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
June 22, 1999
To the Shareholders of
CYBEROPTICS CORPORATION:
The Annual Meeting of Shareholders of CyberOptics Corporation (the
"Company") will be held on Tuesday, June 22, 1999, at the Radisson Plaza Hotel
Minneapolis, 35 South 7th Street, Minneapolis, Minnesota 55402, at 3:00 p.m. for
the following purposes:
1) To elect seven directors;
2) To approve an amendment to the CyberOptics
Corporation 1992 Employee Stock Purchase Plan to
increase the number of shares of common stock
reserved for issuance thereunder by 200,000 shares;
3) To approve amendments to the CyberOptics Corporation
Stock Option Plan for Nonemployee Directors to
provide for the automatic grant to each director who
is not also an employee of the Company of an option
to purchase 3,000 shares of common stock at each
annual meeting of shareholders at which such director
is elected or reelected beginning for new directors
with the Annual Meeting to which the attached Proxy
Statement relates and beginning for current directors
with the annual meeting in the year in which prior
options granted under the plan are fully vested; and
4) 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 May
5, 1999, 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
May 12, 1999
-----------------------------------------
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.
-----------------------------------------
<PAGE>
CYBEROPTICS CORPORATION
5900 Golden Hills Drive
Minneapolis, MN 55416
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
ON JUNE 22, 1999
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 June 22, 1999, at 3:00 p.m. at the Radisson Plaza Hotel
Minneapolis, 35 South 7th Street, Minneapolis, Minnesota 55402, and at any
adjournments thereof. The cost of solicitation, including the cost of preparing
and mailing the Notice of Annual Meeting of Shareholders 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 May
5, 1999, will be entitled to receive notice of and to vote at the meeting. On
May 5, 1999, the Company had 4,965,206 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, 1998, is being furnished to each shareholder with this Proxy
Statement. This Proxy Statement is being mailed to shareholders on or about May
12, 1999.
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, Irene
M. Qualters, Steven M. Quist and Michael M. Selzer, Jr. Each nominee except Ms.
Qualters and Mr. Selzer 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
<PAGE>
no reason to believe that any candidate will be unavailable. George P. Kline and
P. June Min, who have served as directors of the Company since June 1986 and
February 1995, respectively, are not standing for reelection.
The following information is furnished with respect to each nominee as
of March 17, 1999:
PRINCIPAL OCCUPATION AND DIRECTOR
NAME AND AGE BUSINESS EXPERIENCE FOR PAST FIVE YEARS SINCE
------------ --------------------------------------- -----
Steven K. Case Chairman of the Company since September January 1984
Age 50 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 53 1998; President of Rosemount Inc.
("Rosemount"), a subsidiary of Emerson
Electric Co., and an employee of
Rosemount from 1970 until joining the
Company.
Alex B. Cimochowski President and owner of Four Peaks May 1984
Age 59 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 May 1998
Age 42 Worldwide Temperature, a division of
Rosemount, since September 1997; Vice
President Worldwide Temperature of
Rosemount from January 1996 to September
1997; Vice President--Finance of
Rosemount from 1992 to January 1996.
Erwin A. Kelen* President of Kelen Ventures since 1990; February 1995
Age 63 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.
Irene M. Qualters+ President of Cray Research, a subsidiary Nominee
Age 49 of Silicon Graphics, Inc., and Senior
Vice President of Silicon Graphics, Inc.
from 1997 to 1998; Vice President of
Silicon Graphics, Inc. from 1996 to 1997;
Senior Vice President of Cray Research
from 1995 until its acquisition by
Silicon Graphics, Inc. in 1996; Vice
President--Software Division of Cray
Research from 1992 to 1995.
Michael M. Selzer, Jr.* President, Chief Executive Officer and Nominee
Age 46 Director of Urologix, Inc, a medical
device manufacturer, since January 1999;
Vice President and General
Manager--Neurostimulation Business of
Medtronic, Inc., a medical device
manufacturer, from 1994 until December
1998; Vice President--Components and
Research Group of Medtronic, Inc. from
1992 to 1994; Vice President and General
Manager--Micro-Relationship Division of
Medtronic, Inc. from 1987 to 1992.
