SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
CYBEROPTICS CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which the
filing fee is calculated and state how it was determined.)
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] 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>
CYBEROPTICS CORPORATION
5900 Golden Hills Drive
Minneapolis, MN 55416
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 18, 1998
To the Shareholders of
CYBEROPTICS CORPORATION:
The Annual Meeting of Shareholders of CyberOptics Corporation (the
"Company") will be held on Monday, May 18, 1998, at the Radisson Plaza Hotel, 12
South Seventh Street, Minneapolis, Minnesota 55402, at 3:30 p.m. for the
following purposes:
1) To elect seven directors;
2) To approve the CyberOptics Corporation 1998 Stock Incentive
Plan and the reservation of 250,000 shares of common stock for
issuance pursuant to such Plan;
3) To transact such other business as may properly come before
the meeting or any adjournments thereof.
Only holders of record of Common Stock at the close of business on
April 1, 1998, will be entitled to receive notice of and to vote at the meeting.
Shareholders who do not expect to attend the meeting in person are urged to fill
in, date, sign and promptly return the proxy in the enclosed envelope. If you
later desire to revoke your proxy, you may do so at any time before it is
exercised.
By Order of the Board of Directors
Thomas Martin
SECRETARY
Minneapolis, Minnesota
April 7, 1998
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IMPORTANT - PLEASE MAIL YOUR PROXY PROMPTLY
In order that there may be a proper representation at the
meeting, you are urged, whether you own one share or many, to
promptly complete, sign and mail your proxy.
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<PAGE>
CYBEROPTICS CORPORATION
5900 Golden Hills Drive
Minneapolis, MN 55416
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
ON MAY 18, 1998
The accompanying Proxy is solicited on behalf of the Board of Directors
of CyberOptics Corporation (the "Company") for use at the Annual Meeting of
Shareholders to be held May 18, 1998, at 3:30 p.m. at the Radisson Plaza Hotel,
12 South Seventh Street, Minneapolis, Minnesota 55402, and at any adjournments
thereof. The cost of solicitation, including the cost of preparing and mailing
the Notice of Annual Shareholders' Meeting and this Proxy Statement, will be
paid by the Company. Representatives of the Company may, without cost to the
Company, solicit Proxies for the management of the Company by means of mail,
telephone or personal calls.
Shares of the Company's common stock, no par value (the "Common
Stock"), represented by proxies in the form solicited will be voted in the
manner directed by a shareholder. If no direction is made, the proxy will be
voted for the election of the nominees for director named in this Proxy
Statement and any other matters properly brought before the meeting. Shares
voted as a "withhold vote for" one or more directors will be counted as shares
that are present and entitled to vote for purposes of determining the presence
of a quorum at the meeting and as unvoted, although present and entitled to
vote, for purposes of the election of the directors with respect to which the
shareholder has abstained. If a broker submits a proxy that indicates the broker
does not have discretionary authority to vote certain shares, those shares will
be counted as shares that are present and entitled to vote for purposes of
determining the presence of a quorum at the meeting, but will not be considered
as present and entitled to vote with respect to the matters voted on at the
meeting.
Proxies may be revoked at any time before being exercised by delivery
to the Secretary of the Company of a written notice of termination of the
proxies' authority or a duly executed proxy bearing a later date.
Only holders of record of Common Stock at the close of business on
April 1, 1998, will be entitled to receive notice of and to vote at the meeting.
On April 1, 1998, the Company had 5,408,711 shares of Common Stock outstanding.
Each outstanding share is entitled to one vote on all matters presented at the
meeting.
So far as the management of the Company is aware, no matters other than
those described in this Proxy Statement will be acted upon at the Annual
Meeting. In the event that any other matters properly come before the Annual
Meeting calling for a vote of shareholders, the persons named as proxies in the
enclosed form of proxy will vote in accordance with their best judgment on such
other matters.
A copy of the Company's Annual Report to Shareholders for the year
ended December 31, 1997, is being furnished to each shareholder with this Proxy
Statement. This Proxy Statement is being mailed to shareholders on or about
April 7, 1998.
<PAGE>
PROPOSAL I--ELECTION OF DIRECTORS
NOMINEES
Seven persons have been nominated for election at the annual meeting:
Steven K. Case, Alex B. Cimochowski, Kathleen P. Iverson, Erwin A. Kelen, George
E. Kline, P. June Min, and Steven M. Quist,. Each nominee except Ms. Iverson is
currently a director of the Company. All nominees elected at the Annual Meeting
will serve until the next Annual Meeting or until their earlier death,
resignation, removal, or disqualification. The persons named in the accompanying
Proxy intend to vote the Proxies held by them in favor of the nominees named
below as directors, unless otherwise directed. The affirmative vote of a
majority of the voting shares represented at the meeting is required for the
election of each director. Should any nominee for director become unavailable
for any reason, the Proxies will be voted in accordance with the best judgment
of the persons named therein. The Board of Directors has no reason to believe
that any candidate will be unavailable.
