<PAGE> 1
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. [ ] 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 Rule 14a-11(c) or Rule 14a-12.
HUTCHINSON TECHNOLOGY INCORPORATED
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
N/A
- --------------------------------------------------------------------------------
(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)(1) 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> 2
HUTCHINSON TECHNOLOGY INCORPORATED
40 West Highland Park
Hutchinson, Minnesota 55350
320/587-3797
December 20, 1999
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders to
be held at the Hilton Minneapolis, 1001 Marquette Avenue South, Minneapolis,
Minnesota, commencing at 10:00 a.m., Minneapolis time, on Wednesday, January 26,
2000.
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, or vote the enclosed Proxy by telephone or via
Internet, 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,
/s/ Wayne M. Fortun
Wayne M. Fortun
Chief Executive Officer
<PAGE> 3
HUTCHINSON TECHNOLOGY INCORPORATED
------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 26, 2000
------------------------------
The Annual Meeting of Shareholders of Hutchinson Technology Incorporated
will be held at the Hilton Minneapolis, 1001 Marquette Avenue South,
Minneapolis, Minnesota, commencing at 10:00 a.m., Minneapolis time, on
Wednesday, January 26, 2000 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 ratify the appointment of Arthur Andersen LLP as independent public
accountants for the fiscal year ending September 24, 2000.
3. To transact such other business as may properly be brought before the
meeting.
The Board of Directors has fixed November 30, 1999 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, OR VOTE THE ENCLOSED PROXY BY TELEPHONE OR VIA INTERNET. THE
PROXY MAY BE REVOKED BY YOU AT ANY TIME PRIOR TO BEING EXERCISED, AND RETURNING
YOUR PROXY OR VOTING YOUR PROXY BY TELEPHONE OR INTERNET 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,
/s/ John A. Ingleman
John A. Ingleman
Secretary
Hutchinson, Minnesota
December 20, 1999
<PAGE> 4
------------------------------
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 26, 2000 at
the Hilton Minneapolis, 1001 Marquette Avenue South, Minneapolis, Minnesota at
10:00 a.m. and at any adjournments thereof. Only shareholders of record at the
close of business on November 30, 1999 will be entitled to vote at such meeting
or adjournment. Proxies in the accompanying form which are properly signed and
duly returned to an officer of the Company, or voted by telephone or via
Internet, 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 20, 1999.
Shareholder proposals intended to be presented at the Annual Meeting of
Shareholders in the year 2001 that are requested to be included in the Proxy
Statement for that meeting must be received by the Company at its principal
executive office no later than August 22, 2000. Any other shareholder proposals
intended to be presented at the Annual Meeting of Shareholders in the year 2001
must be received by the Company at its principal executive office no later than
November 5, 2000.
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.
<PAGE> 5
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth, as of November 30, 1999, 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 director-nominee, each executive officer named in the
Summary Compensation Table on page 10, and all executive officers and directors
as a group. At November 30, 1999 there were 24,745,440 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>
Spinnaker Technology Fund, L.P., 3,312,000(2) 13.38
Bowman Capital Management, LLC
and Lawrence A. Bowman
San Mateo, California 94402
Jeffrey W. Green 901,285(3) 3.59
Wayne M. Fortun 795,179(4) 3.14
W. Thomas Brunberg 5,500(5) *
Archibald Cox, Jr. 33,000(6) *
Harry C. Ervin, Jr.(7) 20,000(8) *
Russell Huffer 0 *
Steven E. Landsburg 5,000(9) *
William T. Monahan 0 *
Richard B. Solum 7,000(10) *
John A. Ingleman 164,030(11) *
Richard J. Penn 109,710(12) *
Beatrice A. Graczyk 111,559(13) *
Executive officers and directors as
a
group (14 persons) 2,448,852(14) 9.37
</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) The number of shares indicated is based on information reported to the
Securities and Exchange Commission in a Schedule 13G filed jointly by
Spinnaker Technology Fund, L.P., Bowman Capital Management, LLC and
Lawrence A. Bowman on September 15, 1999, and reflects aggregate beneficial
ownership as of September 14, 1999.
