<PAGE> 1
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
Pacific Scientific Company
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
Richard V. Plat, Senior Vice President and Secretary
- --------------------------------------------------------------------------------
(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 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:
-----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
Set forth the amount on which the filing fee is calculated and state how it was
determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
-----------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
3) Filing Party:
-----------------------------------------------------------------------
4) Date Filed:
-----------------------------------------------------------------------
<PAGE> 2
[LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 27, 1994
To The Stockholders:
You are cordially invited to attend the 1994 Annual Meeting of Stockholders
of Pacific Scientific Company, which will be held at the Newport Center
Conference Center, located at 610 Newport Center Drive, Suite 130, Newport
Beach, California on Wednesday, April 27, 1994 at 10:00 A.M. for the following
purposes:
(a) To elect a Board of seven Directors for the ensuing year;
(b) To ratify the appointment of Deloitte & Touche as independent
public accountants; and
(c) To consider and act upon such other matters as may properly come
before the meeting.
The close of business on March 4, 1994 has been fixed as the record date
for stockholders to receive notice of and to vote at the meeting or any
adjournment or postponement thereof. Holders of a majority of the outstanding
shares must be present either in person or by proxy in order for the meeting to
be held. The proxy is revocable at any time in the manner set forth on page 1 of
the Proxy Statement and will not affect your right to vote in person in the
event you attend the meeting.
By Order of the Board of
Directors,
RICHARD V. PLAT
Senior Vice President & Secretary
March 11, 1994
WHETHER YOU ATTEND THE MEETING OR NOT, YOU ARE REQUESTED TO SIGN
AND DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE AT YOUR
EARLIEST CONVENIENCE. FOR THOSE ATTENDING THE MEETING, AMPLE PARKING WILL BE
AVAILABLE.
<PAGE> 3
ANNUAL MEETING OF STOCKHOLDERS
APRIL 27, 1994
------------------------
PROXY STATEMENT
This Proxy Statement is furnished by Pacific Scientific Company, 620
Newport Center Drive, Suite 700, Newport Beach, CA 92660 (the "Company"), in
connection with the solicitation by the Company's Board of Directors of proxies
to be voted at the Annual Meeting of Stockholders to be held on Wednesday, April
27, 1994 at 10:00 a.m., or any adjournments or postponements thereof. The Board
of Directors has fixed the close of business on March 4, 1994, as the record
date for determining stockholders entitled to notice of and to vote at the
annual meeting. As of that date, 5,417,385 shares of the Company's Common Stock
were issued and outstanding.
Any person giving a proxy has the right to revoke it before it is
exercised. It may be revoked by filing with the Secretary of the Company an
instrument of revocation or by delivering at the annual meeting a duly executed
proxy bearing a later date. It also may be revoked by attendance at the meeting
and election to vote in person.
All expenses incurred in connection with solicitation of the enclosed proxy
will be paid by the Company. In addition to solicitation by mail, officers,
directors and regular employees of the Company, who will receive no additional
compensation for their services, may solicit proxies by mail, telephone,
telegraph or personal call. The Company has requested brokers and nominees who
hold stock in their names to furnish this proxy material to their customers and
will reimburse such brokers and nominees for their related out-of-pocket
expenses.
The approximate date on which this Proxy Statement and the enclosed proxy
are first being sent to the Company's stockholders is March 11, 1994. A copy of
the Company's Annual Report for the fiscal year ended December 31, 1993
accompanies this Proxy Statement.
VOTING RIGHTS
Each share of Common Stock outstanding on the record date is entitled to
one vote. As provided by the Company's Bylaws and by California law, in electing
directors no stockholder shall be entitled to cumulate votes (i.e., cast for any
one candidate a number of votes greater than the number of such stockholder's
shares) unless the candidates' names have been placed in nomination prior to the
commencement of voting and at least one stockholder has given notice prior to
commencement of the voting of an intention to cumulate votes. If any stockholder
has given such notice, then each stockholder may cumulate votes and give one
candidate a number of votes equal
<PAGE> 4
to the number of directors to be elected multiplied by the number of votes to
which the stockholder's shares are entitled, or the stockholder may distribute
his votes on the same principle among as many candidates as may be desired. The
candidates receiving the highest number of votes, up to the number of directors
to be elected, shall be elected. If cumulative voting is in effect, the persons
named in the accompanying proxy will vote the shares covered by proxies received
by them among the candidates named herein as they shall determine, unless a
contrary direction is made on such proxies.
An automated system administered by the Company's transfer agent tabulates
the votes. Abstentions and broker non-votes are each included in the
determination of the number of shares present and voting. Each is tabulated
separately. Abstentions are counted in tabulations of the votes cast on
proposals presented to stockholders, whereas broker non-votes are not counted
for purposes of determining whether a proposal has been approved.