The following information is furnished with respect to each nominee as
of February 28, 1998:
PRINCIPAL OCCUPATION AND
NAME AND AGE BUSINESS EXPERIENCE FOR PAST FIVE YEARS DIRECTOR SINCE
- ------------ --------------------------------------- --------------
Steven K. Case Chairman of the Company since September January 1984
Age 49 1995; President of the Company from 1984
until February 1998; part-time Professor of
Electrical Engineering at the University of
Minnesota since 1978.
Steven M. Quist President of the Company since February June 1991
Age 52 1998; President of Rosemount Inc., a
subsidiary of Emerson Electric Co., and an
employee of Rosemount Inc. from 1970 until
joining the Company.
Alex B. Cimochowski+ President and owner of Four Peaks May 1984
Age 58 Technologies, Inc., a printing company,
since November 1996; Independent business
consultant from September 1995 to November
1996; Chief Executive Officer of Delphax
Systems from November 1988 to September
1995; President of Edgecore Technology, Inc.
from September 1983 to April 1988 and
consultant thereto from April 1988 to
November 1988.
Kathleen P. Iverson+ Vice-President and General Manager of Nominee
Age 41 Worldwide Temperature, a division of
Rosemount Inc., since September 1997; Vice
President Worldwide Temperature of Rosemount
Inc. from January 1996 to September 1997;
Vice President--Finance of Rosemount Inc.
from 1992 to January 1996.
<PAGE>
PRINCIPAL OCCUPATION AND
NAME AND AGE BUSINESS EXPERIENCE FOR PAST FIVE YEARS DIRECTOR SINCE
- ------------ --------------------------------------- --------------
Erwin A. Kelen * President of Kelen Ventures since 1990; February 1995
Age 62 President of Datamyte Corporation, a
subsidiary of Allen Bradley Co., from 1984
until 1990. Director of Printronix, Inc.,
Insignia Systems, Inc. and Computer Network
Technologies, Inc.
George E. Kline +* President of Venture Management, a financial June 1986
Age 62 management services company, since 1966.
General Partner of Brightstone Capital Ltd.,
a venture capital firm, since 1985. Director
of Health Fitness Physical Therapy, Inc.,
Rimage Corporation, Nutrition Medical, Inc.,
LaserMaster Technologies, Inc. and
FieldWorks, Incorporated.
P. June Min Chairman and Chief Executive Officer of February 1995
Age 62 minMAX Technologies, Inc., a computerized
switching company, since May 1997; Chairman
and Chief Executive Officer of Intellect,
Inc., a consulting firm, since May 1990;
Vice Chairman Anam Industrial Co., Ltd., a
semiconductor fabrication company located in
Korea, from April 1995 to May 1997; Vice
President and the Chief Executive Officer
of the Semiconductor Division of Daewoo
Corporation from November 1993 to April
1995; Chairman and Chief Executive Officer
of CyberTech, Inc., a computer simulation
company, from September 1992 to August 1993.
- -----------------------------
+ Member of or nominee to Audit Committee
* Member of Compensation Committee
COMPENSATION OF DIRECTORS
Directors are paid $1,000 per board meeting attended and are reimbursed
for their expenses in attending meetings. In addition, in accordance with the
Company's Stock Option Plan for Nonemployee Directors (the "Director Plan"),
each director who was not then also an employee (all directors except Dr. Case)
as of October 12, 1993 (the date of initial adoption of the amended plan) was
granted an option to purchase 12,000 shares of Common Stock, each such director
was granted an additional option to purchase 12,000 shares on adoption of an
amendment to the Director Plan in 1997. Further, each new director who is not
also an employee is granted an option to purchase 12,000 shares upon his or her
initial election as a director of the Company. All of such options have an
exercise price equal to the fair market value of the Common Stock on the date of
grant, are exercisable to purchase 25% of the shares subject thereto commencing
on the date of the first annual shareholder meeting after the date of grant and
are exercisable with respect to an additional 25% at each of the next three
annual
<PAGE>
shareholder meetings at which the director is reelected. All such options expire
ten years after the date of grant.
In consideration of consulting services, on February 13, 1995, Mr.
Kelen was also granted an option to purchase an additional 30,000 shares of
Common Stock with an exercise price of $9.25 per share (the fair market value on
such date). Such option becomes exercisable with respect to 625 shares
commencing on March 13, 1995, and monthly with respect to an additional 625
shares in each month during the following four years. The option expires ten
years from the date of grant.
Dr. Min is Chairman, Chief Executive Officer and sole shareholder of
Intellect, Inc., a consulting firm retained by the Company in 1992 to assist in
the Company's sales and marketing efforts in Korea. Pursuant to an agreement
with Intellect, Intellect is entitled to commissions on the sale of certain of
the Company's products, provision of services and license of certain technology
in Korea. During 1997, Intellect received $7,300 pursuant to such agreement. In
addition, Dr. Min received an option to purchase 5,000 shares of the Company's
Common Stock at $6.25 per share (the fair market value on such date) in January
1994 in consideration of such consulting services.
