon any securities exchange or
under any state or federal law, or the consent or approval of any governmental
regulatory authority, is necessary or desirable as a condition of or in
connection with the granting of such Stock Option or the purchase of shares
thereunder, the Stock Option may not be exercised, in whole or in part, unless
and until such listing, registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not acceptable to the
Board of Directors, in its sole discretion.
G. LIMITATION ON INCENTIVE STOCK OPTIONS. No option designated by the
Committee as an ISO entitled to special tax treatment under Code Section 422A
may be granted under the Plan if such grant, together with any applicable
prior grants, would exceed any maximum established under the Code for ISOs
that may be granted to a single employee. Should it be determined that
any such ISO granted under the Plan exceeds such maximum, the excess
portion of such ISO shall be reclassified as a non-qualified option not
entitled to special tax treatment under Section 422A of the Code.
H. PROCEEDS FROM SALE OF STOCK. The proceeds of sale of all shares of
Stock issued from time to time upon the exercise of options granted pursuant
to the Plan shall be added to the general funds of the Company and as such
shall be used from time to time for such corporate purposes as the Board
of Directors of the Company may determine.
I. OTHER PROVISIONS. The stock option agreement may contain such other
terms, provisions and conditions not inconsistent with the Plan as may be
determined by the Committee in its sole discretion.
VII. MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS
Subject to the terms and conditions and within the limitations of the
Plan, the Committee may modify, extend or renew outstanding Stock Options
granted under the Plan, or accept the surrender of outstanding Stock
Options (to the extent not theretofore exercised) and authorize the
granting of new Stock Options in substitution therefor (to the extent
not theretofore exercised). Notwithstanding the foregoing, however,
no modification of any Stock Option shall, without the consent of the
employee, alter or impair any rights or obligations under any Stock
Option theretofore granted under the Plan.
PART 3. STOCK AWARDS
VIII. STOCK AWARD DETERMINATION
The Committee may grant an eligible employee Stock Awards at such
times and in such amounts as the Committee may designate which in its
opinion fully reflect the performance level and potential of such employee.
Such awards shall be made in accordance with such guidelines as the
Committee may from time to time adopt. Stock Awards shall be independent of
any grant of any Stock Option under this Plan, and shall be made subject to
such restrictions as the Committee may determine to be appropriate.
IX. PAYMENT OF STOCK AWARDS
A. No employee shall have the right to receive payment of any Stock
Award until notified of the amount of such award, in writing, by the
Committee or its authorized delegate.
B. An award of Common Stock may be subject to restrictions ("Restricted
Stock") or acquired by the employee by delivery of a recourse or non-recourse
promissory note ("Loan Stock"), and certificates for such shares will be
deposited in escrow with the Company's Secretary. The employee shall retain
all rights in the Restricted Stock or Loan Stock while it is held in escrow
including, but not limited to, voting rights and the right to receive
dividends, except that the employee shall not have the right to transfer or
assign such shares until all restrictions pertaining to such shares are
terminated and all loans paid in full, at which time the applicable stock
certificates shall be released from escrow and delivered to the employee
by the Company's Secretary.
C. The Committee may permit, on such terms as it deems appropriate,
use of Restricted Stock or Loan Stock as partial or full payment upon
exercise of a stock option under any stock option of a Company plan or
this Plan. In the event shares of Restricted Stock or Loan Stock are so
tendered as consideration for the exercise of an option, a number of the
shares issued upon the exercise of said option, equal to the number of
shares of Restricted Stock or Loan Stock used as consideration therefor,
shall be subject to the same conditions as the Restricted Stock or Loan
Stock so submitted plus any additional conditions that may be imposed by
the Committee.
X. DURATION OF RESTRICTIONS AND TERMS OF PROMISSORY NOTES
The Committee will establish the period or periods after which the
conditions on Restricted Stock will lapse and the terms of any promissory
notes relating to Loan Stock.
XI. DEATH OR TOTAL AND PERMANENT DISABILITY OF A PARTICIPATING EMPLOYEE
HOLDING RESTRICTED STOCK
By written notice to the Company, an employee who has received a
grant of Restricted Stock may designate one or more persons (and from time
to time change such designation) who, by reason of his death, shall acquire
the right to receive any vested but unpaid Stock Awards held by the
employee at the time of his death. Such Stock Awards shall be paid to
the designated representative at such time and in such manner as if
the employee were living.
In the event of total and permanent disability of an employee who has
participated in the Plan, any unpaid but vested Stock Award shall be paid
to the employee if legally competent or to other legally designated guardian
or representative if the employee is legally incompetent.
After the death or total and permanent disability of an employee, the
Committee may in its sole discretion at any time terminate restrictions upon
stock awarded to the employee. A request to the Committee for the termination
of restrictions or the acceleration of payments not yet due may be made by
the employee's beneficiary or representative, or by a totally and permanently
disabled employee.