COMMON STOCK OWNERSHIP
The following table sets forth information with respect to any person known
by the Company to be the beneficial owner of more than 5% of the Company's
Common Stock as of March 4, 1994:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP(1) OF CLASS
--------------------------------- ------------ --------
<S> <C> <C>
David L. Babson & Company, Inc. 444,800 8.21%
One Memorial Drive
Cambridge, Massachusetts 02142
Dimensional Fund Advisors Inc. 357,500 6.60%
1299 Ocean Ave., 11th Floor
Santa Monica, California 90401
</TABLE>
2
<PAGE> 5
The following table sets forth information with respect to beneficial
ownership of the Company's Common Stock by all directors and nominees, by each
of the executive officers named in the Summary Compensation Table beginning on
page 8 (the "Summary Compensation Table,") and by all directors and executive
officers as a group, as of March 4, 1994.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME OF BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP(1)(2) OF CLASS
------------------------------------------------ --------------- --------
<S> <C> <C>
Directors:
Walter F. Beran 1,000 *
Ralph O. Briscoe 12,000 *
Edgar S. Brower, Chairman 144,665(3) 2.67%
William A. Preston 2,700 *
Millard H. Pryor, Jr. 1,600 *
Thomas P. Stafford 0 *
Harry W. Todd 5,000 *
Officers:
Steven L. Brietzka 20,469 *
Robert L. Day 7,900 *
Ronald B. Nelson 14,525 *
Richard V. Plat 104,824 1.93%
All Directors and Executive
Officers as a Group (17 persons): 402,973 7.44%
</TABLE>
- ---------------
* Represents less than 1%.
(1) Information with respect to beneficial ownership is based upon the Company's
stock records and data supplied to the Company by the stockholders.
(2) Includes certain shares which the following have the right to acquire within
sixty days of March 4, 1994, through the exercise of stock options under the
Company's stock option plan: Mr. Briscoe, 10,000 shares; Mr. Brower, 33,451
shares; Mr. Brietzka, 13,600 shares; Mr. Day, 4,500 shares; Mr. Nelson,
8,000 shares; Mr. Plat, 41,150 shares.
(3) Includes 50,000 shares issued pursuant to a restricted stock agreement. See
the Summary Compensation Table.
3
<PAGE> 6
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors, executive officers and
holders of more than 10% of the Company's Common Stock to file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
The Company is not aware of any holder of more than 10% of the Company's Common
Stock. The Company believes that during the fiscal year ended December 31, 1993,
its officers and directors complied with all Section 16(a) filing requirements.
In making these statements, the Company has relied upon the representations of
its directors and officers.
ELECTION OF DIRECTORS
During the fiscal year ended December 31, 1993, Mr. Roger W. Johnson was
appointed by the President of the United States to serve as the Administrator of
the General Services Administration. On July 27, 1993 the Board of Directors
regretfully accepted Mr. Johnson's resignation. In August, the Board amended the
Company Bylaws, in accordance with the terms thereof, to reduce the number of
authorized directors from eight to seven.
At the annual meeting, it is intended that the persons named in the proxy
will vote for the election of the seven nominees listed below, each director to
serve until the next annual meeting or until his successor is elected and
qualified. All of the nominees are now members of the Board. If any nominee, for
any reason currently unknown, cannot be a candidate for election, proxies will
be voted for the election of a substitute recommended by the Board.
Biographical summaries and ages, as of December 31, 1993, of individuals
nominated by the Board of Directors for election as directors appear below. 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 March 4, 1994, appears on
page 3 of this proxy statement.
INFORMATION CONCERNING NOMINEES FOR DIRECTOR
WALTER F. BERAN; AGE 68; CHAIRMAN, PACIFIC ALLIANCE GROUP
Mr. Beran was elected a director of the Company in 1987. He served as
Vice Chairman and Western Regional Managing Partner of Ernst & Young
from 1971 until his retirement on September 30, 1986, when he became an
independent consultant. He joined the Pacific Alliance Group (a
financial services firm) in 1988, as Chairman. Mr. Beran also serves as
a director of Arco Chemical Company, Fleetwood Enterprises Inc., the
Hillhaven Corporation, and the Federal Home Loan Bank of San Francisco.
4
<PAGE> 7
RALPH O. BRISCOE; AGE 66; BUSINESS CONSULTANT
Mr. Briscoe was elected a director of the Company in 1985. Prior to
his retirement in 1986, Mr. Briscoe was President, Chief Executive
Officer and a director of Triton Group Ltd. Since his retirement, he
has worked as a business consultant.
