<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
PACIFIC SCIENTIFIC COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
RICHARD V. PLAT, EXECUTIVE VICE PRESIDENT AND SECRETARY
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $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 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------------------
(4) Date Filed:
----------------------------------------------------------------------
<PAGE> 2
(LOGO)
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 17, 1996
To The Stockholders:
You are cordially invited to attend the 1996 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 17, 1996 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 LLP 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 1, 1996 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
Executive Vice President and Secretary
March 15, 1996
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
PACIFIC SCIENTIFIC COMPANY
ANNUAL MEETING OF STOCKHOLDERS
APRIL 17, 1996
------------------------
PROXY STATEMENT
This Proxy Statement is furnished by Pacific Scientific Company, 620
Newport Center Drive, Suite 700, Newport Beach, California 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 17, 1996 at 10:00 a.m., and any adjournments or
postponements thereof. The Board of Directors has fixed the close of business on
March 1, 1996, as the record date for determining stockholders entitled to
notice of and to vote at the annual meeting. As of that date, 12,138,558 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 electing 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 15, 1996. A copy of
the Company's Annual Report for the fiscal year ended December 29, 1995
accompanies this Proxy Statement.
VOTING RIGHTS
Each share of Common Stock outstanding on the record date is entitled to
one vote on all matters to be voted on. 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 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 entitled to vote for purposes
of determining the presence of a quorum. Abstentions and broker non-votes are
tabulated separately. Abstentions and broker non-votes do not constitute a vote
"for" or "against" any matter and thus will be disregarded in any calculation of
"votes cast." The New York Stock Exchange determines whether
<PAGE> 4
brokers that do not receive instructions from beneficial owners are entitled to
vote on management proposals. In the event of a broker non-vote with respect to
a management proposal, arising from the absence of authorization by the
beneficial owner to vote as to a management proposal, the proxy will not be
deemed as present and entitled to vote as to the management proposal for
determining the total number of shares of which a majority is required for
adoption. Where no specification is made on a properly executed and returned
form of proxy, the shares will be voted in favor of the election of the nominees
for director and for the ratification of the appointment of Deloitte & Touche
LLP as independent public accountants, as indicated in the form of proxy.
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 1, 1996:
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) PERCENT OF CLASS
------------------- ----------------------- ----------------
<S> <C> <C>
Louis J. Petralli 792,364 6.6%
100 Granite Hill Road, #289 Common Stock
Grants Pass, OR 97526
</TABLE>
- ---------------
(1) Information with respect to beneficial ownership is based upon the Company's
stock records, and data supplied to the Company by the stockholders.
The following table sets forth information with respect to beneficial
ownership of the Company's Common Stock held by its directors, by each of the
executive officers named in the Summary Compensation Table beginning on page 6
(the "Summary Compensation Table"), and by all directors and executive officers
as a group, as of March 1, 1996.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1)(2) PERCENT OF CLASS
------------------------ -------------------------- ----------------
<S> <C> <C>
Directors:
Walter F. Beran 2,000 *
Ralph O. Briscoe 17,000 *
Edgar S. Brower, Chairman 259,331 2.1%
Ralph D. Ketchum 2,000 *
William A. Preston 8,000 *
Millard H. Pryor, Jr. 4,000 *
Thomas P. Stafford 300 *
Officers:
William T. Fejes, Jr. 4,652 *
Richard G. Knoblock 6,200 *
Ronald B. Nelson 16,774 *
Richard V. Plat 208,142 1.7%
All Directors and Executive
Officers as a Group (18 persons): 641,335 5.3%
</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 1, 1996, through the exercise of stock options under the
Company's stock option plans: Mr. Brower, 124,000 shares; Mr. Fejes, 4,652
shares; Mr. Knoblock, 6,200 shares; Mr. Nelson, 14,274 shares; Mr. Plat,
58,500 shares.
2
<PAGE> 5
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 beneficial 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 29, 1995, its executive officers and directors complied with all
Section 16(a) filing requirements, except that Ronald B. Nelson, a Vice
President of the Company, inadvertently failed to timely file one Form 4.