COMMITTEES/MEETINGS
Except for its Compensation Committee and Audit Committee, the Company
does not have any standing committees, including any nominating committee, of
the Board of Directors. The Audit Committee, which consisted of Messrs. Quist,
Kline, and Cimochowski until Mr. Quist resigned upon becoming President of the
Company, reviews the Company's arrangements with its auditors, the substance of
the audit and interested party transactions. Ms. Iverson has been nominated to
the Audit Committee effective upon her election as a director. The Compensation
Committee, which consisted of Messrs. Quist, Kline and Kelen until Mr. Quist
resigned upon becoming President of the Company, administers the Company's stock
benefit plans and determines compensation policy and levels for the Company's
executive officers. During the fiscal year ended December 31, 1997, the Board of
Directors of the Company met four times, the Compensation Committee met four
times and the Audit Committee met one time. Every nominee for director attended
at least 75 percent of the meetings of the Board.
THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE COMMON STOCK
REPRESENTED AT THE MEETING IS REQUIRED FOR THE ELECTION OF EACH DIRECTOR. THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH NOMINEE.
EXECUTIVE OFFICERS
The current executive officers of the Company are as follows:
Dr. Steven K. Case, 49, has been Chairman of the Company since
September 1995 and was President of the Company from January 1984 until the
appointment of Mr. Quist in February 1998.
Steven M. Quist, 52, has been President of the Company since February
1998. From 1970 until joining the Company, Mr. Quist served in various
capacities with Rosemount, Inc., a subsidiary of Emerson Electric Co., the last
five years as President.
<PAGE>
John D. Beagan, 56, started as Director of Manufacturing for the
Company in September 1993, and became Vice President--Operations in February
1995. Since September 1996, Mr. Beagan has also assumed the role of acting Chief
Financial Officer. Mr. Beagan held executive officer positions in the
manufacturing, development and customer service areas of Computer Network
Technology Corporation, a manufacturer of mainframe network products, from 1987
to 1993.
Carl D. Moe, 51, started as Director of Sales and Marketing for the
Company in October 1992, and became Vice President--Sales and Marketing in
February 1995. Mr. Moe was President of the Danbury Group, a consulting firm
specializing in market development of technology based products, from 1988 until
joining the Company.
William J. Farmer, 48, started as Asia-Pacific Regional Sales Manager
with the Company in July 1994, was appointed Director of Product Development in
January 1996 and was elected Vice President--Product Development in February
1997. From November 1991 until joining the Company, Mr. Farmer was a research
engineer with Sharp Corporation in Japan.
PROPOSAL II--APPROVAL OF 1998 STOCK INCENTIVE PLAN
In January 1998, the Company's Board adopted the CyberOptics
Corporation 1998 Stock Incentive Plan (the "1998 Plan") and reserved a total of
250,000 shares of common stock for issuance under such 1998 Plan, subject to
approval by the Company's shareholders. The 1998 Plan, like the Company's
Restated Stock Option Plan, is intended to assist in attracting, retaining and
providing an incentive to employees, management personnel and other personnel
capable of assuring the future success of the Company. At the time of adoption
of the 1998 Plan by the Board, there remained fewer than 100,000 shares
available for new options under the Company's Restated Stock Option Plan. The
Board considered this an inadequate number of shares to provide additional
option grants during the next two years. Rather than increasing availability
under the existing plan, however, the Board adopted the new 1998 Plan in order
to provide for additional flexibility in the type of stock-based incentives that
may be granted. In determining the number of shares reserved for issuance under
the 1998 Plan, the Board considered industry data relative to the number of
shares reserved under stock-based compensation plans as a function of total
capitalization.
SUMMARY OF THE 1998 PLAN
ADMINISTRATION. The 1998 Plan is administered by the Compensation
Committee of the Board (the "Committee"). The Committee has the authority to
select the individuals to whom awards are granted, to determine the types of
awards to be granted and the number of shares of Common Stock covered by such
awards, to set the terms and conditions of such awards, to determine whether the
payment of any amounts received under any award shall or may be deferred, and to
establish rules for the administration of the 1998 Plan.
TERMS OF THE 1998 PLAN. The 1998 Plan permits the granting of a variety
of different types of awards, including (1) stock options, including incentive
stock options meeting the requirements of Section 422 of the Code, and stock
options that do not meet such requirements (non-qualified stock
<PAGE>
options); (2) stock appreciation rights (SARs); (3) restricted stock and
restricted stock units; (4) performance awards; (5) dividend equivalents; and
(6) other awards valued in whole or in part by reference to or otherwise based
upon the Company's Common Stock ("other stock-based awards"). Awards may be
granted alone, in addition to, in tandem with, or in substitution for any other
award granted under the 1998 Plan or any other plan. Awards may be granted for
no cash consideration or for such minimal cash consideration as may be required
by applicable law. Awards may provide that upon the grant or exercise thereof
the holder will receive cash, shares of Common Stock or other securities, awards
or property, or any combination thereof, as the Committee shall determine. The
exercise price per share under any stock option, the grant price of any SAR, and
the purchase price of any security which may be purchased under any other
stock-based award under Section 6(f) of the 1998 Plan may not be less than 100%
of the fair market value of the Common Stock on the date of the grant of such
option, SAR or right. Determinations of fair market value under the 1998 Plan
are made in accordance with methods and procedures established by the Committee.