EDGAR S. BROWER; AGE 63; CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE
OFFICER OF THE COMPANY
Mr. Brower joined the Company in 1985 as Chief Executive Officer and a
member of the Board. He has served as Chairman of the Board since
1990. Prior to joining the Company, Mr. Brower served as an executive
with Allied Corporation from 1977 until 1985, most recently as Group
Vice President and President of Allied Electronic Components Company.
From 1972 to 1977, he served as Assistant Postmaster General of the
United States.
WILLIAM A. PRESTON; AGE 57; CHAIRMAN AND MAJORITY OWNER OF APM, INC.
Mr. Preston was elected a director in 1979. He has been Chairman and
majority owner of APM, Inc., a speciality plastics manufacturer, since
1969. Mr. Preston is also a director of University National Bank &
Trust Company.
MILLARD H. PRYOR, JR.; AGE 60; MANAGING DIRECTOR, PRYOR & CLARK COMPANY
Mr. Pryor became a director in 1992. He is the Managing Director of
Pryor and Clark Company (a real estate and investment holding
company), which he had served as an executive since 1970. In addition
to performing these duties, Mr. Pryor is the Chairman of the Board of
GEO International Company. He became a director of Corcap, Inc. in
1992, after having been an executive officer since 1988, and is also a
director of Compudyne Corporation, The Hartford Funds, Infodata
Systems Inc., The Wiremold Company and Hoosier Magnetics Inc.
Additionally, Mr. Pryor was the Chief Executive Officer of Lydall Inc.
(a manufacturer of materials from specialty fibers) from 1972 through
1988.
5
<PAGE> 8
THOMAS P. STAFFORD; AGE 63; CHAIRMAN OF THE BOARD, OMEGA WATCH
CORPORATION OF AMERICA AND VICE CHAIRMAN AND CO-FOUNDER OF STAFFORD, BURKE
AND HECKER, INC.
Mr. Stafford has served as a director of the Company since
1987. In addition to his duties as Chairman of the Board of Omega
Watch Corporation of America and as Vice Chairman and co-founder of
Stafford, Burke and Hecker, Inc. (a Washington D.C.-based consulting
firm), Mr. Stafford also serves as a director of Allied Signal Inc.,
Wheelabrator Technologies, Inc., Tremont Inc., Seagate Technologies,
Inc., CMI, Inc., Fisher Scientific Inc. and Spectrum Technologies, Inc.
HARRY W. TODD; AGE 71; MANAGING PARTNER OF CARLISLE ENTERPRISES L.P.,
CHAIRMAN OF THE BOARD, PRECISION AEROTEC, INC.
Mr. Todd has served as a director of the Company since 1983. He
is also Director Emeritus of Rohr Industries, and a director of
Precision Aerotech, Inc., and Helmerich & Payne Incorporated. In 1991,
Mr. Todd completed his term as a director of the Federal Reserve Bank
of San Francisco-Los Angeles Branch. Mr. Todd retired in January 1990
as Chairman of the Board and Chief Executive Officer of Rohr
Industries, Inc., an aerospace manufacturing company. He joined Rohr
in 1980 as President and Chief Operating Officer. Previously, Mr. Todd
had been Chairman of the Board, President and Chief Executive
Officer of The L.E. Myers Company and Chairman of The L.E. Myers
International, Ltd.
COMMITTEES AND COMPENSATION OF THE BOARD OF DIRECTORS
The Company has standing Executive, Audit, Compensation and Nominating
Committees. During the Company's last fiscal year, the Board of Directors held
seven meetings; each director attended at least 75% of all regular Board
meetings and Committee meetings on which he served.
Executive Committee
The Executive Committee, consisting of Messrs. Brower, Preston (Chairman)
and Todd, has all the powers and authority of the Board of Directors in the
management of the business and the affairs of the Company, except those powers
which by law cannot be delegated by the Board of Directors. Although the
Executive Committee has broad powers, in practice it meets only when it would be
inconvenient to call a meeting of the Board. One meeting of the Executive
Committee was held during the Company's last fiscal year.
6
<PAGE> 9
Audit Committee
The Audit Committee, consisting of Messrs. Beran (Chairman), Briscoe,
Preston, Pryor and Todd, met three times during the last fiscal year. The Audit
Committee makes recommendations concerning the engagement of the Company's
independent auditors, consults with the independent auditors concerning the
audit plan and reviews the comments and recommendations resulting from the
auditors' report and management letter. The Audit Committee also reviews the
program of the internal auditor and consults with her on questions of interest.
Compensation Committee
The Compensation Committee, consisting of Messrs. Briscoe (Chairman),
Stafford and Todd, met once during the last fiscal year. The Compensation
Committee makes recommendations to the Board of Directors on the annual salary
rates of all elected officers of the Company, makes recommendations to the Board
on incentive compensation, stock options and compensation matters and
administers the incentive compensation, stock option and other compensation
plans of the Company.
