<PAGE>
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
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
HUTCHINSON TECHNOLOGY INCORPORATED
- --------------------------------------------------------------------------------
(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 transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
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<PAGE>
HUTCHINSON TECHNOLOGY INCORPORATED
40 West Highland Park
Hutchinson, Minnesota 55350
320/587-3797
December 19, 1997
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders to be
held at the Minneapolis Marriott City Center Hotel, 30 South Seventh Street,
Minneapolis, Minnesota, commencing at 10:30 a.m., Minneapolis time, on
Wednesday, January 28, 1998.
The Secretary's Notice of Annual Meeting and the Proxy Statement which
follow describe the matters to come before the meeting. During the meeting, we
will also review the activities of the past year and items of general interest
about the Company.
We hope that you will be able to attend the meeting in person and we look
forward to seeing you. Please mark, date and sign the enclosed Proxy and return
it in the accompanying envelope as quickly as possible, even if you plan to
attend the Annual Meeting. You may revoke the Proxy and vote in person at that
time if you so desire.
Sincerely,
[SIGNATURE]
Wayne M. Fortun
CHIEF EXECUTIVE OFFICER
<PAGE>
HUTCHINSON TECHNOLOGY INCORPORATED
------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 28, 1998
------------------------
The Annual Meeting of Shareholders of Hutchinson Technology Incorporated
will be held at the Minneapolis Marriott City Center Hotel, 30 South Seventh
Street, Minneapolis, Minnesota, commencing at 10:30 a.m., Minneapolis time, on
Wednesday, January 28, 1998 for the following purposes:
1. To elect a Board of Directors of eight directors, to serve until the next
Annual Meeting of Shareholders or until their successors have been duly
elected and qualified.
2. To approve the Hutchinson Technology Incorporated Incentive Bonus Plan.
3. To ratify the appointment of Arthur Andersen LLP as independent public
accountants for the fiscal year ending September 27, 1998.
4. To transact such other business as may properly be brought before the
meeting.
The Board of Directors has fixed December 5, 1997 as the record date for the
meeting, and only shareholders of record at the close of business on that date
are entitled to receive notice of and vote at the meeting.
YOUR PROXY IS IMPORTANT TO ENSURE A QUORUM AT THE MEETING. EVEN IF YOU OWN
ONLY A FEW SHARES, AND WHETHER OR NOT YOU EXPECT TO BE PRESENT, YOU ARE URGENTLY
REQUESTED TO DATE, SIGN AND MAIL THE ENCLOSED PROXY IN THE POSTAGE-PAID ENVELOPE
THAT IS PROVIDED. THE PROXY MAY BE REVOKED BY YOU AT ANY TIME PRIOR TO BEING
EXERCISED, AND RETURNING YOUR PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON
IF YOU ATTEND THE MEETING AND REVOKE THE PROXY.
By Order of the Board of Directors,
[SIGNATURE]
John A. Ingleman
SECRETARY
Hutchinson, Minnesota
December 19, 1997
<PAGE>
------------------------
PROXY STATEMENT
------------------------
GENERAL INFORMATION
The enclosed Proxy is being solicited by the Board of Directors of
Hutchinson Technology Incorporated (the "Company") for use in connection with
the Annual Meeting of Shareholders to be held on Wednesday, January 28, 1998 at
the Minneapolis Marriott City Center Hotel, 30 South Seventh Street,
Minneapolis, Minnesota at 10:30 a.m. and at any adjournments thereof. Only
shareholders of record at the close of business on December 5, 1997 will be
entitled to vote at such meeting or adjournment. Proxies in the accompanying
form which are properly signed, duly returned to an officer of the Company and
not revoked will be voted in the manner specified. A shareholder executing a
Proxy retains the right to revoke it at any time before it is exercised by
notice in writing to an officer of the Company of termination of the Proxy's
authority or a properly signed and duly returned Proxy bearing a later date.
The address of the principal executive office of the Company is 40 West
Highland Park, Hutchinson, Minnesota 55350 and the telephone number is (320)
587-3797. The mailing of this Proxy Statement and the Board of Directors' form
of Proxy to shareholders will commence on or about December 19, 1997.
Shareholder proposals intended to be presented at the 1999 Annual Meeting of
Shareholders must be received by the Company at its principal executive office
no later than August 20, 1998 for inclusion in the Proxy Statement for that
meeting.
The affirmative vote of the holders of a majority of the voting power of the
outstanding shares of Common Stock of the Company present and entitled to vote
is required for approval of each proposal presented in this Proxy Statement. A
shareholder voting through a Proxy who abstains with respect to a certain
proposal is considered to be present and entitled to vote on such proposal at
the meeting, and is in effect a negative vote, but a shareholder (including a
broker) who does not give authority to a Proxy to vote, or withholds authority
to vote, on a certain proposal shall not be considered present and entitled to
vote on such proposal.
1
<PAGE>
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth, as of December 1, 1997, the ownership of
Common Stock of the Company by each shareholder who is known by the Company to
own beneficially more than 5% of the outstanding Common Stock of the Company,
each director, each executive officer named in the Summary Compensation Table on
page 11, and all executive officers and directors as a group. At December 1,
1997 there were 19,637,098 shares of Common Stock, par value $.01, issued and
outstanding, each of which is entitled to one vote.
<TABLE>
<CAPTION>
NAME OF BENEFICIAL OWNER AMOUNT AND NATURE OF PERCENTAGE OF
OR IDENTITY OF GROUP BENEFICIAL OWNERSHIP (1) OUTSTANDING SHARES
- ---------------------------------------- ------------------------- ------------------
<S> <C> <C>
Jeffrey W. Green 1,109,850(2) 5.54
Sioux Falls, South Dakota 57103
FMR Corp. 2,318,100(3) 11.80
Boston, Massachusetts 02109
Wayne M. Fortun 780,938(4) 3.86
W. Thomas Brunberg 4,650(5) *
Archibald Cox, Jr. 33,000(6) *
James E. Donaghy 4,600(7) *
Harry C. Ervin, Jr. 16,500(8) *
Steven E. Landsburg -- --
Richard N. Rosett 15,435(9) *
John A. Ingleman 153,570(10) *
R. Scott Schaefer 67,320(11) *
Richard J. Penn 81,750(12) *
Executive officers and directors 2,557,543(13) 12.17
as a group (15 persons)
</TABLE>
- ------------------------
* Less than 1%.