Options may be exercised by payment in full of the exercise price,
either in cash or, at the discretion of the Committee, in whole or in part by
the tendering of shares of the Company's Common Stock or other consideration
having a fair market value on the date the option is exercised equal to the
exercise price. The 1998 Plan provides that the Committee may grant "reload
options," separately or together with another option, and may establish the
terms and conditions of such reload options. The holder of a SAR is entitled to
receive the excess of the fair market value (calculated as of the exercise date
or, if the Committee shall so determine, as of anytime during a specified period
before or after the exercise date) of a specified number of shares over the
grant price of the SAR. Shares of restricted stock and restricted stock units
will be subject to such restrictions as the Committee may impose (including any
limitations on the right to vote or the right to receive dividends), which
restrictions may lapse separately or in combination at such time or times, in
such installments or otherwise as the Committee may determine. Holders of
restricted stock units have the right, subject to any restrictions imposed by
the Committee, to receive shares of the Company's Common Stock at some future
date. Upon termination of the holder's employment during the restriction period,
restricted stock and restricted stock units are forfeited, unless the Committee
determines otherwise. Performance awards provide the holder the right to receive
payments, in whole or in part, upon the achievement of such goals during such
performance periods as the Committee shall establish. A performance award
granted under the 1998 Plan may be denominated or payable in cash, shares of
Common Stock or restricted stock or restricted stock units, or other securities,
awards or property. Dividend equivalents entitle the holder thereof to receive
payments (in cash, shares or otherwise, as determined by the Committee)
equivalent to the amount of cash dividends with respect to a specified number of
shares. The Committee is also authorized to establish the terms and conditions
of other stock-based awards.
RESTRICTIONS ON AWARDS AND TRANSFERS. Any employee, officer, consultant
or independent contractor of the Company and its affiliates selected by the
Committee is eligible to receive an award under the 1998 Plan. No person who is
an employee of the Company at the time of grant may be granted any award or
awards under the 1998 Plan, the value of which awards are based solely on an
increase in the value of the shares after the date of grant of such awards, of
more than 100,000 shares in the aggregate in any calendar year. The foregoing
annual limitation specifically includes the grant of any "performance-based
awards" within the meaning of Section 162(m) of the Code.
<PAGE>
No award granted under the 1998 Plan may be assigned, transferred,
pledged or otherwise encumbered by the individual to whom it is granted,
otherwise than by will or the laws of descent and distribution, except that the
Committee may permit the designation of a beneficiary. Each award is
exercisable, during such individual's lifetime, only by such individual or, if
permissible under applicable law, by such individual's guardian or legal
representative.
The aggregate number of shares of the Company's Common Stock which may
be issued under all awards granted under the 1998 Plan is 250,000 (subject to
adjustment as described below). If any shares of the Company's Common Stock
subject to any award or to which an award relates are not purchased or are
forfeited, or if any such award terminates without the delivery of shares, the
shares previously set aside for such awards will be available for future awards
under the 1998 Plan.
TERMINATION. The 1998 Plan will be effective as of the date on which it
is approved by the Company's shareholders and, unless it has been previously
discontinued or terminated, will terminate ten years after such date. No awards
may be made after such termination date. However, unless otherwise expressly
provided in the 1998 Plan or an applicable award agreement, any award granted
may extend beyond the end of such period.
AMENDMENT. The Board of Directors may amend, alter or discontinue the
1998 Plan at any time, provided that shareholder approval must be obtained for
any such action that, absent such shareholder approval, would (1) cause Rule
16b-3 under the Exchange Act to become unavailable with respect to the 1998
Plan; (2) violate the rules or regulations of the Nasdaq National Market, any
other securities exchange or the National Association of Securities Dealers,
Inc. applicable to the Company; or (3) cause the Company to be unable, under the
Code, to grant incentive stock options under the 1998 Plan. The Committee may
correct any defect, supply any omission, or reconcile any inconsistency in the
1998 Plan or any award agreement in the manner and to the extent it shall deem
desirable to carry the 1998 Plan into effect. The Committee may waive any
condition of, or rights of the Company under any outstanding award,
prospectively or retroactively, but the Committee may not amend or terminate any
outstanding award, prospectively or retroactively, without the consent of the
holder or beneficiary of the award.
FEDERAL TAX CONSEQUENCES. The following is a summary of the principal
federal income tax consequences generally applicable to awards under the 1998
Plan.
The grant of an option or SAR is not expected to result in any taxable
income to the recipient. The holder of an incentive stock option generally will
have no taxable income upon exercising the incentive stock option (except that a
liability may arise pursuant to the alternative minimum tax), and the Company
will not be entitled to a tax deduction when an incentive stock option is
exercised. Upon exercising a non-qualified stock option, the optionee must
recognize ordinary income equal to the excess of the fair market value of the
shares of Common Stock acquired on the date of exercise over the exercise price,
and the Company will be entitled at that time to a tax deduction in the same
amount. Upon exercising a SAR, the amount of any cash received and the fair
market value on the exercise date of any shares of Company Common Stock received
are taxable to the recipient as ordinary income and deductible by the Company.