- ---------------------
+ Member of and/or nominee to Audit Committee
* Member of and/or nominee to Compensation Committee
2
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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)
was granted an option to purchase 12,000 shares of Common Stock upon adoption of
an amendment to the Director Plan in 1993 (or, in the case of Mr. Kelen, upon
his election as a director in 1995) and 1997 (or, in the case of Ms. Iverson,
upon her election as a director in 1998). All of such options are exercisable to
purchase 25% of the shares subject thereto commencing on the date of the first
annual meeting of shareholders after the date of grant and are exercisable with
respect to an additional 25% at each of the next three annual meetings at which
the director is reelected. The Board has proposed amendments to the Directors'
Plan that would provide for annual grants of 3,000 shares. See Proposal
III--Amendments to Stock Option Plan for Nonemployee Directors.
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 Mr. Kline (a
director not standing for re-election) and Ms. Iverson, reviews the Company's
arrangements with its auditors, the substance of the audit and interested party
transactions. Ms. Qualters has been nominated to the Audit Committee effective
upon her election as a director. The Compensation Committee, which consisted of
Messrs. Kline and Kelen, administers the Company's stock benefit plans and
determines compensation policy and levels for the Company's executive officers.
Mr. Selzer has been nominated to the Compensation Committee effective upon his
election as a director. During the fiscal year ended December 31, 1998, the
Board of Directors of the Company met six times and acted twice by writing in
lieu of meeting, the Compensation Committee met four times and acted twice by
writing in lieu of meeting and the Audit Committee met one time. Every nominee
for director attended at least 75 percent of the meetings of the Board and the
Board Committees for which such nominee was a member.
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, 50, 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, 53, 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.
Richard G. Ballintine, 52, has been Vice President--Finance and
Information Systems of the Company since April 1998. Prior to joining the
Company, Mr. Ballintine served in various capacities with Rosemount Inc., the
last two years as Vice President--Finance. From December 1993 to September 1995,
he was Vice President--Finance for Rosemount Aerospace Inc., a subsidiary of
BF Goodrich Co.
Dr. Bruce E. Batten, 48, has been Vice President and General
Manager--Industrial Measurement Business Unit of the Company since August 1998.
Dr. Batten was Vice President--Sales and Marketing with Kovex Corporation, a
developer of precision 3D surface inspection and measurement instrumentation,
from 1997 until joining the Company and served as Vice President and General
Manager--Confocal Optics Business Unit for Noan Instruments, Inc., a
thermospectra company, from 1990 to 1997.
William J. Farmer, 49, started as Asia-Pacific Regional Sales Manager
with the Company in July 1994, was appointed Director of Product Development in
January 1996 and served as Vice President--Product Development from
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<PAGE>
February 1997 until May 1998 when he was elected Vice President, General
Manger--OEM Sensors Business Unit. From November 1991 until joining the Company,
Mr. Farmer was a research engineer with Sharp Corporation in Japan.
Michael D. Wetle, 41 has been Vice President and General Manager of the
SMT Systems Business Unit of the Company since May 1998. Mr. Wetle was Vice
President of Marketing for Danaher Controls, an industrial controls company from
1996 until joining the Company. Prior to that, Mr. Wetle was on the Corporate
Sponsorship Program at Emerson Electric (1988-96) where he served in various
capacities including Strategic Planning, Marketing, and General Management. Mr.
Wetle was also an Associate at Chase Investment Bank (1986-88) and was on the
Executive Program at Honeywell Inc (1981-84).
PROPOSAL II--APPROVAL OF THE AMENDMENT TO THE
COMPANY'S 1992 EMPLOYEE STOCK PURCHASE PLAN
As of April 14, 1999, the Company's Board of Directors adopted, subject
to shareholder approval, an amendment to increase the number of shares of Common
Stock available for issuance under the Company's 1992 Employee Stock Purchase
Plan (the "Purchase Plan") from 200,000 shares to 400,000 shares. As of March
31, 1999, there were 58,369 shares remaining that can be issued under the
Purchase Plan. The Board believes this is an adequate number of shares for the
Purchase Plan year ending July 31, 1999, but will be inadequate to cover
Purchase Plan issuances thereafter.