Subsequently, a Form 5 was timely filed by Mr. Nelson reporting the transaction.
In making these statements, the Company has relied upon a review of the forms
furnished to it and the representations of its directors and officers.
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
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 nominees are now members of the Board. Directors are to be
elected by a plurality of the votes cast at the annual meeting in person or by
proxy by the holders of shares entitled to vote in the election. Mr. Harry W.
Todd, currently a director, who has reached the mandatory retirement age of 72
years, has requested not to be renominated. In February 1996, the Board amended
the Company's Bylaws, in accordance with the terms thereof, to reduce the number
of authorized directors from eight to seven. 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.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" ALL SUCH NOMINEES.
Biographical summaries and ages 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 1, 1996, appears on page 2 of this
proxy statement.
INFORMATION CONCERNING NOMINEES FOR DIRECTOR
WALTER F. BERAN; AGE 70; 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 LLP
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., and
Vencor Inc.
RALPH O. BRISCOE; AGE 68; 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 65; 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.
RALPH D. KETCHUM; AGE 69; PRESIDENT, RDK CAPITAL, INC.
Mr. Ketchum was elected a director in 1994. He also serves on the boards
of Oglebay Norton Company, Thomas Industries, Lithium Technologies
Corporation, Metropolitan Savings Bank and Crescent Electric Supply
Company. He is also the General Partner of RDK Capital, L.P., and as
3
<PAGE> 6
such is the majority owner and CEO of Heintz Corporation (a manufacturer
of aircraft engine components) which filed for voluntary reorganization
under Chapter 11 of the United States Bankruptcy Code, in the federal
bankruptcy court of the Eastern District of Pennsylvania, on August 4,
1993. Mr. Ketchum was a long-time employee of General Electric Company,
rising to the position of Senior Vice President and Group Executive at
the time of his retirement. Mr. Ketchum was with GE from 1946 to 1987,
except for a three year period (1969-1972) when he served as Vice
President of Control Data Corporation.
WILLIAM A. PRESTON; AGE 59; 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 specialty plastics manufacturer, since
1969. Mr. Preston is also a director of University National Bank & Trust
Company.
MILLARD H. PRYOR, JR.; AGE 61; MANAGING DIRECTOR, PRYOR & CLARK COMPANY
Mr. Pryor became a director in 1992. He is a Managing Director of Pryor
& Clark Company (a real estate and investment holding company), which he
had served as an executive since 1970. He has been a director of Corcap,
Inc. since 1988 and served as an executive officer with that company
from 1988 to 1992. Mr. Pryor is also a director of 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.
THOMAS P. STAFFORD; AGE 65; 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., CMI, Inc.,
Fisher Scientific Inc., Seagate Technologies, Inc., Tracor Inc., Tremont
Inc. and Wheelabrator Technologies, Inc.
COMMITTEES AND COMPENSATION OF THE BOARD OF DIRECTORS
The Company has standing Executive, Audit, Compensation and Nominating
Committees and a Succession Committee. During the Company's last fiscal year,
the Board of Directors held six meetings and each director attended at least 75%
of all Board meetings and meetings of Committees on which he served.
Executive Committee
The Executive Committee, consisting of Messrs. Briscoe, Brower and Preston
(Chairman), 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. The Executive Committee met twice
during the Company's last fiscal year.
Audit Committee
The Audit Committee, consisting of Messrs. Beran (Chairman), Briscoe,
Ketchum, Preston, Pryor and Stafford, 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 Company's program of internal audit and consults with the Company's
internal auditors on questions of interest.
Compensation Committee
The Compensation Committee, consisting of Messrs. Ketchum, Preston and
Stafford (Chairman), met twice during the last fiscal year. The Compensation
Committee makes recommendations to the Board of
4
<PAGE> 7
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 Stafford
(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.
