<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
CEM Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
CEM Corporation
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[CEM CORPORATION LOGO]
MATTHEWS, NORTH CAROLINA
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 8, 1995
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of CEM
Corporation (the Company) will be held at the principal office of the Company,
3100 Smith Farm Road, Matthews, North Carolina, on Wednesday, November 8, 1995,
at 11:00 a.m., Local Time, for the purpose of considering and acting upon the
following:
1. The election of four Directors.
2. A proposal to amend the 1993 Nonqualified Stock Option Plan
for Non-Employee Directors.
3. A proposal to ratify the selection of Coopers & Lybrand L.L.P.
as independent public accountants for the fiscal year ending
June 30, 1996.
4. Any and all other matters that may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on September
15, 1995 as the record date for determining the shareholders entitled to notice
of and to vote at the meeting and any adjournment thereof, and only holders of
Common Stock of the Company of record at such date will be entitled to notice
of or to vote at the meeting.
THE BOARD OF DIRECTORS WILL APPRECIATE THE PROMPT RETURN OF THE
ENCLOSED PROXY, DATED AND SIGNED. THE PROXY MAY BE REVOKED BY YOU AT ANY TIME
BEFORE IT IS EXERCISED AND WILL NOT BE EXERCISED IF YOU ATTEND THE MEETING AND
VOTE IN PERSON.
By Order of the Board of Directors
/s/ Michael J. Collins
-------------------------------------
MICHAEL J. COLLINS
President and Chief Executive Officer
Matthews, North Carolina
October 2, 1995
<PAGE> 3
CEM CORPORATION
Post Office Box 200, Matthews, North Carolina 28106
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of proxies to be used at the Annual Meeting of
Shareholders of CEM Corporation (the Company) to be held at its principal
office, 3100 Smith Farm Road, Matthews, North Carolina, at 11:00 a.m., Local
Time, on Wednesday, November 8, 1995. This Proxy Statement and accompanying
proxy are being sent to the shareholders of the Company on or about October 2,
1995.
Solicitation other than by mail may be made personally and by
telephone by regularly employed officers and employees of the Company who will
not be additionally compensated therefor. The Company will request brokers,
dealers, banks or voting trustees, or their nominees, who hold stock in their
names for others or hold stock for others who have the right to give voting
instructions, to forward proxy materials to their principals and request
authority for the execution of the proxy and will reimburse such institutions
for their reasonable expenses in so doing. In addition, the Company has
engaged Corporate Communications, Inc. (CCI) to deliver proxy materials to, and
solicit proxies from, these institutions. CCI will be reimbursed for its
printing costs, postage and freight charges, and other expenses and will be
paid a solicitation fee of approximately $3,500. The total cost of soliciting
proxies will be borne by the Company.
Any proxy delivered in the accompanying form may be revoked by the
person executing the proxy at any time, before the authority thereby granted is
exercised, by written request addressed to Secretary, CEM Corporation, Post
Office Box 200, Matthews, North Carolina 28106 or by attending the meeting and
electing to vote in person. Proxies received in such form will be voted as
therein set forth at the meeting or any adjournment thereof.
The only matters to be considered at the meeting, so far as known to
the Board of Directors, are the matters set forth in the Notice of Annual
Meeting of Shareholders, and routine matters incidental to the conduct of the
meeting. However, if any other matters should come before the meeting or any
adjournment thereof, it is the intention of the persons named in the
accompanying form of proxy, or their substitutes, to vote said proxy in
accordance with their judgment on such matters.
Shareholders present or represented and entitled to vote on a matter
at the meeting or any adjournment thereof will be entitled to one vote on such
matter for each share of the Common Stock of the Company held by them of record
at the close of business on September 15, 1995, which is the record date for
determining the shareholders entitled to notice of and to vote at such meeting
or any adjournment thereof. Voting on all matters, including the election of
Directors, will be by voice vote or by show of hands, unless the holders of at
least 25% of the shares represented at the meeting and entitled to vote on such
matter demand a vote by ballot prior to the vote. The number of shares of
Common Stock of the Company outstanding on September 15, 1995 was 3,619,163.