The Company continues to recruit key personnel and believes that the
incentives available under the Purchase Plan are an important element in
attracting highly skilled and qualified individuals. As such, the Company
believes that the amendment to the Purchase Plan can help it meet the
competitive demands of attracting and retaining a productive work force.
Therefore, the Board of Directors believes that it is desirable to amend the
Purchase Plan to change the number of shares of Common Stock authorized for
issuance thereunder.
The Purchase Plan was initially approved by the Company's shareholders
in 1992 and is administered by the Compensation Committee of the Board of
Directors or such other committee as established by the Board of Directors (the
"Plan Committee"). The Plan Committee must consist of two or more directors who
are not employees and are "independent" within the meaning of Section 16b-3 of
the Securities Exchange Act of 1934.
The Purchase Plan reserves shares of the Company's Common Stock for
sale to participating employees at the lower of 85% of the fair market value of
the Company's Common Stock on the first business day, or the last business day,
of the applicable purchase period. Under the terms of the Purchase Plan,
purchase periods begin on the first business day of August of each year and end
on the last business day of July of the following year.
Participating employees may direct the Company to make payroll
deductions from 1% to 10% of their compensation during the purchase period for
the purchase of shares under the Purchase Plan and may withdraw from the
Purchase Plan at any time (although no employee may enroll again after a
withdrawal until commencement of the next purchase period). No participant may
purchase more than 10,000 shares or shares having a market value exceeding
$25,000 under the Purchase Plan (and any other plan qualifying under Section
423(b)(8) of the Internal Revenue Code of 1986, as amended) during any purchase
period.
Any employee of the Company or any of its subsidiaries (other than
employees who have been employed by the Company or any of its subsidiaries less
than 6 months or whose customary employment by the Company or any of its
subsidiaries is less than 20 hours per week or 5 months per calendar year) is
eligible to participate in the Purchase Plan, provided that no employee who
holds more than 5% percent of the outstanding Common Stock may participate.
Upon a participant's termination of employment with the Company for any
reason other than approved retirement or death, participation in the Purchase
Plan will cease and the balance of the participant's share purchase account will
be paid, in cash, to the participant within 30 days. Upon the death or approved
retirement of a participant, no further contributions will be made to the
participant's share purchase account and the balance in the account will either
be used to purchase shares of Common Stock at the end of the current purchase
period or be paid in cash if
4
<PAGE>
requested, provided that in the case of approved retirement, no purchase of
Common Stock shall be allowed if the last day of the purchase period in which
such retirement occurs is more than 3 months following the date of such
retirement.
The Purchase Plan may be amended by the Board of Directors at any time,
except that the Board of Directors cannot, without shareholder approval, adopt
any amendment that (i) would cause Rule 16b-3 under the Exchange Act to become
unavailable with respect to the Purchase Plan, (ii) requires shareholder
approval under any rules or regulations of the National Association of
Securities Dealers, Inc. or any securities exchange applicable to the Company,
or (iii) permits the issuance of Common Stock before payment therefor in full.
The Board of Directors adopted the amendment to the Purchase Plan in
order to allow the Company to continue to provide a convenient and advantageous
way for its employees to make systematic purchases of Common Stock and therefore
to develop a stronger incentive to work for the continued success of the
Company. The amendment to the Purchase Plan is being submitted to the
shareholders for approval in order to comply with the requirements of the
Internal Revenue Code of 1986, as amended.
THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE SHARES OF THE
COMMON STOCK REPRESENTED AT THE ANNUAL MEETING AND ENTITLED TO VOTE IS NECESSARY
FOR APPROVAL OF THE AMENDMENT TO THE PURCHASE PLAN DESCRIBED ABOVE. PROXIES WILL
BE VOTED IN FAVOR OF SUCH PROPOSAL UNLESS OTHERWISE INDICATED. THE BOARD
RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS VOTE FOR THE PROPOSAL TO AMEND THE
PURCHASE PLAN AS DESCRIBED ABOVE.