Succession Committee
The Succession Committee consisting of Messrs. Briscoe, Preston (Chairman)
and Stafford, was created at the February 22, 1995 Board's Meeting. The
Committee makes recommendations, as required, concerning the selection of the
Company's executive officers. To date, the Committee has had two meetings.
Director's Compensation
The Directors' Compensation Plan provides a $25,000 per year retainer with
no other meeting fees or additional retainer payable. Mr. Brower does not and
has not received an annual retainer for his services as Chairman of the Board.
Director's Retirement Plan
The Company maintains a retirement plan for members of the Board. The
annual benefit paid under the Plan is $12,000 for directors retiring before 1994
and $16,000 for directors retiring after 1994. The benefit commences any time
after age sixty-five (65), provided the director is no longer serving as a
director of the Company. Directors who leave the Board before age sixty-five
(65) after completing five (5) years of Board service are eligible to receive a
benefit upon attaining age sixty-five (65).
The plan provides that the retirement benefit will be paid over the lesser
of twelve (12) years or the number of years a director serves on the Board. In
the event of death while a director, a surviving spouse is entitled to receive
an annual benefit equal to 50% of the annual retainer payable to the director at
the date of death, such benefit to be paid for a period equal to the total
number of years of service the deceased director served on the Board, not to
exceed twelve (12) years.
The benefits paid under this plan are a direct obligation of the Company
and are reflected as a financial statement liability determined in accordance
with accepted actuarial assumptions.
5
<PAGE> 8
EXECUTIVE COMPENSATION
The following table discloses compensation received for the three fiscal
years ended December 29, 1995 by the Company's Chief Executive Officer, and the
Company's next four most highly paid executive officers for the year ended
December 29, 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------------- ------------
OTHER ANNUAL SECURITIES ALL OTHER
COMPENSATION UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) ($)(2) OPTONS(#)(3) ($)(4)
--------------------------- ---- --------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Edgar S. Brower........................... 1995 376,640 155,341 6,000 20,000 90,620
Chairman of the Board, 1994 339,954 175,000 7,500 80,000 120,620
Director, President and Chief Executive 1993 319,454 137,233 6,000 100,000 108,497
Officer
Richard V. Plat........................... 1995 284,904 100,924 -- 10,000 4,620
Executive Vice President, 1994 234,365 90,000 -- 34,000 4,620
Chief Financial Officer and Secretary 1993 208,788 71,563 -- 40,000 4,497
Ronald B. Nelson.......................... 1995 167,178 87,768 -- 4,000 4,180
Vice President and 1994 158,415 75,000 -- 7,000 3,850
President, Motor Products 1993 145,412 73,328 -- 13,050 3,635
Richard G. Knoblock....................... 1995 147,117 64,150 -- 4,000 3,678
Vice President and President, 1994 130,000 -- -- 5,600 1,875
HTL/Kin-Tech and Electro Kinetics 1993 129,450 7,906 -- 9,600 --
William T. Fejes, Jr.(5).................. 1995 151,951 33,550 -- 5,000 3,449
Senior Vice President 1994 119,822 28,000 -- 3,600 3,284
and President, 1993 -- -- -- -- --
Automation Technology Group
</TABLE>
- ---------------
(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 9 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 held 100,000 shares of restricted common stock. The
restricted term expired in July 1995, therefore, this amount represents the
non-preferential dividends paid by the Company during the first two quarters
of 1995. The fair market value of the 100,000 shares of restricted stock was
$1,950,000 on the date that the restriction expired.
(3) For the three-year period ended December 29, 1995, no restricted stock
awards were made.
(4) The amounts disclosed in this column include:
(a) Accrual by the Company of $86,000, $116,000 and $104,000 in fiscal
1995, 1994 and 1993, respectively, 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. 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 were:
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Mr. Brower....................... $4,620 $4,620 $4,497
Mr. Plat......................... 4,620 4,620 4,497
Mr. Nelson....................... 4,180 3,850 3,635
Mr. Knoblock..................... 3,678 4,620 4,363
Mr. Fejes........................ 3,449 -- --
</TABLE>
(5) Mr. Fejes was promoted to the position of Senior Vice President and
President of the Automation Technology Group in August 1995. He has been an
executive officer of the Company since 1994 when he was promoted to Vice
President and President of the Motion Technology Division (now part of the
Automation Technology Group). He was not an executive officer prior to 1994;
therefore no executive compensation is reported for 1993.