(3) 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 351,300 shares
covered by currently exercisable options granted to Mr. Green.
(4) Of these shares, 167,038 are held by Mr. Fortun in joint tenancy with his
wife. Includes 584,170 shares covered by currently exercisable options
granted to Mr. Fortun.
(5) Of these shares, 1,150 are held in trusts, 1,050 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 currently exercisable options granted to Mr. Brunberg.
(6) Includes 3,000 shares covered by currently exercisable options granted to
Mr. Cox.
2
<PAGE> 6
(7) Mr. Ervin, a director, has reached retirement age and will not be a nominee
for re-election to the Board of Directors.
(8) Includes 3,000 shares covered by currently exercisable options granted to
Mr. Ervin.
(9) Includes 3,000 shares covered by currently exercisable options granted to
Mr. Landsburg.
(10) Of these shares 4,000 are held in an IRA for Mr. Solum and 3,000 shares are
covered by options granted to Mr. Solum which are exercisable within 60
days hereof.
(11) Of these shares, 71,700 are held by Mr. Ingleman in joint tenancy with his
wife. Includes 92,330 shares covered by currently exercisable options
granted to Mr. Ingleman.
(12) All of these shares are covered by currently exercisable options granted to
Mr. Penn.
(13) Of these shares, 54,150 are held by Ms. Graczyk in joint tenancy with her
husband. Includes 57,340 shares covered by currently exercisable options
granted to Ms. Graczyk.
(14) Includes 1,386,760 shares covered by currently exercisable options and
3,000 shares covered by options which are exercisable within 60 days
hereof, granted to executive officers and directors of the Company.
3
<PAGE> 7
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, except Mr. Monahan, 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 59 Chairman of the Board and Director
Wayne M. Fortun 50 President and Chief Executive Officer and
Director
W. Thomas Brunberg 59 Director
Archibald Cox, Jr. 59 Director
Russell Huffer 50 Director
Steven E. Landsburg 45 Director
William T. Monahan 52 Director-Nominee
Richard B. Solum 55 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. Green is also a director of Medwave, Inc. and Applied
Biometrics, Inc.
Mr. Fortun was elected President and Chief Operating Officer in 1983, Chief
Executive Officer in May 1996, and is now President and Chief Executive Officer.
He has served as a director of the Company since 1983. Mr. Fortun is also a
director of G&K Services, Inc. and Excelsior-Henderson Motorcycle Manufacturing
Company. Mr. Fortun has been with the Company since 1975.
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.
Mr. Cox became a director of the Company in 1996. Since February 1999, Mr.
Cox has been President and Chief Executive Officer, and was Vice Chairman and
President from October 1995 until February 1999, of Magnequench International,
Inc., a manufacturer of magnets and magnetic material. He has been Chairman of
Sextant Group, Inc., a financial advisory firm, since August 1993. Mr. Cox
served as a Managing Director of Tiger Management Company, a hedge fund, from
November 1993 to June 1994.
Mr. Huffer became a director of the Company in 1999. Since June 1999, Mr.
Huffer has been Chairman of Apogee Enterprises, Inc. ("Apogee"), a manufacturer
of glass products, services and systems. He has been
4
<PAGE> 8
President, Chief Executive Officer and a director of Apogee since January 1998,
and has served in various senior management positions with Apogee or its
subsidiaries since 1986.
Mr. Landsburg became a director of the Company in 1997. He has been an
Associate Professor of Economics at the University of Rochester since September
1991.
Mr. Monahan has been Chairman of the Board, President, Chief Executive
Officer and a director of Imation Corp., a developer, manufacturer and marketer
of data storage and imaging products and services, since March 1996. Mr. Monahan
served as Group Vice President of the Electro and Communications Systems Group
of Minnesota Mining and Manufacturing Company (3M) from June 1993 to March 1996.