Nominating Committee
The Nominating Committee, consisting of Messrs. Beran, Briscoe and Preston
(Chairman), makes recommendations to the Board of Directors regarding candidates
to fill future vacancies on the Board. There is no established procedure for
submission of nominations by stockholders. The Nominating Committee did not meet
during the last fiscal year.
Director's Compensation
The annual retainer paid to each director is $12,000 per year. Compensation
for attendance at each meeting of the Board of Directors, attendance at each
meeting of a committee of the Board and the per day rate paid for participating
in special assignments on behalf of the Company is $800 per meeting and/or day.
There is also a provision for the payment of $2,000 per year in additional fees
for the chairmen of the Audit, Compensation and Executive Committees. Mr. Brower
receives neither annual fees nor any additional fees for attending Board or
Board Committee meetings.
Director's Retirement Plan
The Company maintains a retirement plan for members of the Board. The plan
provides for an annual benefit payable to a retiree equal to the director's
annual retainer during the twelve-month period immediately preceding retirement
from the Board. The benefit commences any time after age sixty-five (65),
provided the director is no longer serving as a director of the Company.
7
<PAGE> 10
Directors who leave the Board before age sixty-five (65) after completing five
(5) years of Board service are eligible to receive a benefit upon attaining age
sixty-five (65).
The plan provides that the retirement benefit will be paid over the lesser
of twelve (12) years or the number of years a director serves on the Board. In
the event of death while a director, a surviving spouse is entitled to receive
an annual benefit equal to 50% of the annual retainer payable to the director at
the date of death, such benefit to be paid for a period equal to the total
number of years of service the deceased director served on the Board, not to
exceed twelve (12) years.
The benefits paid under this plan are a direct obligation of the Company
and are reflected as a financial statement liability determined in accordance
with accepted actuarial assumptions.
EXECUTIVE COMPENSATION
The following table discloses compensation received, for the three fiscal
years ended December 31, 1993, by the Company's Chief Executive Officer and the
next four most highly paid executive officers for fiscal 1993.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-------------------------------------- LONG TERM
OTHER ANNUAL COMPENSATION ALL OTHER
COMPENSATION AWARDS(3) COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) ($)(2) OPTIONS(#) ($)(4)
- ------------------------------- ---- --------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Edgar S. Brower................ 1993 $319,454 $ 137,233 $6,000 50,000 $108,497
President, Chief Executive 1992 299,301 85,045 6,000 -- 96,560
Officer, Chairman of the 1991 292,000 -- 1,500 -- *
Board and Director
Richard V. Plat................ 1993 208,788 71,563 -- 20,000 4,497
Senior Vice President, 1992 194,887 44,247 -- -- 4,364
Finance and Administration 1991 190,000 -- -- -- *
and Secretary
Ronald B. Nelson............... 1993 145,412 73,328 -- 6,525 3,635
Vice President; President, 1992 141,123 70,875 -- -- 3,528
Motor & Control Division 1991 135,000 57,009 -- -- *
Steven Breitzka(5)............. 1993 128,539 59,525 -- 5,575 4,363
Vice President; President, 1992 118,241 40,019 -- -- 1,947
HTL/Kin-Tech Division 1991 -- -- -- -- *
Robert L. Day(6)............... 1993 105,115 45,674 -- 3,400 2,498
Vice President; President, 1992 -- -- -- -- *
Energy Dynamics Division 1991 -- -- -- -- *
</TABLE>
8
<PAGE> 11
- ---------------
(1) The amounts shown in this column reflect payments under the Company's
Management Incentive Plan which is described more thoroughly in the
Compensation Committee Report on Executive Compensation, which begins on
page 13 of this proxy statement.
(2) The amounts shown in this column reflect the non-preferential dividends
earned by Mr. Brower as part of his long-term incentive agreement with the
Company. Mr. Brower holds 50,000 shares of restricted common stock valued at
$875,000 when awarded on April 23, 1986 as a long-term incentive. Mr. Brower
has all voting, dividend (non-preferential) and other stockholder rights
with respect to these shares. In order to receive the shares, Mr. Brower
must retain his position with the Company until July 1995 when the
restricted term expires. The restricted term also expires in the event of
death, disability and certain types of involuntary termination.
(3) For the three-year period ended December 31, 1993, no restricted stock
awards were made.
(4) The amounts disclosed in this column include:
(a) Accrual by the Company in fiscal 1993 of $104,000 and in 1992 of $92,208
on behalf of Mr. Brower for his supplementary Executive Retirement Plan.
The Executive Retirement Plan is provided to Mr. Brower only, and is in
addition to and duplicates the benefits provided by the Post-1985 Company
Plan for employees hired after January 1, 1985 (described below). This
Plan is not separately funded and rights to receive payment are identical
to those of an unsecured creditor.