(1) Unless otherwise indicated in the footnotes to this table, the listed
beneficial owner has sole voting power and investment power with respect to
such shares.
(2) Of these shares, 660 are held by Mr. Green in joint tenancy with his wife
and 133,800 are held in an IRA for Mr. Green. Includes 411,300 shares
covered by currently exercisable options granted to Mr. Green.
(3) The number of shares indicated is based upon information reported to the
Securities and Exchange Commission in a Schedule 13G filed by FMR Corp.
("FMR") on May 10, 1997, a copy of which was provided to the Company by FMR,
and reflects beneficial ownership by FMR as of April 30, 1997.
(4) Of these shares, 150,989 are held by Mr. Fortun in joint tenancy with his
wife. Includes 574,170 shares covered by currently exercisable options
granted to Mr. Fortun.
(5) Of these shares, 750 are held in trusts, 600 are held in an IRA for Mr.
Brunberg and 300 are held in an IRA for Mr. Brunberg's wife. Includes 3,000
shares covered by options granted to Mr. Brunberg that are exercisable
within 60 days.
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<PAGE>
(6) Includes 3,000 shares covered by options granted to Mr. Cox that are
exercisable within 60 days.
(7) Of these shares, 1,300 are held by Mr. Donaghy's wife and 300 are held in a
living trust of which Mr. Donaghy is settlor, beneficiary and co-trustee,
and over which he exercises both investment control and the power to revoke
the trust. Includes 3,000 shares covered by options granted to Mr. Donaghy
that are exercisable within 60 days.
(8) Includes 3,000 shares covered by options granted to Mr. Ervin that are
exercisable within 60 days.
(9) Of these shares, 12,135 are held by Mr. Rosett's wife and 300 are held in
an IRA for Mr. Rosett's wife. Includes 3,000 shares covered by options
granted to Mr. Rosett that are exercisable within 60 days.
(10) Of these shares, 71,700 are held by Mr. Ingleman in joint tenancy with his
wife and 300 are held by Mr. Ingleman as custodian for his son under the
Minnesota Uniform Transfers to Minors Act. Includes 81,570 shares covered by
currently exercisable options granted to Mr. Ingleman.
(11) Includes 52,320 shares covered by currently exercisable options granted to
Mr. Schaefer.
(12) All of these shares are covered by currently exercisable options granted to
Mr. Penn.
(13) Includes 1,364,421 shares covered by currently exercisable options granted
to 9 executive officers of the Company.
3
<PAGE>
ELECTION OF DIRECTORS
The By-Laws of the Company provide that the business of the Company shall be
managed by or under the direction of a Board of Directors of not less than three
nor more than nine directors, which number shall be determined by the
shareholders at their annual meeting. Each director shall be elected at the
Annual Meeting of Shareholders for a term of one year or until a successor is
elected and has qualified. The Board of Directors has recommended that the
number of directors to be elected for the ensuing year be set at eight and has
nominated the eight persons named below for election as directors. Proxies
solicited by the Board of Directors will, unless otherwise directed, be voted to
elect the eight nominees named below to constitute the entire Board of
Directors.
All of the nominees named below are current directors of the Company. Each
nominee has indicated a willingness to serve as a director for the ensuing year,
but in case any nominee is not a candidate at the meeting for any reason, the
Proxies named in the enclosed form of Proxy may vote for a substitute nominee in
their discretion.
The affirmative vote of the holders of at least a majority of the voting
power of the outstanding shares of Common Stock of the Company present and
entitled to vote on the election of directors is required for election to the
Board of Directors of each of the eight nominees named below.
The following table sets forth certain information as to each nominee for
the office of director:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------ --- --------------------------------------------
<S> <C> <C>
Jeffrey W. Green 57 Chairman of the Board and Director
Wayne M. Fortun 48 President, Chief Executive Officer and Chief
Operating Officer and Director
W. Thomas Brunberg 57 Director
Archibald Cox, Jr. 57 Director
James E. Donaghy 63 Director
Harry C. Ervin, 68 Director
Jr.
Steven E. 43 Director
Landsburg
Richard N. Rosett 69 Director
</TABLE>
Mr. Green is a co-founder of the Company and has served as a director since
the Company's formation in 1965. Mr. Green has been Chairman of the Board since
January 1983, and served as the Company's Chief Executive Officer from January
1983 to May 1996.
Mr. Fortun became a director in 1983. He has been with the Company since
1975 and was elected President and Chief Operating Officer in January 1983 and
Chief Executive Officer in May 1996. Mr. Fortun is also a director of G&K
Services, Inc. and Excelsior-Henderson Motorcycle Manufacturing Company.
Mr. Brunberg became a director of the Company in 1975. He is a certified
public accountant and has been a shareholder in the Minneapolis accounting firm
of Brunberg Thoresen Diaby & Associates, Ltd. since March 1991. He was a partner
in the Minneapolis office of the accounting firm of Pannell Kerr
4
<PAGE>
Forster from 1987 through January 1991, which firm filed a petition under the
Federal bankruptcy laws in 1993.
Mr. Cox became a director of the Company in May 1996. Mr. Cox has been Vice
Chairman and President of Magnequench International, Inc., a manufacturer of
magnets and magnetic material, since October 1995. He has been Chairman of
Sextant Group, Inc., a financial advisory firm, since August 1993. Mr. Cox
served as President and Chief Executive Officer of The First Boston Corporation,
an investment banking firm, from July 1990 to August 1993, and as a Managing
Director of Tiger Management Company, a hedge fund, from November 1993 to June
1994.
Mr. Donaghy became a director of the Company in 1992. Since January 1991,
Mr. Donaghy has been the Chief Executive Officer and President and a director of
Sheldahl, Inc., a manufacturer of laminates, composite materials and flexible
electronic interconnects.
Mr. Ervin became a director of the Company in 1969. Mr. Ervin, who is now
retired, was a Vice President of Dain Bosworth Incorporated, an investment
banking firm, from April 1988 through June 1996.
Mr. Landsburg became a director of the Company in March 1997. He has been an
Associate Professor of Economics at the University of Rochester since September
1991.
Mr. Rosett became a director of the Company in 1986. He has been a Professor
of Economics at the Rochester Institute of Technology ("RIT") since July 1990,
and Director of Quality Cup Programs at RIT since July 1995. Mr. Rosett was Dean
of the College of Business of RIT from July 1990 to July 1996. Mr. Rosett is
also a director of Smith Corona Corp.