<PAGE> 4
PRINCIPAL SHAREHOLDERS AND HOLDINGS OF MANAGEMENT
At September 15, 1995, the only persons known to the Company to be the
beneficial owners of more than 5% of the $.05 par value Common Stock of the
Company (the Common Stock) were as follows:
<TABLE>
<CAPTION>
NAME AND NUMBER OF SHARES
ADDRESS OF AND NATURE OF PERCENT OF COMMON
BENEFICIAL OWNER BENEFICIAL OWNERSHIP STOCK OUTSTANDING (1)
---------------- -------------------- ---------------------
<S> <C> <C>
Michael J. Collins 504,112(2) 13.5%
10225 Thomas Payne Circle
Charlotte, North Carolina 28277
David L. Babson & Co., Inc. 391,100(3) 10.4%
One Memorial Drive
Cambridge, MA 02142-1300
Dimensional Fund Advisors Inc. 206,900(4) 5.5%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Morgan Grenfell Capital 334,000(5) 8.9%
Management Incorporated
855 Third Avenue, Suite 3200
New York, New York 10022
</TABLE>
____________________
(1) Based on the number of shares outstanding plus options held by Directors
and Executive Officers that are currently exercisable or that are
exercisable within 60 days.
(2) Includes 27,970 shares subject to options that are currently exercisable
or which are exercisable within 60 days and 4,950 shares held by Mr.
Collins' wife as custodian for their children.
(3) David L. Babson & Company, Inc. (Babson) is an investment adviser. Babson
has sole voting power over 294,700 of the shares, shared voting power over
96,400 of the shares and sole dispositive power over all of the shares.
All information herein concerning Babson is based upon that furnished by
Babson to the Company in a Schedule 13G dated February 10, 1995.
(4) Dimensional Fund Advisors Inc. (Dimensional), a registered investment
advisor, is deemed to have beneficial ownership of 206,900 shares as of
December 31, 1994, all of which shares are held in portfolios of DFA
Investment Dimensions Group Inc., a registered open-end investment
company, or in a series of the DFA Investment Trust Company, a Delaware
business trust, or the DFA Group Trust and DFA Participation Group Trust,
investment vehicles for qualified employee benefit plans, all of which
Dimensional serves as investment manager. Dimensional disclaims
beneficial ownership of all such shares. All information herein
concerning Dimensional is based upon that furnished by Dimensional to the
Company in a Schedule 13G dated January 30, 1995 and in information
furnished by Dimensional to the Company by letter dated February 9, 1995.
(5) Morgan Grenfell Capital Management, Inc. (Morgan), a registered investment
advisor, has sole voting power over 234,500 shares and sole dispositive
power over all of the shares. All
2
<PAGE> 5
information herein concerning Morgan is based upon that furnished by
Morgan in a Schedule 13F dated August 28, 1995.
The following table sets forth, as of September 15, 1995, information
as to the beneficial ownership of the Common Stock by all Directors and
Executive Officers of the Company as a group and by Francis H. Zenie, James A.
Prendergast, Brian W. Renoe and Richard N. Decker:
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME OF AND NATURE OF PERCENT OF COMMON
BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) STOCK OUTSTANDING (2)
---------------- ------------------------ ---------------------
<S> <C> <C>
Directors and Executive 620,021(3) 16.6%
Officers as a group
Francis H. Zenie 10,500(4) (5)
James A. Prendergast 39,768(6) 1.1%
Brian W. Renoe 16,202(7) (5)
Richard N. Decker 9,734(8) (5)
</TABLE>
___________________
(1) Information as to the beneficial ownership of the Common Stock by the
Chief Executive Officer is included in the immediately preceding
table.
(2) Based on the number of shares outstanding plus options held by
Directors and Executive Officers that are currently exercisable or
exercisable within 60 days.
(3) Includes 125,270 shares subject to options held by Directors and
Executive Officers that are currently exercisable or that are
exercisable within 60 days and 1,009 shares subject to transfer
restrictions and risk of forfeiture as described in Note 2 to the
Summary Compensation Table.
(4) Includes 10,500 shares subject to options that are currently
exercisable or that are exercisable within 60 days.
(5) Less than 1%.
(6) Includes 36,800 shares subject to options that are currently
exercisable or that are exercisable within 60 days and 367 shares
subject to transfer restrictions and risk of forfeiture as described
in Note 2 to the Summary Compensation Table.
(7) Includes 14,000 shares subject to options that are currently
exercisable or that are exercisable within 60 days and 335 shares
subject to transfer restrictions and risk of forfeiture as described
in Note 2 to the Summary Compensation Table.
(8) Includes 8,000 shares subject to options that are currently
exercisable or that are exercisable within 60 days and 307 shares
subject to transfer restrictions and risk of forfeiture as described
in Note 2 to the Summary Compensation Table.