Mr. Solum became a director of the Company in 1999. Mr. Solum has been a
partner in the law firm of Dorsey & Whitney LLP since July 1, 1998. He was a
judge of the Hennepin County District Court from January 1992 through June 1998.
Mr. Solum previously served as a director of the Company from 1977 until January
1992.
None of the above nominees is related to each other or to any executive
officer of the Company.
The Company has an audit committee consisting of W. Thomas Brunberg,
Russell Huffer and Richard B. Solum. The audit committee had three meetings in
fiscal year 1999. 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. (Mr. Ervin has reached
retirement age and will not be a nominee for re-election to the Board of
Directors), 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 four meetings in
fiscal year 1999. The Company does not have a nominating committee.
The Board of Directors held eight meetings during fiscal year 1999. Each
non-employee director of the Company receives an annual fee of $20,000 and a fee
of $1,000 for each Board meeting attended in person, $600 for each Board meeting
attended by conference call, and $600 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 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.
Upon his election to the Board of Directors on January 26, 1999, Richard B.
Solum 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 $43.75, which was equal to the fair
market value per share of the Common Stock at the time of the grant. Upon his
appointment to the Board of Directors on September 1, 1999, Russell Huffer
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 $27.00, 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.
5
<PAGE> 9
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. Section 162(m) ("Section 162(m)") of the Internal
Revenue Code of 1986, as amended (the "Code"), 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 1999 pursuant to the Company's 1996 Incentive Plan have been
structured to qualify as performance-based compensation for these purposes. The
Company also believes that cash bonuses paid under the Hutchinson Technology
Incorporated Incentive Bonus Plan (the "Bonus Plan"), if any, 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 Chairman's expected job responsibilities during the fiscal year and the time
required to meet such duties, and, 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 two 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 1999 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 on individual performance, experience
and job responsibility. All four peer companies constituting the Peer Composite
Index presented in the performance graph on page 13 of this Proxy Statement are
included in one of the Surveys.
With respect to the Company's Chairman, the Committee assessed the expected
job responsibilities of the Chairman for fiscal year 1999 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 1998.
6
<PAGE> 10
With respect to all executive officers, including both the CEO and the
Chairman, 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 with each officer's peers and subordinates and discussion
with the Chairman. In addition, the CEO assesses 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
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 Bonus Plan as performance-based compensation
within the meaning of Section 162(m). Executive officers of the Company and its
subsidiaries are eligible to participate in the Bonus Plan, which is
administered by the Committee. The Committee selects annually the executive
officers it deems appropriate to participate in the Bonus Plan for that year. In
fiscal year 1999, all of the eight eligible executive officers of the Company,
including the CEO and the Chairman, were selected by the Committee to
participate in 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, payable under the Bonus Plan in cash. 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.
For fiscal year 1999, the Committee selected Targets intended as a means of
assessing the Company's overall corporate financial performance. The Targets set
(i) the Company's corporate goals for both operating income and return on
assets, and (ii) minimum thresholds to be achieved with respect to the Company's
actual return on assets and with respect to a combined percentage of the two
corporate goals for operating income and return on assets. The Targets for
corporate goals were selected by the Committee in conjunction with
recommendations by the CEO and the Chairman at the start of the fiscal year.
Bonuses for executive officers, including the CEO and the Chairman, are paid
under the Bonus Plan only if the Company achieves both the minimum prescribed
level of actual return on assets as well as the minimum prescribed percentage of
the corporate goals for operating income and return on assets that have been set
as Targets under the Bonus Plan.