None of the above nominees is related to each other or to any executive
officer of the Company, except that Mr. Rosett is married to Mr. Green's first
cousin.
The Company has an audit committee consisting of Richard N. Rosett, W.
Thomas Brunberg and James E. Donaghy. The audit committee had three meetings in
fiscal year 1997. The audit committee meets with the Chief Financial Officer and
the Company's internal auditor and independent public accountants, and monitors
and reviews the Company's system of internal controls, approves the scope and
timing of the independent public accountants' audit and discusses the meaning
and significance of the audited financial results. The Company has a
compensation committee consisting of Harry C. Ervin, Jr., Archibald Cox, Jr. and
Steven E. Landsburg, which grants or makes recommendations to the Board of
Directors concerning employee stock options, bonuses and other compensation. The
compensation committee had three meetings in fiscal year 1997. The Company does
not have a nominating committee.
The Board of Directors held six meetings during fiscal year 1997.
Each non-employee director of the Company receives an annual fee of $16,000
and a fee of $900 for each Board meeting and $500 for each Board committee
meeting attended by the director.
All persons serving as non-employee directors of the Company are entitled to
receive retirement benefits under the Company's Directors' Retirement Plan (the
"Retirement Plan"). Under the Retirement Plan, following cessation of service as
a director of the Company (i) after at least five years of service on the Board
of Directors, (ii) upon reaching age 65, or (iii) regardless of the length of
service on the Board of Directors, as a result of such non-employee director's
death or permanent disability while a director, a non-employee director (or his
or her beneficiary) will receive a cash retirement benefit equal on an annual
basis to the amount of the annual retainer fee (exclusive of meeting fees) in
effect at the time such
5
<PAGE>
individual ceases to serve on the Board of Directors. The benefit is payable no
less frequently than annually for a period equal to one-half of the period such
non-employee director served on the Board of Directors up to a maximum payment
period of five years. Payments otherwise due in installments may become payable
in a lump sum upon the occurrence of certain change of control events specified
in the Retirement Plan.
On January 29, 1997, each non-employee director elected to the Board of
Directors on that date received a stock option pursuant to the Hutchinson
Technology Incorporated 1996 Incentive Plan (the "1996 Plan") to purchase 3,000
shares of Common Stock of the Company at an exercise price of $36.67, which was
equal to the fair market value per share of the Common Stock at the time the
option was granted. Upon his appointment to the Board of Directors on March 26,
1997, Mr. Landsburg also received a stock option pursuant to the 1996 Plan to
purchase 3,000 shares of Common Stock of the Company at an exercise price of
$29.375, which was equal to the fair market value per share of the Common Stock
at the time of the grant. The options granted to non-employee directors
generally are not exercisable for one year after the date of grant.
6
<PAGE>
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The compensation committee of the Company's Board of Directors (the
"Committee"), which is composed entirely of independent, outside directors,
establishes the general compensation policies of the Company and specific
compensation for each executive officer of the Company, and administers the
Company's stock option program. The Committee's intent is to make the
compensation packages of the executive officers of the Company sufficient to
attract and retain persons of exceptional quality, and to provide effective
incentives to motivate and reward Company executives for achieving the financial
and strategic goals of the Company essential to the Company's long-term success
and to growth in shareholder value. The Company's executive compensation package
consists of three main components: (i) base salary; (ii) annual cash bonuses;
and (iii) stock options. Internal Revenue Code Section 162(m) ("Section 162(m)")
generally limits the deductibility of compensation over $1 million paid by a
company to certain executive officers. The Section 162(m) limit does not apply
to "performance-based compensation", and the stock options granted to executives
in fiscal year 1997 pursuant to the Company's 1988 Stock Option Plan have been
structured to qualify as performance-based compensation for these purposes.
Historically, the combination of base salary and annual cash bonuses for any
executive officer has not exceeded $1 million. However, in light of Section
162(m), the Committee recommended approval to the Board of Directors of the
Company, and the Board of Directors has approved and is submitting to
shareholders for approval, the Company's Incentive Bonus Plan (the "Bonus
Plan"). The Bonus Plan is described in detail on pages 15 through 17 of this
Proxy Statement and, if approved by the shareholders, will be effective for the
Company's fiscal year 1998. Assuming such shareholder approval, the Committee
expects that all cash bonuses paid under the Bonus Plan will qualify as
"performance-based compensation" for Section 162(m) purposes and be deductible
by the Company under current federal income tax laws.
BASE SALARY
The base salary of each executive officer of the Company other than the
Company's Chairman of the Board of Directors (the "Chairman"), but including the
Company's Chief Executive Officer (the "CEO"), is determined annually by the
Committee after considering the compensation levels of personnel with similar
responsibilities at other companies in high technology industry and in
manufacturing generally and, to a lesser extent, the Company's financial
performance during the prior fiscal year. With respect to the Company's
Chairman, base salary is determined annually by the Committee after considering
the compensation levels of personnel with similar responsibilities at
Minnesota-based publicly-held corporations, as well as, to a lesser extent, the
Company's financial performance during the prior fiscal year. In the case of
executive officers other than the CEO and the Chairman, the individual
performance of each executive officer is also given significant weight. Salary
decisions concerning executive officers are made by the Committee at the
beginning of each fiscal year of the Company in a review process which includes
recommendations of the CEO and the Chairman for all executive officers other
than themselves.
To maintain a competitive level of executive compensation and retain
superior personnel, the Committee annually evaluates the salary for each
executive officer's position (other than the Chairman) based on three surveys on
executive compensation for manufacturers in high technology industry and for
manufacturers generally (the "Surveys"). Using the Surveys, the base salary of
the CEO was targeted in fiscal year 1997 by the Committee to be at the median of
the salary range for chief executive officers. With respect to all other
executive officers, base salaries are targeted initially to be in line with the
industry median for similar positions, as presented in the Surveys, with
variations above or below the median based
7
<PAGE>
on individual performance, experience and job responsibility. All four peer
companies constituting the Peer Composite Index presented in the performance
graph on page 14 of this Proxy Statement are included in two of the Surveys.
With respect to the Company's Chairman, the Committee reviews salary data
contained in a survey on executive compensation for chief executives, including
chairmen of the board, of one hundred Minnesota-based publicly-held corporations
(the "Minnesota Data"), focusing on corporations in which the executive position
of "chairman of the board" is separate from the executive position of "chief
executive officer". The Minnesota Data indicated wide variations in base salary
for the executive position of "chairman of the board." The Committee assessed
the expected job responsibilities of the Chairman for fiscal year 1997 and the
time required to meet such duties, and arrived at a base salary for such fiscal
year based on a proportion of the base salary paid to the Chairman in fiscal
year 1996 (during the majority of which year the Chairman was also the chief
executive officer of the Company).