PROPOSAL III--AMENDMENTS TO STOCK OPTION PLAN FOR NONEMPLOYEE DIRECTORS
As of April 14, 1999, the Board of Directors approved, subject to
shareholder approval, amendments to the CyberOptics Corporation Stock Option
Plan for Nonemployee Directors (the "Director Plan") to provide for the
automatic grant to each director who is not also an employee of the Company of
an option to purchase 3,000 shares of Common Stock at each annual meeting of
shareholders at which such director is elected or reelected. Option grants under
the amended Director Plan would begin with the 1999 Annual Meeting of
Shareholders for new directors but would be delayed until the annual meeting of
shareholders in the year in which all options previously granted to a director
become fully vested for incumbent directors.
The Director Plan was initially adopted by the Board of Directors on
September 19, 1989, and approved by shareholders in April 1990. It was amended
on (i) October 12, 1993, to provide for an additional one-time grant which was
approved by shareholders on May 10, 1994 and (ii) May 8, 1997 to both provide
for an additional one-time grant and to increase the number of shares of Common
Stock reserved for issuance thereunder by 80,000. The Director Plan reserves a
total of 172,400 shares of Common Stock for issuance to directors of the Company
who are not also employees upon exercise of options granted to them under the
Director Plan. There are currently options to purchase 112,200 shares
outstanding under the Director Plan.
The Director Plan currently provides that each director who is not also
an employee will automatically receive an option to purchase 12,000 shares of
Common Stock upon initial election as a director. Currently, options may not be
exercised until one year after the date of grant and become exercisable
thereafter in cumulative annual installments equal to 25% percent of the number
of shares of Common Stock subject to the option, at the date of each annual
meeting of shareholders at which the director is reelected. The exercise price
of all options under the Director Plan is equal to the fair market value of the
Common Stock on the date of grant. All options expire ten years from the date of
grant. Options under the Director Plan are nontransferable and expire upon
removal of a director for gross or willful misconduct. Options remain
exercisable for the remainder of their initial term if a director otherwise
resigns. All options granted under the Director Plan are nonqualified stock
options.
The Board of Directors has proposed that the Director Plan be amended
to provide for the automatic grant to each nonemployee director of an option to
purchase 3,000 shares of Common Stock at each annual meeting of shareholders at
which such director is elected or reelected beginning with the 1999 Annual
Meeting of Shareholders for new directors and beginning with the annual meeting
in the year in which all previously granted options under the Directors Plan
become fully vested for current directors. Such options would remain exercisable
for the balance of their term (10 years) to the extent exercisable upon
termination of service as a director, except for termination due to gross
5
<PAGE>
or willful misconduct in which case such options would expire immediately, and
will be fully exercisable on the date of grant. The following table sets forth
the information with respect to options that will be granted to nominees under
the Director Plan upon their election to the Board of Directors and shareholder
approval of the amendments to the Director Plan:
NEW PLAN GRANTS
NAME AND POSITION NUMBER OF SHARES
----------------- ----------------
Irene M. Qualters, Nominee for Director 3,000
Michael M. Selzer, Nominee for Director 3,000
All of such options will be fully exercisable on the date of grant. Such options
will expire on June 22, 2009. Most members of the Board of Directors will not be
eligible to receive option grants under the amended Director Plan until the
annual meeting of shareholders to be held in 2001.
The Board of Directors believes that stock options are an important
tool for aligning the interests of nonemployee directors with the interests of
the Company and the Company's shareholders. The Board of Directors believes that
the proposed amendments to the Director Plan are in the best interests of the
Company because they will further align the interests of nonemployee directors
with those of the Company and the Company's shareholders.
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 AMENDMENTS TO THE DIRECTOR PLAN DESCRIBED ABOVE.