6
<PAGE> 9
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on option grants in fiscal 1995 to
the named executive officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL
------------------------------------------------------- REALIZABLE VALUE AT
NUMBER OF % OF TOTAL ASSUMED ANNUAL
SECURITIES OPTIONS RATES OF STOCK PRICE
UNDERLYING GRANTED TO APPRECIATION
OPTIONS EMPLOYEES IN EXERCISE FOR OPTION TERM(3)
GRANTED FISCAL YEAR PRICE ---------------------
NAME (#)(1) 1995(2) ($/SH) EXPIRATION DATE 5%($)
---- ---------- ------------ -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Edgar S. Brower......................... 20,000 18% $16.75 June 2005 $545,600 $869,000
Richard V. Plat......................... 10,000 9% 16.75 June 2005 272,800 434,500
William T. Fejes, Jr.................... 5,000 5% 16.75 June 2005 136,400 217,250
Ronald B. Nelson........................ 4,000 4% 16.75 June 2005 109,120 173,800
Richard G. Knoblock..................... 4,000 4% 16.75 June 2005 109,120 173,800
</TABLE>
- ---------------
(1) All options granted by the Company are pursuant to the Pacific Scientific
Company 1995 Stock Option Plan, as described in the Compensation Committee
Report on Executive Compensation under the caption "Long-Term Incentive
Compensation" on page 10 of this proxy statement. The shares become fully
exercisable after four years with normal vesting occurring at a rate of 25%
per year. The Stock Option Plan grants broad discretion to change or modify
the material terms of option grants.
(2) The Company granted options representing 108,600 shares to employees in
fiscal 1995.
(3) The dollar amounts in these columns are determined using assumed rates of
appreciation set by the Securities and Exchange Commission and are not
intended to forecast future appreciation, if any, in the market value of the
Company's common stock. Such amounts are based on the assumption that the
named persons hold the options for the full ten-year term. The actual value
of the options will vary in accordance with the market price of the
Company's Common Stock.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table provides information on the number of exercised and
unexercised options and the value of the in-the-money unexercised options held
by the named executive officers at December 29, 1995. The Company currently does
not grant stock appreciation rights.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS IN-THE-MONEY OPTIONS
ACQUIRED VALUE AT FISCAL YEAR-END(#) AT FISCAL YEAR-END($)(2)
ON EXERCISE REALIZED ----------------------------- -----------------------------
NAME (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Edgar S. Brower............... 12,902 $166,113 124,000 130,000 $2,113,750 $ 1,708,125
Richard V. Plat............... -- -- 110,800 55,500 1,898,256 716,531
Ronald B. Nelson.............. 10,000 168,750 14,274 15,776 241,490 201,182
Richard G. Knoblock........... 3,000 35,063 6,200 13,000 95,613 159,938
William T. Fejes, Jr. ........ -- -- 4,652 11,448 73,094 134,094
</TABLE>
- ---------------
(1) The amounts in this column were calculated using the difference between the
closing market price of the Company's Common Stock at exercise minus the
option exercise price.
(2) The amounts in this column were calculated by using the difference between
the closing price of the Company's Common Stock on December 29, 1995 and the
option exercise prices. The closing price of the Company's Common Stock on
December 29, 1995 on the New York Stock Exchange was $25.00.
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 and
7
<PAGE> 10
certain part-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's pension plans were 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 "Post-1985 Retirement Plan. Employees hired prior to January 1, 1985 have
the option of receiving retirement benefits from the Pre-1985 or Post-1985
Retirement Plan whichever plan provides the higher benefit.