The tax consequence to an optionee upon a disposition of shares acquired through
the exercise of an option or SAR will depend on how long the shares have been
held and upon
<PAGE>
whether such shares were acquired by exercising an incentive stock option or by
exercising a non-qualified stock option or SAR. Generally, there will be no tax
consequence to the Company in connection with disposition of shares acquired
under an option, except that the Company may be entitled to a tax deduction in
the case of a disposition of shares acquired under an incentive stock option
before the applicable incentive stock option holding periods set forth in the
Code have been satisfied.
With respect to other awards granted under the 1998 Plan that are
payable either in cash or shares of Common Stock that are either transferable or
not subject to substantial risk of forfeiture, the holder of such an award must
recognize ordinary income equal to the excess of (1) the cash or the fair market
value of the shares of Common Stock received (determined as of the date of such
receipt) over (2) the amount (if any) paid for such shares of Common Stock by
the holder of the award, and the Company will be entitled at that time to a
deduction for the same amount. With respect to an award that is payable in
shares of Common Stock that are restricted as to transferability and subject to
substantial risk of forfeiture, unless a special election is made pursuant to
the Code, the holder of the award must recognize ordinary income equal to the
excess of (1) the fair market value of the shares of Common Stock received
(determined as of the first time the shares become transferable or not subject
to substantial risk of forfeiture, whichever occurs earlier) over (2) the amount
(if any) paid for such shares of Common Stock by the holder, and the Company
will be entitled at that time to a tax deduction in the same amount.
Under the 1998 Plan, the Committee may permit participants (other than
Non-Employee Directors) receiving or exercising awards, subject to the
discretion of the Committee and upon such terms and conditions as it may impose,
to surrender shares of the Company's Common Stock (either shares received upon
the receipt or exercise of the award or shares previously owned by the optionee)
or other property to the Company to satisfy federal and state tax obligations.
In addition, the Committee may grant, subject to its discretion and such rules
as it may adopt, a bonus to a participant in order to provide funds to pay all
or a portion of federal and state taxes due as a result of the receipt or
exercise of (or lapse of restrictions relating to) an award. The amount of any
such bonus will be taxable to the participant as ordinary income, and the
Company will have a corresponding deduction equal to such amount (subject to the
usual rules concerning reasonable compensation).
RECOMMENDATION BY THE BOARD; VOTE REQUIRED.
The affirmative vote of the holders of a majority of the shares of the
Company's Common Stock represented at the Annual Meeting and entitled to vote is
necessary for approval of the 1998 Plan. Proxies will be voted in favor of such
proposal unless otherwise specified. THE BOARD RECOMMENDS THAT THE COMPANY'S
SHAREHOLDERS VOTE "FOR" APPROVAL OF THE 1998 PLAN.
<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT OF THE BOARD OF DIRECTORS
The Company's executive compensation policies are recommended and
administered by the Compensation Committee of the Board of Directors. The
Compensation Committee is currently composed of two independent, outside
directors.
The principal objective of the Company's compensation policy is to
increase shareholder value by providing an incentive to officers and employees
to maximize the Company's performance. Generally, the Company has set the
salaries of its executive officers at slightly below industry averages and
provided for significant variable compensation through stock options and, to a
lesser extent, through cash bonuses. The form of compensation provided to
members of the Company's management varies based on their position and their
ability to influence performance.
The Compensation Committee has discretion to set executive compensation
at levels warranted by external, internal and individual circumstances. The
Committee has solicited through Dr. Case, and reviewed annually, compensation
surveys for officer positions in the electronics industry. Although such data
provides a base for comparison, it is not necessarily used as the basis for the
compensation actually awarded.
EXECUTIVE OFFICER COMPENSATION PROGRAM
The Company's executive officer compensation program can be separated
into several elements: base salary, annual cash incentive compensation,
long-term incentive compensation in the form of stock options, and various
benefits, including medical and retirement savings plans generally available to
employees.
BASE SALARY
The Company's policy is to set the base salaries of its executives at
slightly below industry average. Dr. Case's base salary during 1997 was set by
the Committee at the beginning of the fiscal year at $160,000, which the
Committee believes continues to place his salary below the median of salaries
for executive officers in the electronics industry at similarly sized companies.
Such salary represented a $10,000 increase over Dr. Case's base salary for 1996.
CASH INCENTIVE COMPENSATION
The Compensation Committee establishes an executive bonus plan
annually. The bonus plan assigns to each executive, based upon the Committee's
determination of the size of bonus appropriate for the position held by the
executive, a base dollar amount bonus objective. Sales positions, for example,
which more directly influence revenue attainment and have a higher component of
variable compensation, also have a proportionately larger base dollar amount
bonus objective. The Committee then creates a matrix of multipliers for such
base bonus objective as a function of increase in operating income and revenue.