(b) Company contributions under Pacific Scientific's Savings Plan, a defined
contribution plan, for 1993 were: Mr. Brower, $4,497; Mr. Plat, $4,497;
Mr. Nelson, $3,635; Mr. Breitzka, $4,363; and Mr. Day, $2,498. For 1992,
the Company contributions were: Mr. Brower, $4,352; Mr. Plat, $4,364; Mr.
Nelson, $3,528; and Mr. Breitzka, $1,947.
(5) Mr. Breitzka was promoted to the position of Vice President and President of
the HTL/Kin-Tech Division in January 1992. He was not an executive officer
of the Company prior to that date, therefore no executive compensation is
reported for the year 1991.
(6) Mr. Day was promoted to the position of Vice President and President of the
newly created Energy Dynamics Division in March 1993. He was not an
executive officer of the Company prior to that date, therefore no executive
compensation is reported for the years 1991 and 1992.
* Under the Commission's transition rules, no disclosure is required.
9
<PAGE> 12
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on option grants in fiscal 1993 to
the named executive officers.
All options granted by the Company are pursuant to the Pacific Scientific
Company 1992 Key Employee Stock Option Plan, as described in the Compensation
Committee Report on Executive Compensation under the caption "Long-Term
Incentive Compensation" on page 15 of this proxy statement.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL
--------------------------------------------------- REALIZED VALUE AT
% OF TOTAL ASSUMED ANNUAL
OPTIONS RATES OF STOCK PRICE
GRANTED TO APPRECIATION
OPTIONS EMPLOYEES IN EXERCISE FOR OPTION TERM
GRANTED FISCAL YEAR PRICE EXPIRATION -----------------------
NAME (#)(1) 1993(2) ($/SH) DATE 5%($) 10%($)
- ---------------------------------- -------- ------------- --------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Edgar S. Brower................... 50,000 29% 15.13 June 2003 $1,231,851 $2,350,579
Richard V. Plat................... 20,000 12% 15.13 June 2003 492,741 940,232
Ronald B. Nelson.................. 3,625 2% 15.13 June 2003 89,309 170,417
2,900 2% 18.13 October 2003 71,447 136,334
Steven L. Breitzka................ 3,075 2% 15.13 June 2003 75,759 144,561
2,500 1% 18.13 October 2003 61,593 117,529
Robert L. Day..................... 1,800 1% 15.13 June 2003 44,347 84,621
1,600 1% 18.13 October 2003 39,419 75,218
</TABLE>
- ---------------
(1) The shares become fully exercisable after five years with vesting occurring
at a rate of 20% per year.
(2) The Company granted options representing 172,980 shares to employees in
fiscal 1993.
10
<PAGE> 13
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table provides information on the number of unexercised
options and the value of the in-the-money unexercised options held by the named
executive officers at December 31, 1993. During the fiscal year ended December
31, 1993, no options were exercised by any of the named executive officers. The
Company currently does not grant stock appreciation rights.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS IN-THE-MONEY OPTIONS
ACQUIRED VALUE AT FISCAL YEAR-END(#)(1) AT FISCAL YEAR-END($)(2)
ON EXERCISE REALIZED ----------------------------- -----------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------- ----------- -------- ------------ -------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Edgar S. Brower.......... -- -- 30,451 53,000 $279,363 $378,875
Richard V. Plat.......... -- -- 39,275 21,875 289,309 158,047
Ronald B. Nelson......... -- -- 6,000 8,525 57,750 56,207
Steven L. Breitzka....... -- -- 12,600 6,575 100,738 41,150
Robert L. Day............ -- -- 3,750 4,150 36,656 26,219
</TABLE>
- ---------------
(1) The numbers shown reflect options accumulated over a ten-year period.
(2) The closing price of the Company's Common Stock on December 31, 1993 on the
New York Stock Exchange was $22.125.
RETIREMENT BENEFITS
To provide for retirement income for its employees, the Company has pension
plans designed to qualify under applicable provisions of the Internal Revenue
Code of 1986, as amended. All full-time employees in the United States are
eligible to participate in a pension plan after one year of service. The plans
are funded solely by Company contributions.
Effective January 1, 1985, the Company Plan was revised to combine all
existing employee group retirement plans of the Company into one defined benefit
plan. Employees hired on and after January 1, 1985 participate in the revised
Company Plan (the "Post-1985 Company Plan"). Employees hired prior to January 1,
1985 have the option of receiving retirement benefits from whichever plan
provides the higher retirement benefit.