PRE-1985 RETIREMENT PLAN
ESTIMATED ANNUAL RETIREMENT BENEFITS
<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(1) SERVICE(1) SERVICE(1)
------------ -------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$125,000......... $ 49,000 $ 65,800 $ 80,300 $ 80,300 $ 80,300
175,000......... 70,900 95,000 115,300 115,300 115,300
225,000......... 92,800 124,200 150,300 150,300 150,300
275,000......... 114,700 153,400 185,300 185,300 185,300
325,000......... 136,600 182,600 220,300 220,300 220,300
375,000......... 158,500 211,800 255,300 255,300 255,300
425,000......... 180,400 241,000 290,300 290,300 290,300
475,000......... 202,300 270,200 325,300 325,300 325,300
525,000......... 224,200 299,400 360,300 360,300 360,300
</TABLE>
POST-1985 RETIREMENT PLAN
ESTIMATED ANNUAL RETIREMENT BENEFITS
<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......... $ 26,200 $ 34,900 $ 43,650 $ 52,400 $ 61,100
175,000......... 37,400 49,900 62,400 74,900 87,400
225,000......... 48,700 64,900 81,150 97,400 113,600
275,000......... 59,900 79,900 99,900 119,900 139,900
325,000......... 71,200 94,900 118,650 142,400 166,100
375,000......... 82,400 109,900 137,400 164,900 192,400
425,000......... 93,700 124,900 156,150 187,400 218,600
475,000......... 104,900 139,900 174,900 209,900 244,900
525,000......... 116,200 154,900 193,650 232,400 271,100
</TABLE>
- ---------------
(1) Maximum benefits are obtained at 24 pension service years.
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, 10 years; Mr. Plat, 18 years;
Mr. Nelson, 6 years; Mr. Knoblock, 7 years and Mr. Fejes, 9 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.
8
<PAGE> 11
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.
During 1994, the Company adopted the Pacific Scientific Company Pension
Restoration Plan. This plan was implemented to restore the pension benefit that
would otherwise be payable but for the $150,000 per year pay limitation imposed
during 1994 by Section 401(A)(17) of the Internal Revenue Code. This plan
preserves the pension benefit in effect prior to 1994. As a result, if an
individual's compensation exceeds the prescribed limits, the excess benefits
will be paid by the Company pursuant to this 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 14A 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).
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
9
<PAGE> 12
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 1995. 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 respective 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. Discretionary
bonuses, usually not to exceed 10% of base salary, are sometimes awarded under
special circumstances to employees who have not qualified under the regular
bonus program but who, in the judgement of the Compensation Committee, have made
outstanding contributions during the past year.
The Omnibus Reconciliation Act of 1993 (OBRA) limited deductible senior
officer annual compensation to $1,000,000, unless the compensation qualifies as
"performance-based" compensation under Internal Revenue Code Section 162(m)
["Code Section 162(m)"]. In general, the Company does not believe the
compensation payable to the Company's senior officers will exceed $1,000,000,
however, the Company will continue to evaluate the requirements of the Code
Section 162(m) and consider the deductibility of senior officer compensation.
Long-Term Incentive Compensation
The 1995 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.
Chief Executive Officer Compensation
Mr. Brower received a salary of $376,640, $339,954 and $319,454 in the
years 1995, 1994 and 1993, respectively. During 1995, his annual salary was
increased by 10%. This increase was approximately twice the 5% average merit
increase received by the Company's other salaried employees. The Committee
believes that Mr. Brower has successfully restructured and expanded the
Company's business in electrical equipment while maintaining a profitable
aerospace business.
Mr. Brower's annual base salary is at approximately the 50th percentile of
other chief executive officers' base salaries, calculated using a compensation
data base for manufacturing companies of like size and, where possible,
organized similarly to Pacific Scientific's divisional structure.
Mr. Brower's bonus was $155,341, $175,000 and $137,233 in fiscal 1995, 1994
and 1993, respectively. The bonus payment was determined using the same formula
as used for all other key employees. Mr. Brower was awarded a bonus equal to
82.5% of his target bonus for 1995.