For any given increase in operating income after a threshold increase in
revenue, the matrix will dictate a multiplier that is applied to the base dollar
amount bonus objective to determine the bonus awarded. For 1997, the matrix
provided for no bonuses if operating income grew less than 4% or if revenue
increased less than 5% over operating income and revenue in 1996.
<PAGE>
Dr. Case received a cash bonus of $45,000 in 1997. The bonus reflects a
$60,000 base dollar amount objective for Dr. Case and substantial growth in
revenue and operating income.
STOCK INCENTIVE COMPENSATION
The Company provides long-term incentive to its executive officers
primarily through its Restated Stock Option Plan (the "Option Plan"). Under the
Option Plan, the Compensation Committee awards stock options to executive
officers based on the number of options and shares currently held by the
executive and also on performance factors similar to those used to determine
salaries and annual cash incentives. The Compensation Committee has not fixed,
or predetermined, the amount of shares to be available for option grants in any
year. The Committee has, however, reviewed industry statistics regarding the
appropriate size of the Option Plan in terms of outstanding shares and the
appropriate size of grants to executive officers and to employees as a whole.
Stock options are granted to encourage an executive to seek the same
objectives as shareholders, to retain executives through vesting and to lower
the overall cash cost of compensation. The Company's options generally vest over
a period of four years and expire after five years. All options are granted with
an exercise price equal to fair market value on the date of grant.
Although the Company did not grant options to Dr. Case early in the
1997 fiscal year, the Compensation Committee specifically revisited executive
compensation in August and September 1997 and obtained additional data on
average compensation in the industry in which the Company functions. Such data
indicated that Dr. Case continued to be substantially undercompensated and that
both a salary adjustment and an additional option grant would be appropriate.
Dr. Case indicated, however, that he would prefer that any adjustment in his
compensation be in the form of stock-based compensation rather than salary.
Accordingly, Dr. Case was granted an option under the Option Plan to purchase
80,000 shares with a ten-year term at a price of $22.50 per share in September
1997. This option was granted both to provide an additional incentive to Dr.
Case in accordance with industry averages for stock based compensation and the
Company's overall long-term incentive policy, and to compensate Dr. Case for
continuing to hold his cash compensation to levels substantially below industry
averages. Options granted during 1997 to other executives were principally to
provide additional incentive, with reference to industry statistics on the
appropriate size of the stock-based incentive.
BENEFITS
The Company provides medical and retirement savings benefits to
executive officers on terms generally available to employees. No executive
officer received perquisites in excess of 10% of salary during 1997.
SUMMARY
The Compensation Committee believes that the compensation program for
executive officers during the 1997 year achieved the principal objectives for
which it was designed.
George Kline
Erwin Kelen
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and noncash compensation for
the last three fiscal years awarded to or earned by the President of the Company
and each executive officer of the Company who received cash compensation from
the Company during the year ended December 31, 1997 exceeding $100,000.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------------- -----------------------------------------
AWARDS PAYOUTS
NAME OTHER ------------------- ------- ALL
AND ANNUAL RESTRICTED OTHER
PRINCIPAL COMPEN- STOCK LTIP COMPEN-
POSITION YEAR SALARY BONUS SATION AWARDS OPTIONS PAYOUTS SATION(1)
-------- ---- ------ ----- ------ ------ ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Steven K. Case 1997 $160,000 $45,000 $33,935(2) 80,000 $2,993
Chairman & Director 1996 150,000 -- 93,000 2,669
1995 140,000 119,000 -- 2,816
Carl D. Moe 1997 $115,000 $45,000 40,000 $1,923
Vice President--Sales 1996 110,000 15,000 -- 4,387
and Marketing 1995 100,000 119,000 -- 1,974
John D. Beagan 1997 $120,000 $41,250 10,000 $2,325
Vice President-- 1996 109,600 -- 15,000 2,628
Operations 1995 90,000 68,000 -- 1,658
William J. Farmer 1997 $110,000 $18,750 25,000 $2,238
Vice President-- 1996 86,900 18,750 2,269
Product Development 1995 115,750(3) 10,000 1,005
</TABLE>
- --------------------------
(1) Consists of company contributions for such officers to a 401K plan.
(2) Represents payout of accrued and unused vacation time.
(3) Includes commissions of $65,750 earned while in a sales position.