3
<PAGE> 6
ELECTION OF DIRECTORS
The Bylaws of the Company provide for not less than four nor more than
nine Directors, as determined from time to time by resolution of the
shareholders or the Board of Directors. The Board of Directors has set the
number of Directors of the Company at five but has reduced the number to four
effective at the meeting.
At the meeting, four Directors will be elected to serve, subject to
the provisions of the Bylaws, until the 1996 Annual Meeting of Shareholders and
until their successors are duly elected and qualified. The accompanying proxy
may be voted for only four Directors. Directors are elected by a plurality of
the votes cast by the holders of the shares entitled to vote at a meeting at
which a quorum is present. Provided a quorum is present, abstentions and
shares not voted are not taken into account in determining a plurality. A
quorum consists of a majority of votes entitled to be cast. It is the
intention of the persons named in the accompanying proxy to vote all proxies
solicited by the Board of Directors FOR the four nominees listed below unless
authority to vote for the nominees or any individual nominee is withheld by a
shareholder in such shareholder's proxy. If for any reason any nominee shall
not become a candidate for election as a Director at the meeting, an event not
now anticipated, the proxies will be voted for the four nominees including such
substitutes as shall be designated by the Board of Directors.
The four nominees for election as Director, all of whom are currently
members of the Board of Directors, are listed below. The first three nominees
were elected to their current terms, which expire in 1995, at the Annual
Meeting of Shareholders held on November 10, 1994. John D. Correnti was
elected to the Board of Directors on August 3, 1995 for a term expiring in
1995. Francis H. Zenie is not standing for re-election.
<TABLE>
<CAPTION>
PERCENT OF
COMMON
NAME AND SHARES OF COMMON STOCK
DIRECTOR SINCE (1) AGE INFORMATION ABOUT NOMINEES AND DIRECTORS STOCK OWNED (2) OUTSTANDING (3)
------------------ --- ---------------------------------------- --------------- ---------------
<S> <C> <C> <C> <C>
Michael J. Collins 53 President and Chief Executive 504,112(4) 13.5%
1971 Officer of the Company since 1978;
Chairman of the Board of the Company
1986-1992
Ronald A. Norelli 50 Chairman of the Board of the Company 23,905(5) (6)
1985 since 1992; President and Chief
Executive Officer of Norelli & Company
(strategic management consulting firm)
since 1981
John L. Chanon 52 Senior Vice President - Finance of 15,600(7) (6)
1987 Harris-Teeter, Inc. (regional
supermarket chain) since 1993; President
of Jordan Graphics, Inc. (printing
company) 1989-1993; Harris-Teeter, Inc.
and Jordan Graphics, Inc. are sub-
sidiaries of Ruddick Corporation
(holding company)
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
PERCENT OF
COMMON
NAME AND SHARES OF COMMON STOCK
DIRECTOR SINCE (1) AGE INFORMATION ABOUT NOMINEES AND DIRECTORS STOCK OWNED (2) OUTSTANDING (3)
------------------ --- ---------------------------------------- --------------- ---------------
<S> <C> <C> <C> <C>
John D. Correnti 48 President and Chief Operating Officer of 200 (6)
1995 Nucor Corporation (steel manufacturer)
since 1991 and Vice President 1982-1991;
Director of Nucor Corporation,
Harnischfeger Industries Inc. and
Navistar International Corporation
- -------------------
</TABLE>
(1) The information about the Directors was furnished to the Company by the
Directors.
(2) All shares are owned directly and with sole voting and dispositive power
except as otherwise noted. Common Stock ownership information is as of
September 15, 1995.
(3) Based on the number of shares outstanding plus options held by Directors
that are currently exercisable or exercisable within 60 days.
(4) Includes 27,970 shares subject to options that are presently exercisable
or that are exercisable within 60 days and 4,950 shares held by his wife
as custodian for their children.
(5) Includes 15,500 shares subject to presently exercisable options and 405
shares held as custodian for his children.
(6) Less than 1%.
(7) Includes 12,500 shares subject to presently exercisable options and 100
shares held by his son.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors met four times during the fiscal year. Each
Director attended all of the meetings of the Board of Directors and Committees
on which he served. The Company has Audit and Compensation Committees. The
Board of Directors does not have a Nominating Committee.
The Audit Committee is composed of John L. Chanon and Ronald A.