PROXIES WILL BE VOTED IN FAVOR OF SUCH PROPOSAL UNLESS OTHERWISE INDICATED. THE
BOARD RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS VOTE FOR THE PROPOSAL TO AMEND
THE DIRECTOR PLAN AS DESCRIBED ABOVE.
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 Mr. Quist, 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 1998 was set by
the Committee at the beginning of the fiscal year at $175,000, 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 $15,000 increase over Dr. Case's base salary for 1997.
6
<PAGE>
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 net income before interest and
income taxes ("NIBIT") and revenue. For any given increase in NIBIT 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 1998, the matrix provided for no bonuses if NIBIT grew less than 4%
or if revenue increased less than 5% over NIBIT and revenue in 1997.
Dr. Case received a cash bonus of $15,000 for 1998. The bonus reflects
a $75,000 base dollar amount objective for Dr. Case and a multiplier of 0.20.
The relatively small multiplier, and bonus, reflects lower revenue resulting
from slower growth in the surface mount technology industry.
STOCK INCENTIVE COMPENSATION
The Company provides long-term incentive to its executive officers
primarily through its Restated Stock Option Plan and its 1998 Stock Incentive
Plan (collectively, the "Option Plans"). Under the Option Plans, 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.
Because large grants in 1996 and 1997 provided Dr. Case with a
significant number of options, Dr. Case did not receive any options in 1998. Mr.
Quist was granted an option to purchase 100,000 shares of Common Stock upon his
election as President in February 1998, in part as an inducement to join the
Company. Options granted during 1998 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 1998.
SUMMARY
The Compensation Committee believes that the compensation program for
executive officers during the 1998 year achieved the principal objectives for
which it was designed.
Erwin Kelen
George Kline
7
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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, 1998 exceeding $100,000.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
-------------------------------------------- -------------------------------------------
AWARDS PAYOUTS
-------------------------------------------- ---------------------- -------
OTHER
ANNUAL RESTRICTED SECURITIES ALL OTHER
NAME AND PRINCIPAL COMPEN- STOCK UNDERLYING LTIP COMPEN-
POSITION YEAR SALARY BONUS SATION AWARDS(1) OPTIONS(#) PAYOUTS SATION(2)
- -------------------- ---- ------ ----- ------- --------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Steven K. Case 1998 $181,000(4) $ 15,000 $ 3,446
Chairman & Director 1997 160,000 45,000 $ 33,935(3) 80,000 2,993
1996 150,000 93,000 2,669
Steven M. Quist 1998 172,000(5) 75,000 $195,000 100,000
President & Director
William J. Farmer 1998 119,000(4) 6,000 2,688
Vice President and 1997 110,000 18,750 25,000 2,238
General Manger--OEM 1996 86,900 18,750 2,269
Sensors Business Unit
</TABLE>
- -------------------
(1) Amounts in the column represent the dollar value of grants of restricted
stock. Mr. Quist is the only named executive officer who has received
restricted stock. Mr. Quist received a 10,000 share restricted stock award
that was 20% vested on the date of grant and vests with respect to an
additional 20% on each of the next four anniversaries of the grant date.
(2) Consists of company contributions for such officers to a 401K plan.
(3) Represents payout of accrued and unused vacation time.
(4) Includes one payroll period during 1998 in excess of a full years' payroll.
(5) Mr. Quist commenced employment in February 1998 and the numbers therefore
represent salary for a partial year.
STOCK OPTIONS
The Company maintains a Restated Stock Option Plan, a 1998 Stock
Incentive Plan and a Stock Option Plan for Nonemployee Directors. The Company
may grant stock options to executive officers and other employees and
consultants of the Company under the Restated Stock Option Plan and the 1998
Stock Incentive Plan. The following table sets forth information with respect to
options granted to the named executive officers in 1998:
OPTION GRANTS IN 1998
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION FOR
OPTION TERM(1)
-----------------------------
% OF TOTAL OPTIONS
OPTIONS GRANTED TO EXERCISE PRICE EXPIRATION
NAME GRANTED(#) EMPLOYEES IN 1998 ($/SH) DATE 5%($) 10%($)
- -------------- ---------- ------------------ -------------- ---------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Dr. Case -- -- -- -- -- --
Mr. Quist 100,000 45.0% 19.50 1/12/03 538,749 1,190,495
Mr. Farmer -- -- -- -- -- --
</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 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.