With respect to all executive officers, including both the CEO and the
Chairman, in addition to the Surveys, the Company's financial performance during
the prior fiscal year also is considered in the Committee's annual review of
base salaries. Current measures of financial performance are operating income
and return on assets, each of which is of substantially equivalent importance in
determining compensation.
With respect to all executive officers other than the CEO and the Chairman,
the individual performance and achievements of each executive officer in the
prior fiscal year also are given significant weight in the Committee's annual
review of base salaries. Individual performance is assessed by an annual written
performance appraisal and by quarterly reviews of specific "results objectives".
The appraisal evaluates each officer's performance in areas such as leadership,
vision setting, motivation and development of employees and global economic
marketing and business know-how, and is prepared by the CEO following interviews
by the CEO and certain members of his executive staff with each officer's peers
and subordinates and discussion with the Chairman. In addition, the CEO and
certain members of his executive staff assess each officer's achievement of
specific "results objectives" developed by turning corporate financial and
strategic goals into specific personal objectives to be accomplished each fiscal
quarter by each officer.
ANNUAL INCENTIVE COMPENSATION
Under the Company's bonus program (the "Incentive Compensation Program"),
each executive officer and other management employees are eligible to receive a
cash bonus for each fiscal year, contingent upon the Company's financial
performance during such fiscal year. The Committee determines the bonus to be
received by the CEO after assessing overall corporate financial performance and
reviewing incentive compensation information for individuals in a similar
position, as presented in the Surveys. The Committee also assesses overall
corporate financial performance in determining the bonus to be received by the
Chairman, and reviews incentive compensation information for individuals in a
similar position. Bonuses for executive officers other than the CEO and the
Chairman are based on a target bonus percentage of base salary that is assigned
to each officer after comparing each such officer's job responsibilities to
those of comparable jobs, and the target bonus percentage associated with such
comparable jobs, as presented in the Surveys. Individual performance, in
addition to overall corporate financial performance, also is an important factor
in determining bonuses in the case of officers other than the CEO and the
Chairman. The Incentive Compensation Program is designed to motivate each
executive officer to maximize his or her individual performance while attaining
or exceeding corporate performance goals.
8
<PAGE>
Bonuses for executive officers, including the CEO and the Chairman, are paid
under the Incentive Compensation Program only if the Company achieves threshold
levels of overall corporate financial performance. Overall corporate financial
performance is measured first by the Company's actual return on assets in the
fiscal year, and second by the achievement of operating income and return on
assets goals for that fiscal year. These corporate goals are approved by the
Committee in conjunction with annual recommendations by the CEO and the Chairman
at the start of each fiscal year. Bonuses are paid only if the Company achieves
both a minimum prescribed level of return on assets as well as a minimum
prescribed percentage of the corporate goals for operating income and return on
assets.
In the case of the CEO and the Chairman, once the required threshold levels
of overall corporate financial performance are achieved, bonuses are determined
by the Committee, in its discretion, after reviewing incentive compensation
information presented in the Surveys, with respect to the CEO, and incentive
compensation information for individuals in a similar position, with respect to
the Chairman.
The bonus amounts actually paid out to all executive officers other than the
Chairman and the CEO will vary from the target bonus percentage based on the
magnitude of positive overall corporate financial performance over the threshold
level and on individual performance reviews. The maximum bonus that will be paid
out under the Incentive Compensation Program to any participating employee,
including all executive officers, is twice the target bonus percentage of base
salary.
In the case of executive officers other than the CEO and the Chairman, once
the required threshold levels of overall corporate financial performance are
achieved, each such executive officer participates in one of several bonus
pools. Participation in a particular pool is based on the Company's
organizational structure and the target bonus percentage of each participant.
Each officer in a pool is assigned a target bonus percentage determined by
evaluating the individual's job responsibilities and reviewing the incentives
paid to personnel in jobs with similar responsibilities, as presented in the
Surveys. The Committee approves target bonus percentages for each officer (based
upon the recommendations of the CEO for executive officers other than himself
and the Chairman) that are in line with the industry median for incentives paid
to individuals in similar positions. The total cash available for bonuses to all
executive officers in a particular bonus pool is calculated by multiplying (i)
the percent of the corporate goal achieved for return on assets, (ii) the
percent of the corporate goal achieved for operating income, (iii) the
applicable target bonus percentage, and (iv) the aggregate base salaries for all
executive officers in the pool.
The CEO also reviews the individual performance of each executive officer,
other than himself and the Chairman, for the subject fiscal year, based on the
written performance appraisals and "results objectives" described above, and
makes bonus recommendations to the Committee based on such review. Each bonus
pool is then allocated by the Committee among the executive officers eligible to
share in that pool based on the recommendations of the CEO.
The Company's fiscal year 1997 overall corporate financial performance
exceeded the minimum prescribed threshold level for the Company's actual return
on assets, and also exceeded the minimum prescribed percentages of the Company's
corporate goals for operating income and return on assets. As a result, the CEO,
the Chairman and each executive officer received cash bonuses for fiscal year
1997. Based on the Company's superior performance with respect to operating
income and return on assets, the CEO received a bonus of $470,400 for fiscal
year 1997.
9
<PAGE>
STOCK OPTIONS
The Company's stock option program is intended to provide a long-term
incentive for executive officers and other key employees. The purpose of the
program is to promote the interests of the Company and its shareholders by
providing all employees with an opportunity to acquire a proprietary interest in
the Company and thereby develop a stronger incentive to put forth maximum effort
for the continued success and growth of the Company. In addition, it is believed
that the opportunity to acquire a proprietary interest in the Company will aid
in attracting and retaining personnel of outstanding ability.
The Company's 1988 Stock Option Plan is administered by the Committee and
authorizes the Committee to grant to key employees, including all executive
officers, options to purchase Common Stock of the Company. Generally, options
are granted annually to purchase shares of Common Stock over a ten-year period
at the fair market value per share at the time the options are granted. Options
granted during fiscal year 1997 generally are not exercisable for one year after
the date of grant.