In accordance with the 1995 Stock Option Plan (as described above), Mr.
Brower received 20,000 stock options in fiscal 1995, 80,000 stock options in
fiscal 1994 and 100,000 stock options were awarded in fiscal 1993. Stock option
awards for 1993 and 1994 have been adjusted for the 1994 stock split.
MEMBERS OF THE COMPENSATION COMMITTEE
Thomas P. Stafford, Chairman
William A. Preston
Ralph D. Ketchum
10
<PAGE> 13
STOCK PRICE PERFORMANCE GRAPH
The information in the foregoing report of the Compensation Committee 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>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) PSC S&P 500 S&P HIGH- TECH
<S> <C> <C> <C>
1990 100.0 100.0 100.0
1991 117.6 130.6 114.1
1992 201.5 140.7 118.8
1993 278.1 154.6 146.1
1994 507.8 156.6 170.3
1995 628.0 215.3 245.3
</TABLE>
The cumulative total return calculation assumes $100 invested on December
28, 1990 and dividend reinvestments. The graph above is calculated through the
fiscal year ended December 29, 1995.
APPOINTMENT OF AUDITORS
(PROPOSAL NO. 2)
The firm of Deloitte & Touche LLP, 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 27, 1996.
The independent accountants meet periodically with the Audit Committee of
the Board of Directors. The members of the Audit Committee are Messrs. Beran
(Chairman), Briscoe, Ketchum, Preston, Pryor and Stafford.
Professional services performed by Deloitte & Touche LLP for the fiscal
year ended December 29, 1995 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
11
<PAGE> 14
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 LLP and considered the
possible effect of each such service on the independence of that firm.
Representatives of Deloitte & Touche LLP 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 THAT STOCKHOLDERS VOTE "FOR" RATIFICATION
OF THE APPOINTMENT OF THE AUDITORS.
STOCKHOLDER PROPOSALS
Proposals by stockholders to be presented at the Company's 1997 annual
meeting must be received by the Company no later than 120 days prior to March
15, 1997, in order to be considered for inclusion in the Company's proxy
statement and form of proxy for such meeting.
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
Executive Vice President and Secretary
Dated: March 15, 1996
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.
12
<PAGE> 15
NOTICE OF
ANNUAL
MEETING OF
STOCKHOLDERS
AND PROXY
STATEMENT
APRIL 17, 1996
(LOGO)
<PAGE> 16
<TABLE>
<CAPTION>
<S> <C>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY. PLEASE MARK
YOUR VOTE AS [X]
INDICATED IN
THIS EXAMPLE
(1) ELECTION OF DIRECTORS
FOR all nominees WITHHOLD INSTRUCTION: To withhold authority to vote for any
listed at right (except AUTHORITY individual nominee strike a line through the nominee's name
as marked to the to vote for as in the list below)
contrary at right) nominees listed
at right W. Beran, R. Briscoe, E. Brower, R. Ketchum, W. Preston, M. Pryor, Jr.
[ ] [ ] T. Stafford.
(2) PROPOSAL TO RATIFY THE APPOINTMENT OF Deloitte & Touche The undersigned hereby acknowledges receipt of the
LLP as the Company's independent public accountants. Notice of Annual Meeting of Stockholders to be held
April 17, 1996 and the Proxy Statement furnished
herewith.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Signature
-------------------------
Signature
Dated: , 1996
--------------
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.
</TABLE>
- ------------------------------------------------------------------------------
FOLD AND DETACH HERE
[PACIFIC SCIENTIFIC LOGO]
YOUR VOTE IS IMPORTANT TO THE COMPANY
PLEASE SIGN AND RETURN YOUR PROXY BY
TEARING OFF THE TOP PORTION OF THE SHEET
AND RETURNING IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE
<PAGE> 17
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 the Newport Center
Conference Center, 610 Newport Center Drive, Suite 130, Newport Beach,
California 92660 on April 17, 1996 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 nominee, 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
------------------------------------------------------
FOLD AND DETACH HERE