If the required threshold levels of overall corporate financial performance
(set by the Committee as Targets under the Bonus Plan) are achieved, bonuses for
executive officers, including the CEO and the
7
<PAGE> 11
Chairman, are determined by the Committee based on a bonus percentage (the
"Bonus Percentage") of base salary that is assigned to each participating
executive officer by the Committee at the start of the fiscal year. With respect
to the CEO, the Bonus Percentage is set by the Committee after reviewing
incentive compensation information for individuals in a similar position, as
presented in the Surveys. With respect to the Chairman, the Bonus Percentage is
set by the Committee after assessing the expected job responsibilities of the
Chairman for the upcoming fiscal year. The Bonus Percentage for executive
officers other than the CEO and the Chairman is set by the Committee after
comparing each such officer's job responsibilities to those of comparable jobs,
and the bonus percentage associated with such comparable jobs, as presented in
the Surveys.
The bonus amount actually paid out to each executive officer, including the
Chairman and the CEO, will be based on the magnitude of positive overall
corporate financial performance over the threshold level. If the threshold level
of return on assets is attained, the total bonus paid to each executive officer
is calculated by multiplying (i) the ratio of the Company's actual return on
assets to the corporate goal for return on assets, (ii) the ratio of the
Company's actual operating income to the corporate goal for operating income,
(iii) the applicable Bonus Percentage for such officer, and (iv) the base salary
for such executive officer. The maximum percentage of base salary that will be
paid under the Bonus Plan to each officer is twice the Bonus Percentage assigned
to each officer.
The Bonus Plan permits the Committee, at any time during or after a
Performance Period, and in its sole discretion, to reduce or eliminate an award
payable to any participant for any reason. To that end, the CEO 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 summarizes such reviews
for the Committee. Based on such reviews of individual performance, the
Committee may determine to reduce or eliminate any award that would otherwise be
payable under the Bonus Plan.
The Company's fiscal year 1999 overall corporate financial performance did
not meet the minimum prescribed threshold level for the Company's actual return
on assets or the minimum prescribed percentages of the Company's corporate goals
for operating income and return on assets, set as Targets under the Bonus Plan
by the Committee. As a result, neither the CEO nor the Chairman nor any other
executive officer received any cash bonus for fiscal year 1999.
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, the Company
believes the program will aid in attracting and retaining personnel of
outstanding ability by providing such personnel with an opportunity to acquire a
proprietary interest in the Company.
The Committee administers the Company's 1988 Stock Option Plan, under which
options to purchase Common Stock of the Company were granted by the Committee to
key employees, including all executive officers. All shares of Common Stock
available for option grants under the 1988 Stock Option Plan were used in option
grants made by the Committee between 1988 and 1997. The Company's 1996 Plan 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. Generally, options (under either
the Company's 1988 Stock Option Plan or the 1996 Plan) are granted annually to
purchase shares of Common
8
<PAGE> 12
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 1999 generally are not
exercisable for one year after the date of grant.
The number of options 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 options granted as a
percentage of all outstanding shares.
The number of options to be awarded to each executive officer, other than
the CEO and the Chairman, is proposed by the CEO after comparing each such
officer's job responsibilities to those of comparable jobs, and the dollar value
of option grants associated with such comparable jobs as presented in the
Surveys, 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.
Compensation Committee:
Harry C. Ervin, Jr., Chairman
Archibald Cox, Jr.
Steven E. Landsburg
9
<PAGE> 13
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 26, 1999, as well as compensation earned by each such person for the
two previous fiscal years:
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES
---------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (#) COMPENSATION ($) (1)
- --------------------------------------- ---- ---------- --------- ------------ --------------------
<S> <C> <C> <C> <C> <C>
Wayne M. Fortun 1999 495,684 -- 30,000 9,600
President and Chief 1998 477,459 -- 40,000 9,600
Executive Officer(2) 1997 395,515 470,400 225,000 9,600
Jeffrey W. Green 1999 225,014 -- -- 9,600
Chairman of the Board 1998 225,014 -- -- 9,600
1997 257,856 189,000 -- 9,600
John A. Ingleman 1999 223,283 -- 11,390 9,600
Vice President, Chief 1998 211,546 -- 17,730 10,200
Financial Officer and 1997 191,364 147,420 15,000 9,000
Secretary
Richard J. Penn 1999 221,551 -- 11,390 9,738
Vice President of 1998 204,290 -- 16,570 10,984
Sales and Marketing 1997 173,671 132,308 75,000 9,011
Beatrice A. Graczyk 1999 218,956 -- 11,390 10,430
Vice President and 1998 186,199 -- 15,350 10,616
Chief Operating Officer(3) 1997 166,270 127,009 15,000 8,186
</TABLE>
- ------------------------------
(1) Amounts for fiscal 1999 represent Company matching cash contributions under
the Company's 401-K Plan.