If at the time of the employee's death, there is no effective beneficiary
designation as to all or some portion of the awards hereunder, such awards or
such portion thereof shall be paid to or on the order of the legal
representative of the employee's estate. In the event of uncertainty as to
the interpretation or effect of any notice of designation, the Committee's
decision with respect thereto shall be conclusive.
XII. RESTRICTIONS AND FORFEITURE OF STOCK AWARDS
The Company's obligation to deliver stock certificates held in escrow is
subject to the condition that the employee remain an active employee of the
Company for the entire deferral and/or restriction period, including
mandatory and optional deferrals. If the employee fails to meet this
condition, the employee's right to any such unpaid amounts or undelivered
stock certificates shall be forfeited. This provision may be waived by the
Committee in exceptional circumstances.
PART 4. STOCK WITHHOLDING
XIII. USE OF SHARES TO SATISFY TAX LIABILITY
Agreements with employees implementing this Plan may permit an employee
who has been granted Restricted Stock, Stock Options or Loan Stock to elect
that the tax liability arising from the lapse of restrictions on Restricted
Stock, exercise of Stock Options, or payment of a non-recourse note used to
purchase Loan Stock be satisfied by the Company's withholding from the shares
to be delivered to the employee that number of shares the fair market value
of which is closest to, without exceeding, such tax liability. For purposes
of this paragraph, "tax liability" shall mean the minimum federal and state
income taxes required to be withheld from such compensation income arising
from the transaction, or, in the discretion of the Company, such greater
amount of taxes (including taxes other than income taxes) that are required
to be withheld from such compensation. An employee's election under an
Agreement with the Company permitting such election shall be made in
writing to the Company at least three (3) days prior to the event giving
rise to the employee's tax liability. An employee who is subject to the
requirements of Section 16(b) of the Securities Exchange Act of 1934
("Section 16(b)") desiring to elect the treatment provided for herein shall
give such written notice of the same to the Company as legal counsel for
the Company shall determine is required.
PART 5. GENERAL PROVISIONS
XIV. ASSIGNMENTS
The rights and benefits under this Plan may not be assigned except
for the designation of a beneficiary as provided in Sections VI and XI.
XV. TIME FOR GRANTING STOCK OPTIONS OR STOCK AWARDS
All Stock Options and Stock Awards subject to this Plan shall be
granted, if at all, not later than ten (10) years after the adoption of
this Plan by the Company's Board of Directors.
XVI. LIMITATION OF RIGHTS
A. No Right to a Stock Option or Stock Award . Nothing in the Plan
shall be construed to give any employee of the Company any right to be
granted a Stock Option or Stock Award.
B. No Employment Right. Neither the Plan, nor the granting of a Stock
Option or Stock Award nor any other action taken pursuant to the Plan, shall
constitute or be evidence of any agreement or understanding, express or
implied, that the Company will employ a grantee for any period of time
or in any position, or at any particular rate of compensation.
C. No Stockholders' Rights for Stock Options. An optionee shall have
no rights as a Stockholder with respect to the shares covered by his or
her Stock Options until the date of the issuance to him of a stock
certificate therefor.
XVII. CHANGES IN PRESENT STOCK
In the event of any merger, consolidation, reorganization,
recapitalization, stock dividend, stock split, or other change in
the corporate structure or capitalization affecting the Company's
present Common Stock, appropriate adjustment shall be made by the
Board of Directors, in its sole discretion, in the number and kind of
shares which are or may become subject to Stock Options and Stock Awards
granted or to be granted hereunder, and in the option price of shares
which are subject to Stock Options granted hereunder.
XVIII. EFFECTIVE DATE OF THE PLAN
The Plan shall take effect on the date of adoption by the Board of
Directors of the Company, subject to approval by the Stockholders of the
Company at a meeting held within twelve (12) months after the date of such
adoption. Stock Options and Stock Awards may be granted under the Plan
at any time after the adoption of the Plan by the Board of Directors of
the Company and prior to the termination of this Plan.
XIX. AMENDMENT OF THE PLAN
The Board of Directors of the Company may suspend or discontinue the
Plan or revise or amend it in any respect whatsoever; provided, however,
that without approval of the Stockholders no revision or amendment shall
change the number of shares subject to the Plan (except as provided in
Section XVII), change the designation of the class of employees eligible to
receive Stock Options or Stock Awards, or materially increase the benefits
accruing to participants under the Plan.
XX. NOTICE
Any written notice to the Company required by any of the provisions of
this Plan shall be addressed to the Secretary of the Company and shall become
effective when it is received.