Effective November 19, 1996, the Board of Directors of the Company approved,
and on January 29, 1997 the shareholders of the Company approved, the Hutchinson
Technology Incorporated 1996 Incentive Plan (the "1996 Plan"). The 1996 Plan
generally is administered by the Committee and authorizes the Committee to grant
options to purchase Common Stock of the Company to any full-time employee,
including all executive officers, and to other individuals who are not employees
but who provide services as advisors or consultants. In fiscal year 1997, no
options were granted to any executive officers under the 1996 Plan.
The number of shares to be awarded to the CEO and the Chairman is determined
by the Committee on the basis of its view of each such officer's long-term
individual performance and the overall strategic contribution of each such
individual to corporate performance. Option grants to the CEO and the Chairman
are made on the same terms as all other options granted by the Committee to
other employees of the Company. In determining the number of options to be
granted, the Committee takes into account the number of options then held by the
CEO and the Chairman and the number of shares granted as a percentage of all
outstanding shares.
The number of shares to be awarded to each executive officer, other than the
CEO and the Chairman, is proposed by the CEO on the basis of his view of each
officer's long-term individual performance and the overall strategic
contribution of such officer to corporate performance, taking into account
individual promotions during the fiscal year. The Committee reviews the
recommendations of the CEO and approves the final list of such option recipients
and the amounts of the awards. As with the CEO and the Chairman, in determining
the number of options to be granted, the Committee takes into account the number
of options then held by the officers receiving such grants and the number of
shares granted as a percentage of all outstanding shares.
Compensation Committee:
Harry C. Ervin, Jr., Chairman
Archibald Cox, Jr.
Steven E. Landsburg
10
<PAGE>
SUMMARY COMPENSATION TABLE
The following table shows, for the Company's Chief Executive Officer and
each of the four other most highly compensated executive officers of the Company
(collectively, the "Named Executive Officers"), information concerning
compensation earned for services in all capacities during the fiscal year ended
September 28, 1997, as well as compensation earned by each such person for the
two previous fiscal years:
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------------------
ANNUAL COMPENSATION SECURITIES
NAME AND ----------------------- UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (#) COMPENSATION ($) (1)
- -------------------------- --------- ---------- ---------- ----------- ---------------------
<S> <C> <C> <C> <C> <C>
Wayne M. Fortun 1997 395,515 470,400 225,000 9,600
President, Chief 1996 343,947 -- 120,000 8,350
Executive Officer and 1995 316,380 200,000 30,000 7,528
Chief Operating Officer
1997 257,856 189,000 -- 9,600
Jeffrey W. Green 1996 405,197 -- 90,000 8,030
Chairman of the Board 1995 373,258 200,000 120,000 8,074
John A. Ingleman 1997 191,364 147,420 15,000 9,000
Vice President, Chief 1996 175,614 -- 9,300 4,500
Financial Officer and 1995 161,170 82,000 9,000 5,644
Secretary
R. Scott Schaefer 1997 179,443 136,837 15,000 8,354
Vice President and Chief 1996 170,630 -- 9,000 4,500
Technical Officer 1995 135,202 72,500 7,500 5,419
Richard J. Penn 1997 173,671 132,308 75,000 9,011
Vice President of Sales 1996 141,270 -- 6,750 5,022
and Marketing 1995 114,481 876 6,000 4,500
</TABLE>
- ------------------------
(1) Amounts for fiscal year 1997 represent Company matching cash contributions
under the Company's 401-K Plan.
11
<PAGE>
OPTION TABLES
The following tables summarize stock option grants to and exercises by the
Named Executive Officers during the fiscal year ended September 28, 1997, and
certain other information relative to such options:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
- --------------------------------------------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM (3)
OPTIONS GRANTED EMPLOYEES IN BASE PRICE ----------------------
NAME (#) (1) FISCAL YEAR ($/SHR) (2) EXPIRATION DATE 5% ($) 10% ($)
- -------------------- --------------- --------------- ------------- ---------------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Wayne M. Fortun 225,000 41.44 17.33 November 19, 2006 2,452,500 6,214,500
Jeffrey W. Green -- -- -- -- -- --
John A. Ingleman 15,000 2.76 17.33 November 19, 2006 163,500 414,300
R. Scott Schaefer 15,000 2.76 17.33 November 19, 2006 163,500 414,300
Richard J. Penn 75,000 13.81 17.33 November 19, 2006 817,500 2,071,500
</TABLE>
- ------------------------
(1) All such options are granted under the Company's 1988 Stock Option Plan (the
"1988 Plan"), are intended to be non-statutory options, and generally are
not exercisable for one year after the date of grant. Such options become
immediately exercisable, however, upon (a) death or disability of the
holder, (b) a change of control (defined as certain changes in the Company's
Board of Directors, certain concentrations of voting power, certain mergers,
sales of corporate assets, statutory share exchanges or similar
transactions, or liquidation or dissolution of the Company), or (c)
cancellation of such options by the Committee, which administers the 1988
Plan, in the event of the proposed dissolution or liquidation of the Company
or certain mergers, sales of corporate assets, statutory share exchanges or
similar transactions. The holder is permitted to pay the exercise price and
(if permitted by the Committee and subject to certain restrictions) any
withholding taxes due upon exercise with either cash or shares of Common
Stock.
(2) The exercise price of such options is not less than the fair market value
(as defined in the 1988 Plan) of a share of Common Stock at the time of
grant.
(3) The hypothetical potential appreciation shown in these columns reflects the
required calculations at annual rates of 5% and 10% set by the Securities
and Exchange Commission ("SEC"), and is not intended to represent either
historical appreciation or anticipated future appreciation of the Company's
Common Stock price.
12
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL YEAR-END IN-THE-MONEY OPTIONS AT
SHARES VALUE (#) FISCAL YEAR-END ($) (2)
ACQUIRED ON REALIZED -------------------------- ---------------------------
NAME EXERCISE (#) ($) (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------- ------------- ---------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Wayne M. Fortun 60,000 2,032,500 349,170 225,000 8,466,058 3,581,325
Jeffrey W. Green -- -- 411,300 -- 10,400,790 --
John A. Ingleman -- -- 66,570 15,000 1,806,988 238,755
R. Scott Schaefer -- -- 52,320 15,000 1,403,136 238,755
Richard J. Penn 6,000 131,250 6,750 75,000 114,188 1,193,775
</TABLE>
- ------------------------
(1) Market value of underlying securities on date of exercise minus the exercise
price.
(2) Market value of underlying securities at fiscal year-end minus the exercise
price.