(2) Mr. Fortun was Chief Operating Officer of the Company until March 24, 1999.
(3) Ms. Graczyk became Chief Operating Officer of the Company on March 24, 1999.
10
<PAGE> 14
OPTION TABLES
The following tables summarize stock option grants to and exercises by the
Named Executive Officers during the fiscal year ended September 26, 1999, and
certain other information relative to such options:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
INDIVIDUAL GRANTS ANNUAL RATES OF
- ----------------------------------------------------------------------------------------------- STOCK
SECURITIES PERCENT OF PRICE APPRECIATION FOR
UNDERLYING TOTAL OPTIONS EXERCISE OR OPTION TERM (3)
OPTIONS GRANTED TO EMPLOYEES BASE PRICE -----------------------
NAME GRANTED (#) (1) IN FISCAL YEAR ($/SHR) (2) EXPIRATION DATE 5% 10%
- --------------------- --------------- -------------------- ----------- ----------------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Wayne M. Fortun 30,000 9.45 29.625 November 18, 2008 559,050 1,416,450
Jeffrey W. Green -- -- 29.625 November 18, 2008 -- --
John A. Ingleman 11,390 3.59 29.625 November 18, 2008 212,253 537,779
Richard J. Penn 11,390 3.59 29.625 November 18, 2008 212,253 537,779
Beatrice A. Graczyk 11,390 3.59 29.625 November 18, 2008 212,253 537,779
</TABLE>
- ------------------------------
(1) All such options are granted under the Company's 1996 Incentive Plan (the
"1996 Plan"). Of the total number of such options granted to each Named
Executive Officer, 3,375 are intended to be "incentive stock options" as
that term is defined in Section 422 of the Internal Revenue Code of 1986, as
amended, (the "Code") and the remainder are non-statutory stock options.
Such options 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 1996 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 1996 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.
11
<PAGE> 15
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 (#) FISCAL YEAR-END ($) (2)
ACQUIRED ON VALUE REALIZED --------------------------- ---------------------------
NAME EXERCISE (#) ($) (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------- ------------ -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Wayne M. Fortun 60,000 1,575,000 554,170 30,000 7,533,719 --
Jeffrey W. Green -- -- 351,300 -- 6,772,553 --
John A. Ingleman 18,000 381,384 80,940 11,390 1,195,835 --
Richard J. Penn -- -- 98,320 11,390 920,337 --
Beatrice A. Graczyk -- -- 45,950 11,390 450,525 --
</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.
12
<PAGE> 16
PERFORMANCE GRAPH
Set forth below is a graph comparing, for a period of five fiscal years
ended September 26, 1999, 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 25, 1994 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, Komag Incorporated and Cirrus Logic
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.
HTI'S FISCAL YEAR ENDING
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
1994 1995 1996 1997 1998 1999
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Hutchinson Technology $100.00 $249.54 $138.53 $366.06 $197.48 $306.88
- -------------------------------------------------------------------------------------------------------
Peer Composite 100.00 237.76 160.84 145.56 32.51 81.58
- -------------------------------------------------------------------------------------------------------
S&P 500 Index 100.00 126.55 149.27 205.62 227.27 277.87
- -------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE> 17
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 1999, all required reports were filed on a timely basis during
fiscal year 1999.