8
<PAGE>
The following table sets forth information with respect to options
exercised during 1998 and held by the officers named in the Summary Compensation
Table as of December 31, 1998:
AGGREGATED OPTION EXERCISES IN 1998 AND OPTION VALUES AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-
UNEXERCISED OPTIONS AT MONEY OPTIONS AT
DECEMBER 31, 1998(1) DECEMBER 31, 1998(2)
------------------------------- ----------------------------
SHARES
ACQUIRED ON VALUE
NAME EXERCISE REALIZED(3) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Dr. Case 20,000 $ 251,250 61,500 106,500 $ 19,500 $ 34,500
Mr. Quist -- -- 3,000 109,000 -- --
Mr. Farmer -- -- 19,999 31,876 44,685 39,378
</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 Common Stock as
reported on the Nasdaq National Market ("Nasdaq") on December 31, 1998, 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 and the 1998 Stock Incentive
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.
SHAREHOLDER RETURN
The graph set forth below compares the cumulative total shareholder
return on the common stock of the Company from January 1, 1994 through December
31, 1998 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, 1994, and reinvestment of all dividends.
CYBEROPTICS
STOCK PERFORMANCE CHART DATA
[PLOT POINTS CHART]
Nasdaq
Computer &
Data
Date Processing Nasdaq NMS CyberOptics
---- ---------- ---------- -----------
12/31/93 $100.00 $100.00 $100.00
3/31/94 $101.42 $95.80 $92.00
6/30/94 $99.25 $91.32 $88.00
9/30/94 $110.50 $98.88 $104.00
12/30/94 $121.44 $97.75 $124.00
3/31/95 $136.70 $106.56 $176.00
6/30/95 $162.03 $121.89 $406.00
9/29/95 $177.00 $136.57 $544.00
12/29/95 $184.95 $138.24 $636.00
3/29/96 $193.61 $144.69 $460.00
6/28/96 $215.20 $156.50 $248.00
9/30/96 $219.48 $162.06 $216.00
12/31/96 $228.22 $170.03 $214.26
3/31/97 $211.84 $160.81 $270.00
6/30/97 $271.66 $190.29 $252.00
9/30/97 $297.07 $222.48 $540.00
12/31/97 $280.36 $208.65 $364.00
3/31/98 $370.60 $243.71 $432.00
6/30/98 $411.28 $250.76 $230.00
9/30/98 $387.68 $227.02 $162.00
12/31/98 $502.03 $292.80 $224.00
9
<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 March 17, 1999:
NAME AND ADDRESS AMOUNT AND NATURE PERCENT
OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP(1) OF CLASS
------------------- -------------------------- --------
Steven K. Case 378,988 8.1%
5900 Golden Hills Drive
Minneapolis, MN 55416
Kopp Investment Advisors, Inc. 814,575 16.4%
6600 France Avenue South
Suite 672
Edina, MN 55435 (2)
Robert Fleming, Inc. 777,135 15.7%
320 Park Avenue, 11th Floor
New York, NY 10022 (3)
Dimension Fund Advisors, Inc. 270,000 5.4%
129 Ocean Avenue
Santa Monica, CA 90401 (4)
Alex B. Cimochowski (5) 21,371 *
Kathleen P. Iverson -- *
Erwin A. Kelen 49,000 *
George E. Kline (6) 28,800 *
P. June Min 15,000 *
Irene M. Qualters -- *
Michael M. Selzer -- *
Steven M. Quist (7) 43,395 *
William J. Farmer 26,249 *
All executive officers and
directors as a group (13 persons) 564,097 10.9%
- -------------------
*Less than 1%
(1) Includes 79,000 shares for Dr. Case, 19,200 shares for Mr. Cimochowski,
45,000 shares for Mr. Kelen, 3,000 shares for Mr. Kline, 15,000 shares for
Dr. Min, 28,000 shares for Mr. Quist, 26,249 shares for Mr. Farmer and
215,449 shares for all officers and directors as a group, purchasable upon
exercise of options exercisable within 60 days of March 17, 1999.