11
<PAGE> 14
COMPANY PLAN
ESTIMATED ANNUAL RETIREMENT BENEFITS(1)
<TABLE>
<CAPTION>
HIGHEST
FIVE-YEAR 15 20 25 30 35
AVERAGE YEARS OF YEARS OF YEARS OF YEARS OF YEARS OF
COMPENSATION SERVICE SERVICE SERVICE(2) SERVICE(2) SERVICE(2)
------------ ---------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$125,000........................... $ 49,500 $ 66,500 $ 81,000 $ 81,000 $ 81,000
175,000........................... 71,400 95,700 116,000 116,000 116,000
225,000........................... 93,300 124,900 151,000 151,000 151,000
275,000........................... 115,200 154,100 186,000 186,000 186,000
325,000........................... 137,100 183,300 221,000 221,000 221,000
375,000........................... 159,000 212,500 256,000 256,000 256,000
425,000........................... 180,900 241,700 291,000 291,000 291,000
475,000........................... 202,800 270,900 326,000 326,000 326,000
525,000........................... 224,700 300,100 361,000 361,000 361,000
</TABLE>
POST-1985 COMPANY PLAN
ESTIMATED ANNUAL RETIREMENT BENEFITS(1)
<TABLE>
<CAPTION>
HIGHEST
FIVE-YEAR 15 20 25 30 35
AVERAGE YEARS OF YEARS OF YEARS OF YEARS OF YEARS OF
COMPENSATION SERVICE SERVICE SERVICE SERVICE SERVICE
------------ ---------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$125,000........................... $ 26,600 $ 35,400 $ 44,300 $ 53,100 $ 62,000
175,000........................... 37,800 50,400 63,000 75,600 88,200
225,000........................... 49,100 65,400 81,800 98,100 114,500
275,000........................... 60,300 80,400 100,500 120,600 140,700
325,000........................... 71,600 95,400 119,300 143,100 167,000
375,000........................... 82,800 110,400 138,000 165,600 193,200
425,000........................... 94,100 125,400 156,800 188,100 219,500
475,000........................... 105,300 140,400 175,500 210,600 245,700
525,000........................... 116,600 155,400 194,300 233,100 272,000
</TABLE>
- ---------------
(1) Cash compensation that may be taken into account when calculating benefits
under both the Company Plan and the Post-1985 Company Plan is limited by the
Internal Revenue Service. That limit was $235,840 during 1993. The amounts
presented above were calculated to show the benefit earned without regard to
the Internal Revenue Service limits.
(2) Maximum benefits are obtained at 24 pension service years.
12
<PAGE> 15
The compensation covered by the plans for which benefits are summarized in
the tables above include salary, wages, bonuses and commissions. The covered
compensation for each of the executive officers named in the Summary
Compensation Table is the highest 5 consecutive years' average of the past 10
years of salary and bonus. Mr. Brower is provided with a supplementary Executive
Retirement Plan which is in addition to and duplicates the benefits provided by
the Post-1985 Company Plan.
The officers named in the Summary Compensation Table have been credited
with the following years of service: Mr. Brower, 8 years: Mr. Plat, 16 years;
Mr. Nelson, 4 years; Mr. Breitzka, 11 years; and Mr. Day, 12 years. Of these
officers, Mr. Plat is the only one to have the option of receiving benefits
under either of the plans as described above.
The benefits under the Company Plan are subject to the deduction of a
portion of Social Security or equivalent benefits (maximum deduction limited to
50%, which is reached at 18.75 pension service years) and are computed on the
ten-year certain and life amounts.
The benefits under the Post-1985 Company Plan are not subject to any
deduction for Social Security (nor are there any other offset amounts) and are
computed on the basis of an excess plan.
TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS
The Company has entered into agreements with Messrs. Brower and Plat
pursuant to which adequate and fair severance compensation will be provided to
these officers if their employment should cease after a "change in control of
the Company," which is effectively defined as a change in control which must be
disclosed under Schedule A of Regulation 14A of the Exchange Act. Upon a change
in control of the Company, each agreement allows the named officer to terminate
his employment upon a change in duties or responsibilities or a reduction in
compensation. The present value of these severance benefits would include
accrued salary plus an amount up to 2.99 times a base amount defined as the
average annual gross income for the five years prior to the termination.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
OVERVIEW AND PHILOSOPHY
The Compensation Committee of the Board of Directors (the "Committee") is
composed of outside directors and is responsible for developing and making
recommendations to the Board with respect to the compensation received by the
Company's executive officers (including the named executive officers).
13
<PAGE> 16
The Committee has available to it an outside compensation consultant and
access to independent compensation data. The general objectives of the
compensation program are:
- Competitiveness and design flexibility to attract and retain top caliber
management
- Pay for performance
- Focus on stockholder value creation
The executive compensation program provides an overall level of
compensation opportunity that is competitive within similar industries as well
as within a broader group of companies of comparable size and complexity. Actual
compensation levels may be higher or lower than the average competitive levels
in the surveyed group of companies based upon the discretion of the Committee as
well as individual performance.