13
<PAGE>
PERFORMANCE GRAPH
Set forth below is a graph comparing, for a period of five fiscal years
ended September 28, 1997, the yearly cumulative total shareholder return on the
Company's Common Stock with the yearly cumulative total shareholder return of
the S&P 500 Index and an index of a group of peer companies selected by the
Company (the "Peer Composite Index"). The comparison of total shareholder
returns assumes that $100 was invested on September 27, 1992 in each of the
Company, the S&P 500 Index and the Peer Composite Index, and that dividends were
reinvested when and as paid. The companies in the peer group are Adaptec
Incorporated, Applied Magnetics Corporation, Cirrus Logic Incorporated and Komag
Incorporated. The Company is not included in the peer group. In calculating the
yearly cumulative total shareholder return of the Peer Composite Index, the
shareholder returns of the companies included in the peer group are weighted
according to the stock market capitalizations of such companies at the beginning
of each period for which a return is indicated.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
HUTCHINSON TECHNOLOGY PEER COMPOSITE S&P 500 INDEX
<S> <C> <C> <C>
1992 $100.00 $100.00 $100.00
1993 80.00 121.64 110.45
1994 103.81 102.40 110.95
1995 259.05 243.47 140.41
1996 143.81 164.71 165.62
1997 380.00 149.06 228.14
</TABLE>
<TABLE>
<CAPTION>
HTI'S FISCAL YEAR ENDING
1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
Hutchinson Technology $ 100.00 $ 80.00 $ 103.81 $ 259.05 $ 143.81 $ 380.00
Peer Composite 100.00 121.64 102.40 243.47 164.71 149.06
S&P 500 Index 100.00 110.45 110.95 140.41 165.62 228.14
</TABLE>
14
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, and the
regulations promulgated thereunder require directors and certain officers of the
Company and persons who own more than ten percent of the Company's Common Stock
to file reports of their ownership of the Company's Common Stock and changes in
such ownership with the SEC. To the Company's knowledge, based solely on a
review of copies of forms submitted to the Company during and with respect to
fiscal year 1997, all required reports were filed on a timely basis during
fiscal year 1997.
PROPOSAL TO APPROVE THE
HUTCHINSON TECHNOLOGY INCORPORATED
INCENTIVE BONUS PLAN
INTRODUCTION. On November 19, 1997, the Board of Directors of the Company
approved, subject to shareholder approval, the Hutchinson Technology
Incorporated Incentive Bonus Plan (the "Bonus Plan"). The Bonus Plan will
replace the Incentive Compensation Program of the Company for all executive
officers. If shareholder approval is obtained, the Bonus Plan will be effective
for the fiscal year of the Company beginning on September 29, 1997, but if the
Bonus Plan is not approved by the Company's shareholders, then the Bonus Plan
and any awards granted under the Bonus Plan subject to such approval shall be
null and void. Approval of the Bonus Plan also will constitute approval of the
material terms of the performance targets under the Bonus Plan as described
herein.
Section 162(m) of the Internal Revenue Code of 1986, as amended ("Section
162(m)"), limits the Company's federal income tax deductions for certain
compensation paid to the Company's Chief Executive Officer and its four other
most highly compensated executive officers to $1 million for each individual in
any tax year. Compensation that qualifies as "performance-based compensation" is
not subject to the $1 million limit. In addition to other requirements, bonuses
will qualify as "performance-based compensation" if the material terms of the
plan under which the bonus is paid are disclosed to and approved by shareholders
before the bonus is paid. The Bonus Plan has been structured to comply with the
requirements of Section 162(m) and, by obtaining shareholder approval of the
Bonus Plan, the Company expects to preserve the tax deductibility of the annual
incentive compensation paid to its executive officers.
The following summary description of the Bonus Plan is qualified by
reference to the Bonus Plan, the full text of which is contained in Exhibit A to
this Proxy Statement. Reference is made to Exhibit A for a complete statement of
the terms of the Bonus Plan.
PURPOSE. The Bonus Plan is designed (i) to provide incentives to the
executive officers of the Company and its subsidiaries to produce a superior
return to the Company's shareholders, (ii) to encourage such executive officers
to remain in the employ of the Company and its subsidiaries, and (iii) to
qualify compensation paid pursuant to the Plan as "performance-based
compensation" within the meaning of Section 162(m).
ADMINISTRATION. The Bonus Plan is administered by the Compensation
Committee of the Board of Directors of the Company (the "Committee"), which
presently is comprised of three directors of the Company who are intended to
qualify as "outside directors" under Section 162(m). The Committee establishes
rules to administer the Bonus Plan. The Committee's interpretation of the Bonus
Plan and of awards made under the Bonus Plan is final and binding.
15
<PAGE>
PARTICIPANTS. Executive officers of the Company and its subsidiaries are
eligible to participate in the Bonus Plan. The Committee selects annually the
executive officers it deems appropriate to participate in the Bonus Plan for
that year. There are currently nine executive officers of the Company eligible
to participate in the Bonus Plan.
AWARDS UNDER THE BONUS PLAN. The Bonus Plan provides that within 90 days
following the start of a specified "Performance Period", which is the Company's
fiscal year, the Committee will select performance targets ("Targets"), the
attainment of which will entitle the designated participants for that year to
receive an award of bonus compensation. Targets selected by the Committee for a
Performance Period may be based on any one or more of the following: net
earnings before or after income taxes; gross revenues; operating expenses;
operating income; total shareholder return; or return on assets. Targets may be
expressed in absolute amounts or measured on a per share basis or as a
percentage change from preceding Performance Periods, and Targets may relate to
one or more of corporate, group, unit, division, affiliate or individual
performance.
Following the completion of each Performance Period, the Committee shall
certify in writing the degree to which Targets were attained and the awards
payable to the designated participants. Bonuses payable under the Bonus Plan are
payable in cash. The maximum bonus which may be paid for any Performance Period
to any participant is 2% of the Company's income from operations, as reported on
a pre-income tax basis on the Company's Consolidated Statements of Operations
for such Performance Period. The Committee may, at any time during or after a
Performance Period, and in its sole discretion, reduce or eliminate an award
payable to any participant for any reason.
MODIFICATION OR TERMINATION. The Board of Directors of the Company may at
any time terminate, suspend or modify the Bonus Plan, and the terms and
provisions of any award which has not been paid. Amendments of the Bonus Plan
are subject to shareholder approval only if required to comply with Section
162(m) or any other applicable law or regulation.