XXI. COMPANY BENEFIT PLANS
Nothing contained in this Plan shall prevent the employee prior to
death, or the employee's dependents or beneficiaries after the employee's
death, from receiving, in addition to any awards provided for under this
Plan and any salary, any payments under a Company retirement plan or which
may be otherwise payable or distributable to such employee, or to the
employee's dependents or beneficiaries under any other plan or policy
of the Company or otherwise.
XXII.UNFUNDED PLAN
Insofar as it provides for Stock Awards, this Plan shall be unfunded.
Although bookkeeping accounts may be established with respect to employees
who are granted Stock Awards under this Plan, any such accounts will be
used merely as a bookkeeping convenience. Except for the holding of
Restricted Stock and Loan Stock in escrow pursuant to Section IX B, the
Company shall not be required to segregate any assets which may at any time
be represented by Stock Awards, nor shall this Plan be construed as providing
for such segregation, nor shall the Company nor the Board nor the Committee
be deemed to be a trustee of shares or cash to be awarded under the Plan.
Any liability of the Company to any employee with respect to a Stock Award
under this Plan shall be based solely upon any contractual obligations which
may be created by the Plan and any agreement consistent with this Plan; no
such obligation of the Company shall be deemed to be secured by any pledge
or other encumbrance on any property of the Company. Neither the Company
nor the Board nor the Committee shall be required to give any security or
bond for the performance of any obligation which may be created by this Plan.
XXIII. GOVERNING LAW
This Plan and all determinations made and actions taken pursuant hereto
shall be governed by the laws of the State of California and construed
accordingly.
(FRONT OF PROXY CARD)
OPTICAL COATING LABORATORY, INC.
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned hereby appoints JOSEPH C. ZILS and AGIE NAVARRO, or either
of them, each with the power of substitution as proxies of the undersigned
to attend the Annual Meeting of Stockholders of Optical Coating Laboratory,
Inc. to be held at the Doubletree Hotel, 3555 Round Barn Boulevard, Santa
Rosa, California on March 30, 1995 at 4:00 p.m., and any adjournment
thereof, and to vote all shares held by the undersigned on the following:
1. FOR __; WITHHOLD AUTHORITY FOR __ the election as directors of the
Company of the five persons listed below:
(MANAGEMENT RECOMMENDS A VOTE FOR ITEM 1.)
Herbert M. Dwight, Jr., Douglas C. Chance, John McCullough,
Julian Schroeder, Renn Zaphiropoulos
(Instructions: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided below.)
----------------------------------------------------------------
2. FOR __; WITHHOLD AUTHORITY FOR __ approval of the 1995 Incentive
Compensation Plan.
(MANAGEMENT RECOMMENDS A VOTE FOR ITEM 2.)
3. FOR __; AGAINST __; ABSTAIN __ ratification of Deloitte & Touche LLP as
the Company's independent auditors.
(MANAGEMENT RECOMMENDS A VOTE FOR ITEM 3.)
4. In their discretion, upon such other matters as may properly be brought
before the meeting or any adjournment thereof;
with all powers that the undersigned would possess if personally present, and
hereby ratifies and confirms all that said proxies may do in the premises.
(continued and to be signed on reverse side)
(RIGHT FRONT SIDE OF PROXY CARD)
PROXY
(OCLI Logo)
Annual Meeting
of Stockholders
March 30, 1995
(BACK OF PROXY CARD)
(Continued from other side)
IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR ITEMS 1, 2 AND
3.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
THEREIN BY THE UNDERSIGNED STOCKHOLDER.
If the stock is issued in the names of two or more persons, only one of
them needs to sign the proxy. A proxy executed by a corporation should
be signed in its name by an authorized officer. Executors, administrators
and trustees should so indicate when signing.
Dated: _________________________, 1995
______________________________________
Signature of Stockholder
______________________________________
Signature of Stockholder
Please sign exactly as name or
names appear at left
(COVER LETTER TO STOCKHOLDERS)
(OCLI LOGO) OPTICAL COATING LABORATORY, INC.
DEAR OCLI STOCKHOLDER:
As a result of omissions from the Notice of Annual Meeting of Stockholders
and Proxy Statement dated February 24, 1995, the Company has issued the
enclosed, revised Notice of Annual Meeting of Stockholders and Proxy
Statement dated March 10, 1995. We would like to direct you, in particular,
to the description of the Company's Proposed 1995 Incentive Compensation
Plan, where most of the changes have been made.
Please complete and return the enclosed proxy card based upon the
additional information provided in the revised Proxy Statement.
We apologize for any confusion or inconvenience this oversight may have
caused and appreciate your continued support.
Sincerely,
/s/JOSEPH C. ZILS
Joseph C. Zils
General Counsel and Secretary
March 10, 1995