EXECUTIVE OFFICER COMPENSATION PROGRAM
The Company's executive officer compensation program is comprised of base
salary, annual incentive compensation, long-term incentive compensation in the
form of stock options and various benefits including medical and pension plans
generally available to employees of the Company.
Base Salary
Base salary levels for the Company's executive officers are competitive and
generally set at the median, relative to other comparable manufacturing
companies of similar size and complexity. In determining base salary, the
Committee also takes into consideration qualifications, experience, performance
and other specific issues particular to the Company.
Annual Incentive Compensation
The Management Incentive Plan is the Company's annual bonus program for
executive officers and key managers. Approximately 75 employees were eligible
for bonus incentive compensation during 1993. The purpose of the plan is to
provide a direct financial incentive in the form of an annual cash bonus to
executives and key employees to achieve their business units' or the Company's
annual goals. Target goals for the Company's and the business units'
performances are set at the beginning of each year. The measures of the
Company's performance include pre-tax income, management of receivables,
inventory turns and other factors. No bonus is paid unless a 75% performance
threshold is exceeded. A full target bonus is paid only if the goals are fully
met. Exceeding goals can result in a bonus equal to 150% of the target bonus.
Target bonus awards, as a percent of base salary, are set at a competitive level
for a broad group of companies of comparable size and complexity.
14
<PAGE> 17
Long-Term Incentive Compensation
The 1992 Key Employee Stock Option Plan is the Company's long-term
incentive program for executive officers and key employees. The objective of the
program is to align the executives' and stockholders' long-term interests by
creating a strong and direct link between executive pay and stockholder return
and to enable the executives to develop and maintain a significant, long-term
stock ownership position in the Company's common stock. The proportion of stock
options awarded is a function of salary and position in the Company.
Benefits
The Company provides medical and pension benefits to the executive officers
that are generally available to Company employees. The amount of perquisites, as
determined in accordance with the rules of the Securities and Exchange
Commission relating to executive compensation, did not exceed 10% of salary for
fiscal 1993.
Chief Executive Officer Compensation
Mr. Brower's annual base salary was $292,000 and $306,000 for the years
1991 and 1992, respectively. During 1993, his annual base salary was increased
by 5% to $320,000. This 5% increase was equal to the average merit increase
received by the Company's other salaried employees. The Committee believes that
Mr. Brower has successfully restructured the Company's business to adjust to
declines in the aerospace business and effectively directed the Company during
difficult economic conditions.
Mr. Brower's annual base salary is at approximately the 50th percentile of
other chief executive officers' base salary, calculated using a compensation
data base for manufacturing companies with similar sales and, where possible,
organized similar to Pacific Scientific's divisional structure.
Mr. Brower's bonus in fiscal 1993 was $137,233. In fiscal 1992, he received
$85,045 and no bonus was paid for fiscal 1991. The bonus payment was determined
using the same formula as used for all other key employees.
In accordance with the 1992 Key Employee Stock Option Plan (as described
above), Mr. Brower received 50,000 stock options in fiscal 1993. No stock
options were awarded to Mr. Brower during fiscal 1991 or 1992.
MEMBERS OF THE COMPENSATION COMMITTEE
Ralph O. Briscoe, Chairman
Thomas P. Stafford
Harry W. Todd
15
<PAGE> 18
STOCK PRICE PERFORMANCE GRAPH
The information in the foregoing report and the following graph shall not
be incorporated by reference (by any general statement incorporating this proxy
statement by reference or otherwise) into any prior or future filing under the
Exchange Act or the Securities Act of 1933, except to the extent Pacific
Scientific Company specifically incorporates this information by reference, and
shall not otherwise be deemed filed under such Acts.
Note: The stock price performance shown on the graph below is not
necessarily indicative of future price performance.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
OF PACIFIC SCIENTIFIC COMPANY, S&P 500 INDEX
AND S&P HIGH TECHNOLOGY COMPOSITE INDEX
<TABLE>
<CAPTION>
PACIFIC
MEASUREMENT PERIOD SCIENTIFIC
(FISCAL YEAR COVERED) COMPANY S&P 500 S&P HIGH-TECH
<S> <C> <C> <C>
1988 100 100 100
1989 155 131 99
1990 82 127 101
1991 96 166 115
1992 162 179 120
1993 231 197 147
</TABLE>
The cumulative total return calculation assumes $100 invested on December
30, 1988 and dividend reinvestment. The graph above is calculated through the
fiscal year ended December 31, 1993.