NEW PLAN BENEFITS. The Bonus Plan is intended to function in the same
fashion as the Company's Incentive Compensation Program described in the
Compensation Committee Report on Executive Compensation on pages 7 through 10 of
this Proxy Statement. All executive officers have been granted incentive
compensation opportunities for the current fiscal year under the Bonus Plan,
subject to its approval by shareholders, but amounts to be paid under the Bonus
Plan for fiscal year 1998 are not currently determinable. The following table
sets forth amounts that would have been paid under the Bonus Plan for the
Company's last completed fiscal year to the Named Executive Officers and all
executive
16
<PAGE>
officers as a group based on Company performance and the performance goals
established by the Committee under the Company's Incentive Compensation Program
for such fiscal year.
BONUS PLAN BENEFITS TABLE
<TABLE>
<CAPTION>
DOLLAR VALUE
NAME AND POSITION ($)
- ------------------------------------------------------------------------------------------------- ---------------
<S> <C>
Wayne M. Fortun--President, Chief Executive Officer and Chief Operating Officer.................. 470,400
Jeffrey W. Green--Chairman of the Board.......................................................... 189,000
John A. Ingleman--Vice President, Chief Financial Officer and Secretary.......................... 147,420
Richard Scott Schaefer--Vice President and Chief Technical Officer............................... 136,837
Richard J. Penn--Vice President of Sales and Marketing........................................... 132,308
All Executive Officers as a Group................................................................ 1,437,658
</TABLE>
VOTING REQUIREMENTS AND RECOMMENDATION
The affirmative vote of the holders of a majority of the outstanding shares
of Common Stock of the Company present or represented and entitled to vote in
person or by proxy at the meeting is required for approval of the Bonus Plan.
Proxies solicited by the Board of Directors will be voted for approval of the
Bonus Plan, unless shareholders specify otherwise in their proxies.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT THE SHAREHOLDERS OF
THE COMPANY VOTE FOR APPROVAL OF THE BONUS PLAN.
RELATIONSHIP WITH AND APPOINTMENT OF INDEPENDENT AUDITORS
The firm of Arthur Andersen LLP, independent public accountants, has been
the auditors for the Company since 1979. The Board of Directors again has
selected Arthur Andersen LLP to serve as the Company's independent public
accountants for the fiscal year ending September 27, 1998, subject to
ratification by the shareholders. While it is not required to do so, the Board
of Directors is submitting the selection of that firm for ratification in order
to ascertain the view of the shareholders. If the selection is not ratified, the
Board of Directors will reconsider its selection. Proxies solicited by the Board
of Directors will, unless otherwise directed, be voted to ratify the appointment
of Arthur Andersen LLP as independent public accountants for the Company for the
fiscal year ending September 27, 1998.
A representative of Arthur Andersen LLP will be present at the Annual
Meeting of Shareholders and will be afforded an opportunity to make a statement
if such representative so desires and will be available to respond to
appropriate questions during the meeting.
GENERAL
The Annual Report of the Company for the fiscal year 1997, including
financial statements, is being mailed with this Proxy Statement.
As of the date of this Proxy Statement, management knows of no matters that
will be presented for determination at the meeting other than those referred to
herein. If any other matters properly come before the meeting calling for a vote
of shareholders, it is intended that the shares represented by the
17
<PAGE>
Proxies solicited by the Board of Directors will be voted by the Proxies named
therein in accordance with their best judgment.
The Company will pay the cost of soliciting Proxies in the accompanying
form. In addition to solicitation by the use of mails, certain directors,
officers and regular employees of the Company may solicit Proxies by telephone,
telegram or personal interview, and may request brokerage firms and custodians,
nominees and other record holders to forward soliciting materials to the
beneficial owners of stock of the Company and will reimburse them for their
reasonable out-of-pocket expenses in so forwarding such materials.
SHAREHOLDERS WHO WISH TO OBTAIN A COPY OF THE COMPANY'S 10-K ANNUAL REPORT,
FILED WITH THE SEC FOR THE FISCAL YEAR ENDED SEPTEMBER 28, 1997, MAY DO SO
WITHOUT CHARGE BY WRITING TO JOHN A. INGLEMAN, VICE PRESIDENT, CHIEF FINANCIAL
OFFICER AND SECRETARY, AT THE COMPANY'S OFFICES, 40 WEST HIGHLAND PARK,
HUTCHINSON, MINNESOTA 55350.
By Order of the Board of Directors,
[SIGNATURE]
John A. Ingleman
SECRETARY
Dated: December 19, 1997
18
<PAGE>
EXHIBIT A
HUTCHINSON TECHNOLOGY INCORPORATED
INCENTIVE BONUS PLAN
1. PURPOSE. The purpose of the Hutchinson Technology Incorporated
Incentive Bonus Plan (the "Plan") is to provide incentives to the executive
officers of Hutchinson Technology Incorporated (the "Company") and its
subsidiaries to produce a superior return to the shareholders of the Company and
to encourage such executive officers to remain in the employ of the Company and
its subsidiaries. Amounts paid pursuant to the Plan are intended to qualify as
performance-based compensation within the meaning of Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code").
2. DEFINITIONS. The terms defined in this section are used (and
capitalized) elsewhere in the Plan.
a. "Award" means an award payable to a Participant pursuant to Section
4 hereof.
b. "Board" means the Board of Directors of the Company.
c. "Committee" means the Compensation Committee of the Board or such
other Board committee as may be designated by the Board to administer the
Plan.
d. "Effective Date" means the date specified in Section 5.
e. "Eligible Employee" means any executive officer of the Company or a
subsidiary thereof.
f. "Participant" means an Eligible Employee designated by the Committee
to participate in the Plan for a designated Performance Period.
g. "Performance Period" means the Company's fiscal year.
3. ADMINISTRATION.
3.1 AUTHORITY OF COMMITTEE. The Committee shall administer the Plan.
The Committee's interpretation of the Plan and of any Awards made under the Plan
shall be final and binding on all persons with an interest therein. The
Committee shall have the power to establish rules to administer the Plan and to
change such rules.
3.2 INDEMNIFICATION. To the full extent permitted by law, (i) no member
of the Committee shall be liable for any action or determination taken or made
in good faith with respect to the Plan or any Award made under the Plan, and
(ii) the members of the Committee shall be entitled to indemnification by the
Company against and from any loss incurred by such members by reason of any such
actions and determinations.