STOCK OPTIONS
The Company maintains a Restated Stock Option Plan and a Stock Option
Plan for Nonemployee Directors. The Company may grant stock options to executive
officers and other employees and consultants of the Company under the Restated
Stock Option Plan. The following table sets forth information with respect to
options granted to the named executive officers in 1997:
<PAGE>
<TABLE>
<CAPTION>
OPTION GRANTS IN 1997
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE
% OF TOTAL APPRECIATION FOR
OPTIONS OPTIONS GRANTED EXERCISE OPTION TERM (1)
GRANTED TO EMPLOYEES PRICE PER EXPIRATION ---------------------
NAME (#) IN 1997 ($/SH) DATE 5%($) 10%($)
---- ------ ------- -------- ---- ----- -------
<S> <C> <C> <C> <C> <C> <C>
Dr. Case 80,000 40.2% 22.50 9/9/07 1,132,010 2,868,736
Mr. Moe 40,000 20.1% 14.75 3/21/02 163,006 360,201
Mr. Beagan 10,000 5.0% 22.50 9/9/07 141,501 358,592
Mr. Farmer 25,000 12.6% 14.75 3/21/02 101,878 225,126
</TABLE>
- ------------------------
(1) These amounts represent the realizable value of the subject options from
the date of grant until termination, without discounting to present
value, assuming appreciation in the market value of the Company's Common
Stock from the market price on the date of grant at the rates indicated.
Actual gains, if any, on stock option exercises are dependent on the
future performance of the Common Stock, and overall stock market
conditions. The amounts reflected in this table may not necessarily be
achieved.
The following table sets forth information with respect to options
exercised during 1997 and held by the officers named in the Summary Compensation
Table as of December 31, 1997:
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN 1997 AND OPTION VALUES AS OF DECEMBER 31, 1997
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT DECEMBER 31, 1997(1) AT DECEMBER 31, 1997 (2)
ACQUIRED VALUE --------------------------- --------------------------
NAME ON EXERCISE REALIZED(3) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Dr. Case 20,000 $227,500 38,250 69,750 $ 399,750 $ 445,500
Mr. Moe 6,840 99,180 -- 53,680 -- 571,370
Mr. Beagan 19,500 508,219 18,000 26,000 297,000 219,000
Mr. Farmer 1,250 18,750 4,688 47,187 55,084 464,135
</TABLE>
- -----------------------------
(1) All of such options are exercisable at a price equal to the fair market
value of the Common Stock on the date of grant.
(2) Represents the difference between the closing price of the Company's
Common Stock as reported on the NASDAQ National Market on December 31,
1997, and the exercise price of the options.
(3) Represents the difference between the option exercise price and the
closing price of the Company's Common Stock as reported by Nasdaq on
the date of exercise.
LONG-TERM INCENTIVE PLAN AWARDS/EMPLOYMENT AGREEMENTS
Other than its Restated Stock Option Plan, the Company does not
maintain any long-term incentive plans, nor does it have any employment
agreements with any of the executive officers named in the Summary Compensation
Table.
<PAGE>
SHAREHOLDER RETURN
The graph set forth below compares the cumulative total shareholder
return on the common stock of the Company from January 1, 1993 through December
31, 1997 with the cumulative total return on a broad market index (the Nasdaq
NMS Index) and a peer group index (the Nasdaq Computer and Data Processing
Index). In each case, the cumulative return is calculated assuming an investment
of $100 on January 1, 1992, and reinvestment of all dividends.
[LINE GRAPH]
CYBEROPTICS
STOCK PERFORMANCE CHART DATA
Nasdaq
Computer &
Data
Date Nasdaq NMS Processing CyberOptics
---- ---------- ---------- -----------
12/31/92 $100.00 $100.00 $100.00
3/31/93 $101.88 $104.79 $100.00
6/30/93 $103.71 $104.85 $100.00
9/30/93 $112.58 $105.30 $118.42
12/31/93 $114.80 $105.83 $131.57
3/31/94 $109.97 $107.33 $121.05
6/30/94 $104.83 $105.04 $115.79
9/30/94 $113.51 $116.94 $136.84
12/30/94 $112.21 $128.53 $163.18
3/31/95 $122.33 $144.68 $231.59
6/30/95 $139.93 $171.49 $534.21
9/29/95 $156.79 $187.33 $715.79
12/29/95 $158.70 $195.74 $836.84
3/29/96 $166.10 $204.91 $605.26
6/28/96 $179.66 $227.75 $326.32
9/30/96 $186.05 $232.29 $284.21
12/31/96 $195.19 $241.54 $281.92
3/31/97 $184.61 $224.20 $355.26
6/30/97 $218.45 $287.51 $331.58
9/30/97 $255.40 $314.40 $710.53
12/31/97 $239.53 $296.72 $478.95
<PAGE>
SHARES OUTSTANDING
The following table sets forth information pertaining to the ownership
of the Company's Common Stock by each person known by the Company to
beneficially own 5% or more of the Company's Common Stock, by each director, by
each officer named in the Summary Compensation Table, and by all officers and
directors as a group as of February 28, 1998:
NAME AND ADDRESS AMOUNT AND NATURE PERCENT
OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP(1) OF CLASS
- ------------------- -------------------------- --------
Steven K. Case 326,738 6.0%
5900 Golden Hills Drive
Minneapolis, MN 55416
Kopp Investment Advisors, Inc. 939,026 17.4%
6600 France Avenue South
Suite 672
Edina, MN 55435 (2)
Robert Fleming, Inc. 409,720 7.6%
320 Park Avenue, 11th Floor
New York, NY 10022(3)
FMR Corp. 420,000 7.8%
82 Devonshire Street
Boston, MA 02109(4)
Alex B. Cimochowski(5) 22,371 *
Kathleen P. Iverson --
Erwin A. Kelen 46,125 *
George E. Kline(6) 25,500 *
P. June Min 14,000 *
Steven M. Quist(7) 15,345 *
Carl D. Moe 39,231 *
John D. Beagan 18,000 *
William Farmer 12,813 *
All executive officers and
directors as a group (10 persons) 520,123 9.4%
- ---------------------
*Less than 1%
(1) Includes 18,250 shares for Dr. Case, 20,200 shares for Mr. Cimochowski,
32,125 shares for Mr. Kelen, 14,000 shares for Dr. Min, 10,000 for Mr.