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 24, 2000, 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 24, 2000.
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 and Form 10-K of the Company for the fiscal year 1999,
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 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,
director-nominees, 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.
14
<PAGE> 18
SHAREHOLDERS WHO WISH TO OBTAIN AN ADDITIONAL COPY OF THE COMPANY'S 10-K
ANNUAL REPORT, TO BE FILED WITH THE SEC FOR THE FISCAL YEAR ENDED SEPTEMBER 26,
1999, 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,
/s/ John A. Ingleman
John A. Ingleman
Secretary
Dated: December 20, 1999
15
<PAGE> 19
\/ Please detach here \/
- --------------------------------------------------------------------------------
HUTCHINSON TECHNOLOGY INCORPORATED
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS - JANUARY 26, 2000
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 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 November 30, 1999 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 26, 2000 and at
any adjournment thereof.
(Continued on other side)
- --------------------------------------------------------------------------------
<PAGE> 20
---------------------
COMPANY #
CONTROL #
---------------------
THERE ARE THREE WAYS TO VOTE YOUR PROXY
YOUR TELEPHONE OR INTERNET VOTE AUTHORIZES THE NAMED PROXIES TO VOTE YOUR SHARES
IN THE SAME MANNER AS IF YOU MARKED, SIGNED AND RETURNED YOUR PROXY CARD.
VOTE BY PHONE -- TOLL FREE -- 1-800-240-6326
- - Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a
week.
- - You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above.
- - Follow the simple instructions provided.
VOTE BY INTERNET -- HTTP://WWW.EPROXY.COM/HTCH/
- - Use the Internet to vote your proxy 24 hours a day, 7 days a week.
- - You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above to obtain your records and create an
electronic ballot.
- - Follow the simple instructions provided.
VOTE BY MAIL -- IF YOU VOTE BY PHONE OR INTERNET, PLEASE DO NOT MAIL YOUR PROXY
CARD
- - Mark, sign and date your proxy card.
- - Return it in the enclosed postage-paid envelope or return it to Hutchinson
Technology Incorporated, c/o Shareowner Services(SM), P.O. Box 64873, St.
Paul, MN 55164-0873.
You may change your vote or revoke your proxy at any time before the Annual
Meeting by filing with the Secretary of the Company either a notice of
revocation or a duly executed proxy bearing a later date. If you have voted by
telephone or via Internet, you may change your vote by calling the toll free
number again and following the instructions or signing on to the website and
following the prompts. If you attend the Annual Meeting in person, you may
revoke the proxy and vote in person at that time if you so desire.
\/ Please detach here \/
- --------------------------------------------------------------------------------
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 BELOW, BUT IF NO DIRECTION IS GIVEN, THIS PROXY WILL
BE VOTED FOR PROPOSAL 1 AND 2.
<TABLE>
<S> <C> <C> <C> <C>
1. Election of Directors: 01 W. Thomas Brunberg 05 Russell Huffer [ ] FOR all nominees (except as [ ] WITHHOLD AUTHORITY
02 Archibald Cox, Jr. 06 Steven E. Landsburg marked to the contrary) to vote for all
03 Wayne M. Fortun 07 William T. Monahan nominees listed at
04 Jeffrey W. Green 08 Richard B. Solum left
-------------------------------------------------------
(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. Ratification of the appointment of Arthur Andersen LLP as independent
public accountants for the 2000 fiscal year. [ ] For [ ] Against [ ] Abstain
3. ANY OTHER BUSINESS WHICH MAY PROPERLY BE CONSIDERED AND ACTED UPON AT
SAID MEETING.
</TABLE>
Address Change? Mark Box [ ]
Indicate changes below:
Date
-----------------------------------
----------------------------------------------
----------------------------------------------
Signature(s) in Box
Joint owners should each sign personally.
When signing as attorney, executor,
administrator, guardian, custodian, or
corporate official, sign name and title.