16
<PAGE> 19
APPOINTMENT OF AUDITORS
The firm of Deloitte & Touche, certified public accountants, has been the
Company's independent accountants since 1972 and has been selected by the Board
of Directors to serve as its independent accountants for the fiscal year ending
December 30, 1994.
The independent accountants meet periodically with the Audit Committee of
the Board of Directors. The members of the Audit Committee are Messrs. Beran,
Briscoe, Preston, Pryor and Todd.
Professional services performed by Deloitte & Touche for the fiscal year
ended December 31, 1993 consisted of an audit of the consolidated financial
statements of the Company and its subsidiaries, limited reviews of interim
financial information, services related to filings with the Securities and
Exchange Commission, meetings with the Company's Audit Committee, and
consultation on various matters relating to accounting and financial reporting.
The Audit Committee approved in advance or ratified each of the major
professional services provided by Deloitte & Touche and considered the possible
effect of each such service on the independence of that firm.
Representatives of Deloitte & Touche are expected to be present at the
annual meeting with the opportunity to make a statement, if they desire, and
will be available to respond to appropriate questions during the meeting.
An affirmative vote of a majority of the shares present and voting at the
meeting is required for ratification of the appointment of the auditors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION.
STOCKHOLDER PROPOSALS
Proposals by stockholders to be presented at the Company's 1995 annual
meeting must be received by the Company no later than 120 days prior to March
10, 1995, in order to be considered for inclusion in the Company's proxy
statement and form of proxy for such meeting.
17
<PAGE> 20
OTHER MATTERS
Management knows of no other business to be presented at the annual
meeting. If other matters do properly come before the meeting, or any
adjournments or postponements thereof, it is the intention of the persons named
in the proxy to vote on such matters according to their best judgment.
By Order of the Board of
Directors,
RICHARD V. PLAT
Senior Vice President & Secretary
Dated: March 11, 1994
IT IS IMPORTANT THAT THE ENCLOSED PROXY CARD BE COMPLETED AND RETURNED. YOUR
COOPERATION IN PROMPTLY RETURNING YOUR SIGNED PROXY CARD WILL BE HELPFUL IN
REDUCING EXPENSES INCIDENTAL TO FOLLOWING UP THIS PROXY SOLICITATION.
18
<PAGE> 21
NOTICE OF
ANNUAL
MEETING OF
STOCKHOLDERS
AND PROXY
STATEMENT
APRIL 27, 1994
[LOGO]
<PAGE> 22
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
/X/
Please mark
your votes
as this
------------------
COMMON
(1) ELECTION OF DIRECTORS
FOR all nominees listed at right
(except as marked to the
contrary at right) / /
WITHHOLD AUTHORITY
to vote for all nominees
listed at right / /
(INSTRUCTION: To withhold authority to vote for any individual nominee strike a
line through the nominee's name in the list below)
W. Beran, R. Briscoe, E. Brower, W. Preston, M. Pryor, Jr., T. Stafford,
H. Todd
2. PROPOSAL TO RATIFY THE ELECTION OF Deloitte & Touche as the Company's
independent public accountants.
FOR AGAINST ABSTAIN
/ / / / / /
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders to be held April 27, 1994 and the Proxy Statement furnished
herewith.
-------------------------------
Signature
Dated: , 1994
------------------
Please sign exactly as name appears hereon. When signing as attorney, executor,
administrator, trustee or guardian, give full title as such. If more than one
name appears hereon, all persons named should sign.
PACIFIC SCIENTIFIC COMPANY
The undersigned stockholder of PACIFIC SCIENTIFIC COMPANY hereby appoints
EDGAR S. BROWER, RICHARD V. PLAT, or either of them, proxies of the
undersigned, each with full power to act without the other and with the power
of substitution to represent the undersigned at the Annual Meeting of
Stockholders of Pacific Scientific Company to be held at Newport Center
Conference Center, 610 Newport Center Drive, Suite 130, Newport Beach,
California 92660 on April 27, 1994 at 10:00 A.M. (California time), and at any
adjournments or postponements thereof, and to vote all shares of stock of the
Company standing in the name of the undersigned with all the powers the
undersigned would possess if personally present, in accordance with the
instructions below and on the reverse hereof, and in their discretion upon such
other business as may properly come before the meeting; provided however, that
such proxies, or either of them, shall have the power to cumulate votes and
distribute them among the nominees listed below as they see fit, and to drop
any of such nominees, in order to ensure the election of the greatest number of
such nominees.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS BELOW AND ON
THE REVERSE HEREOF, AND WILL BE VOTED IN FAVOR OF ANY MATTER BELOW AS TO WHICH
NO INSTRUCTIONS ARE INDICATED.
IMPORTANT: SIGNATURE REQUIRED ON REVERSE SIDE