4. AWARDS.
4.1 ALLOCATION OF AWARDS. Within 90 days following the commencement of
each Performance Period, the Committee may select such Eligible Employees as it
deems appropriate for participation in the Plan. Eligible Employees selected for
participation will be entitled to receive an award of bonus compensation based
on the attainment of performance targets selected by the Committee and
consisting of one or any combination of two or more of net earnings before or
after income taxes; gross revenues; operating expenses; operating income; total
shareholder return; or return on assets. As appropriate, any such targets may be
expressed in absolute amounts, on a per share basis, or as a percentage change
from preceding
A-1
<PAGE>
Performance Periods. In addition, such targets may relate to one or any
combination of two or more of corporate, group, unit, division, affiliate or
individual performance.
4.2 MAXIMUM AMOUNT OF AWARDS. No Participant shall be entitled to
receive an Award for any Performance Period that exceeds 2% of income from
operations, as reported on a pre-income tax basis in the Company's Consolidated
Statements of Operations for such Performance Period.
4.3 ADJUSTMENTS. The Committee is authorized at any time during or
after a Performance Period, in its sole and absolute discretion, to reduce or
eliminate an Award payable to any Participant for any reason, including changes
in the position or duties of any Participant with the Company or any subsidiary
of the Company during the Performance Period, whether due to any termination of
employment (including death, disability, retirement, or termination with or
without cause) or otherwise. No reduction in an Award made to any Participant
shall increase the amount of the Award to any other Participant.
4.4 PAYMENT OF AWARDS. Following the completion of each Performance
Period, the Committee shall certify in writing the degree to which the
performance targets were attained and the Awards payable to Participants. Each
Participant shall receive payment in cash of the Award as soon as practicable
following the determination in respect thereof made pursuant to this Section
4.4.
5. EFFECTIVE DATE OF THE PLAN. The Plan shall become effective as of
September 29, 1997; provided that this Plan is approved and ratified by the
affirmative vote of the holders of a majority of the outstanding shares of
Common Stock of the Company present or represented and entitled to vote in
person or by proxy at a meeting of the shareholders of the Company no later than
March 1, 1998. The Plan shall remain in effect until it has been terminated
pursuant to Section 8. If the Plan is not so approved by the shareholders of the
Company, the Plan and any Awards granted under the Plan subject to such approval
shall be null and void.
6. RIGHT TO TERMINATE EMPLOYMENT. Nothing in the Plan shall confer upon
any Participant the right to continue in the employment of the Company or any
subsidiary or affect any right which the Company or any subsidiary may have to
terminate the employment of a Participant with or without cause.
7. TAX WITHHOLDING. The Company shall have the right to withhold from cash
payments under the Plan to a Participant or other person an amount sufficient to
cover any required withholding taxes.
8. AMENDMENT, MODIFICATION AND TERMINATION OF THE PLAN. The Board may at
any time terminate, suspend or modify the Plan and the terms and provisions of
any Award to any Participant which has not been paid. Amendments are subject to
approval of the shareholders of the Company only if such approval is necessary
to maintain the Plan in compliance with the requirements of Section 162(m) of
the Code, its successor provisions or any other applicable law or regulation. No
Award may be granted during any suspension of the Plan or after its termination.
9. UNFUNDED PLAN. The Plan shall be unfunded, and the Company shall not be
required to segregate any assets that may at any time be represented by Awards
under the Plan.
10. OTHER BENEFIT AND COMPENSATION PROGRAMS. Neither the adoption of the
Plan by the Board nor its submission to the shareholders of the Company shall be
construed as creating any limitation on the power of the Board to adopt such
other incentive arrangements as it may deem appropriate. Payments received by a
Participant under an Award made pursuant to the Plan shall not be deemed a part
of a Participant's regular recurring compensation for purposes of the
termination, indemnity or severance pay law of any state and shall not be
included in, nor have any effect on, the determination of benefits under any
other
A-2
<PAGE>
employee benefit plan, contract or similar arrangement provided by the Company
or any subsidiary unless expressly so provided by such other plan, contract or
arrangement, or unless the Committee expressly determines otherwise.
11. GOVERNING LAW. To the extent that Federal laws do not otherwise
control, the Plan and all determinations made and actions taken pursuant to the
Plan shall be governed by the laws of the State of Minnesota and construed
accordingly.
A-3
<PAGE>
PROXY
HUTCHINSON TECHNOLOGY INCORPORATED
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS -- JANUARY 28, 1998
The undersigned, revoking any proxy heretofore given, hereby appoints
Jeffrey W. Green, Wayne M. Fortun and Harry C. Ervin, Jr., and each of them, as
Proxies, each with full power of substitution, for and in the name of the
undersigned to vote, as designated below, and on the reverse side hereof, all
the shares of Common Stock of Hutchinson Technology Incorporated registered in
the name of the undersigned at the close of business on December 5, 1997, upon
the following matters more fully described in the Notice of and Proxy Statement
for the Annual Meeting of Shareholders to be held on January 28, 1998, and at
any adjournment thereof.
1. Election of Directors. Nominees of the Board of Directors are W.
Thomas Brunberg, Archibald Cox, Jr., James E. Donaghy, Harry C.
Ervin, Jr., Wayne M. Fortun, Jeffrey W. Green, Steven E. Landsburg
and Richard N. Rosett.
/ / FOR ALL NOMINEES LISTED ABOVE / / WITHHOLD AUTHORITY
except vote withheld from the to vote for all
following nominee(s), nominees listed above
if any:
--------------------------------------------------------------------
2. Proposal to Approve the Incentive Bonus Plan.
/ / FOR / / AGAINST / / ABSTAIN
3. Ratification of the appointment of Arthur Andersen LLP as
independent public accountants for the 1998 fiscal year.
/ / FOR / / AGAINST / / ABSTAIN
<PAGE>
4. ANY OTHER BUSINESS WHICH MAY PROPERLY BE CONSIDERED AND ACTED UPON
AT SAID MEETING.
THE PROXIES ARE AUTHORIZED TO VOTE IN THEIR DISCRETION UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING. THIS PROXY WHEN PROPERLY
EXECUTED WILL BE VOTED AS SPECIFIED ON THE REVERSE SIDE, BUT IF NO DIRECTION IS
GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3.
Dated: ______________ , 19___
Please sign exactly as this proxy
is addressed.
__________________________________
__________________________________
(Signature)
Joint owners should each sign
personally. When signing as
attorney, executor, administrator,
guardian, custodian, or corporate
official, sign name and title.