Moe, 18,000 shares for Mr. Beagan, 12,813 shares.
<PAGE>
for Mr. Farmer and 131,868 shares for all officers and directors as a
group, purchasable upon exercise of options exercisable within 60 days
of February 28, 1998.
(2) Based on Schedule 13G filing dated February 12, 1998. Includes 159,000
shares over which the holder has sole voting power and 939,026 shares
over which the holder has shared power of disposition.
(3) Based on Schedule 13G filed February 17, 1998. All shares held with
shared voting and shared power of disposition.
(4) Based on Schedule 13G filed February 14, 1998. Includes 12,700 shares
with sole voting power and 420,000 with sole power of disposition.
(5) Includes 1,650 shares owned by Mr. Cimochowski's spouse, the beneficial
ownership of which Mr. Cimochowski disclaims.
(6) Includes 22,500 held in a trust for which Mr. Kline is the trustee.
(7) Includes 8,000 shares subject to a restricted stock agreement.
Under federal securities laws, the Company's directors and officers,
and any beneficial owner of more than 10% of a class of equity securities of the
Company, are required to report their ownership of the Company's equity
securities and any changes in such ownership to the Securities and Exchange
Commission (the "Commission") and the securities exchange on which the equity
securities are registered. Specific due dates for these reports have been
established by the Commission, and the Company is required to disclose in this
Proxy Statement any delinquent filing of such reports and any failure to file
such reports during the fiscal year ended December 31, 1997.
Based upon information provided by officers and directors of the
Company, and because of a change in the Commission's rules as to reporting of
option exercises, all officers, directors and 10% shareholders otherwise filed
all reports on a timely basis in the 1997 fiscal year.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The Company has selected Coopers & Lybrand L.L.P. as its independent
accountants for its fiscal year ending December 31, 1998. Representatives of
Coopers & Lybrand L.L.P., which has served as the Company's independent
accountants since July 1994, are expected to be present at the Annual Meeting,
will have an opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions from shareholders.
GENERAL
The Board of Directors of the Company does not know of any matters
other than those described in this Proxy Statement that will be acted upon at
the Annual Meeting. In the event that any other matters properly come before the
meeting calling for a vote of shareholders, the persons named as proxies in the
enclosed form of proxy will vote in accordance with their best judgment.
<PAGE>
SHAREHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Any proposal by a shareholder to be presented at the next Annual
Meeting must be received at the Company's principal executive offices, 5900
Golden Hills Drive, Minneapolis, MN 55416, no later than December 8, 1998.
BY ORDER OF THE BOARD OF
DIRECTORS
Thomas Martin
SECRETARY
Dated: April 7, 1998
<PAGE>
CYBEROPTICS CORPORATION
PROXY FOR THE 1998 ANNUAL SHAREHOLDERS MEETING
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Steven K. Case and Steven M. Quist, and each of
them, with power to appoint a substitute, to vote all shares the undersigned is
entitled to vote at the Annual Meeting of Shareholders of CyberOptics
Corporation to be held on May 18, 1998, and at all adjournments thereof, as
specified below on the matters referred to and, in their discretion, upon any
other matters which may be brought before the meeting:
1. ELECTION OF DIRECTORS:
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY
(EXCEPT AS MARKED TO THE CONTRARY BELOW) TO VOTE FOR ALL NOMINEES
TO WITHHOLD AUTHORITY FOR A SPECIFIC NOMINEE, PLACE A LINE
THROUGH HIS OR HER NAME BELOW:
STEVEN K. CASE, STEVEN M. QUIST, ALEX B. CIMOCHOWSKI,
KATHLEEN P. IVERSON, GEORGE E. KLINE, ERWIN A. KELEN AND P. JUN MIN
2. APPROVAL OF 1998 STOCK INCENTIVE PLAN
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. TO VOTE WITH DISCRETIONARY AUTHORITY ON ANY OTHER MATTER THAT MAY PROPERLY
COME BEFORE THE MEETING
(CONTINUED ON REVERSE SIDE)
<PAGE>
(CONTINUED FROM OTHER SIDE)
This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this Proxy will
be voted for all of the directors named in proposal 1 and for proposal 2.
When shares are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title
as such. If a corporation, please sign in full corporate name by President or
other authorized officer. If a partnership, please sign in partnership name by
authorized person.
Dated: _________________, 1998
______________________________
Signature
______________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY.