(2) Based on Schedule 13G filing dated February 2, 1999. Includes 183,500
shares over which the holder has sole voting power and 814,575 shares over
which the holder has shared power of disposition.
(3) Based on Schedule 13G filed February 10, 1999. All shares held with shared
voting and shared power of disposition.
(4) Based on Schedule 13G filed February 11, 1999. All shares held with sole
voting and 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 and
3,300 shares held in an IRA of Mr. Kline's spouse, the beneficial ownership
of which Mr. Kline disclaims.
(7) Includes 10,000 shares subject to a restricted stock agreement.
10
<PAGE>
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, 1998.
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 1998 fiscal year.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The Company has selected PricewaterhouseCoopers LLP as its independent
accountants for its fiscal year ending December 31, 1999. Representatives of
PricewaterhouseCoopers LLP, the successor to Coopers & Lybrand L.L.P. which
served as the Company's independent accountants since July 1994 until the
formation PricewaterhouseCoopers LLP in 1998, 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.
SHAREHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING
Any shareholder wishing to include a proposal in the Company's proxy
solicitation materials for its next annual meeting of shareholders must submit
such proposal for consideration in writing to the Secretary of the Company at
its principal executive offices, 5900 Golden Hills Drive, Minneapolis, MN 55416,
not later than January 7, 2000. Each such notice must set forth certain
information with respect to the shareholder who intends to bring such matter
before the meeting and the business desired to be conducted, as set forth in
greater detail in the Company's Bylaws. Management will use discretionary
authority to vote against any shareholder proposal presented at the next annual
meeting if: (i) such proposal has been properly omitted from the Company's proxy
materials under federal securities laws; (ii) notice of such proposal was not
submitted to the Secretary of the Company at the address listed above by January
7, 2000; or (iii) the proponent has not solicited proxies in compliance with
federal securities laws from the holders of at least the percentage of the
Company's voting shares required to carry the proposal.
BY ORDER OF THE BOARD OF
DIRECTORS
Thomas Martin
SECRETARY
Dated: May 12, 1999
11
<PAGE>
CYBEROPTICS CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
TUESDAY, JUNE 22, 1999
3:00 P.M.
RADISSON PLAZA HOTEL MINNEAPOLIS
35 SOUTH 7TH STREET
MINNEAPOLIS, MN 55402
CYBEROPTICS CORPORATION
5900 GOLDEN HILLS DRIVE
MINNEAPOLIS, MN 55416 PROXY
- --------------------------------------------------------------------------------
PROXY FOR THE 1999 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 June 22, 1999, 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:
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY.
SEE REVERSE FOR VOTING INSTRUCTIONS.
<PAGE>
[ARROW] PLEASE DETACH HERE [ARROW]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3.
<TABLE>
<S> <C> <C>
1. Election of directors: 01 Steven K. Case [ ] Vote FOR [ ] Vote WITHHELD
02 Steven M. Quist all nominees from all nominees
03 Alex B. Cimochowski
04 Kathleen P. Iverson
05 Erwin A. Kelen
06 Irene M. Qualters
07 Michael M. Selzer
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY ________________________________________________
INDICATED NOMINEE, WRITE THE NUMBER(S) OF THE | |
NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.) |________________________________________________|
2. Approval of amendment to 1992 Employee Stock [ ] For [ ] Against [ ] Abstain
Purchase Plan
3. Approval of amendments to Stock Option Plan for [ ]For [ ] Against [ ] Abstain
nonemployee directors
4. To vote with discretionary authority on any other matter that
may properly come before the meeting
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 PROPOSALS 2 AND 3.
Address Change? Mark Box [ ] Indicate changes below: Dated: _________________________, 1999.
________________________________________________
| |
|________________________________________________|
Signature(s) in Box
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.
</TABLE>