Norelli and is responsible for recommending independent auditors for the
Company, reviewing the Company's financial statements, audit report, internal
financial controls and internal audit procedures, and approving services to be
performed by the Company's independent auditors. John L. Chanon is Chairman of
the Audit Committee. The Audit Committee met twice during the fiscal year.
The Compensation Committee is composed of Ronald A. Norelli, John L.
Chanon and Francis H. Zenie and reviews and makes recommendations with respect
to executive and officer compensation and administers the Company's 1993
Management Equity Plan and the Management Incentive Compensation Plan. Ronald
A. Norelli is Chairman of the Compensation Committee. The Compensation
Committee met twice during the fiscal year.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors of the Company,
whose members are named above, provides overall guidance to the Company's
executive compensation process. The Compensation Committee is composed of
three outside members of the Board of Directors and meets
5
<PAGE> 8
periodically to review the Company's executive and officer compensation. The
Compensation Committee's recommendations regarding the salary of the Chief
Executive Officer and the other officers of the Company are subject to approval
by the Board, except for decisions about grants under the 1987 Stock Option
Plan (which was terminated upon approval by the shareholders of the 1993
Management Equity Plan on November 16, 1993) and the 1993 Management Equity
Plan (the Management Equity Plan). As administrator of the 1987 Stock Option
Plan and the Management Equity Plan, the Compensation Committee granted options
under the 1987 Stock Option Plan and grants options and makes other
equity-based awards under the Management Equity Plan and determines the terms
and conditions of such awards. In order for the grants to satisfy tax and
securities law requirements, the Compensation Committee is not composed of
employees of the Company or persons eligible to receive awards under the 1987
Stock Option Plan or the Management Equity Plan.
The Compensation Committee's compensation policies are designed to
fairly compensate the officers of the Company for the effective exercise of
their responsibilities, their management of the business functions for which
they are responsible, the motivation of those officers and employees reporting
to them, their extended period of service to the Company and their dedication
and diligence in carrying out their responsibilities. The named Executive
Officers' 1995 annual compensation consisted of a base salary and a bonus
earned pursuant to the terms of the Company's Management Incentive Compensation
Plan (the MICP). The salary was designed to reward the Executive Officers for
the performance of their responsibilities and their long-term commitment to the
Company. In fiscal year 1995, the Compensation Committee, and in prior years,
the Board, which served the function of the Compensation Committee, has usually
granted increases in the base salaries of the Executive Officers each year
based on recommendations from the Chief Executive Officer who has consulted
with other officers of the Company. From time to time, the Board has made
adjustments to such recommendations.
In considering salaries for the 1995 fiscal year, the Compensation
Committee considered the Company's overall performance over a period of years
and the performance of the individual officer and compared the officers'
salaries with the salaries of comparable officers at comparable companies, and
recommended increases in the base salaries of the named Executive Officers for
1995 over 1994 which averaged 3.9%, excluding the Chief Executive Officer.
The MICP and the Management Equity Plan together provide a
comprehensive incentive compensation program for the Company's key employees
through performance based cash and equity incentives. These two plans are used
together by the Compensation Committee to provide more competitive compensation
packages to the key employees of the Company. Under these plans, key employees
of the Company are eligible to earn increased compensation primarily based on
increases in the Company's net income before interest and taxes as well as
individual performance relative to preestablished individual objectives. Such
compensation is in the form of cash bonuses granted pursuant to the MICP and
restricted stock and other equity-based awards granted under the Management
Equity Plan in amounts determined under the MICP. The Compensation Committee
believes that the combination of the MICP and the Management Equity Plan
creates a competitive compensation package for the Company's key employees,
rewarding key employees for increasing the net income before interest and taxes
of the Company and thereby ultimately benefitting the shareholders of the
Company. For the 1995 fiscal year, two-thirds of a named Executive Officer's
bonus was determined by the performance of the Company and one-third was
discretionary based on an assessment of the individual's performance. The
bonus was paid 60% in cash, 20% in the form of a stock bonus and 20% in the
form of a restricted stock award.
Stock options granted under the Company's 1987 Stock Option Plan and
stock options and other equity based awards granted under the Management Equity
Plan are designed to create a proprietary interest in the Company among the
officers and other key employees of the Company who
6
<PAGE> 9
are granted stock options and to more closely align the long-term interests of
the optionees with those of the shareholders of the Company. During the 1995
fiscal year, Messrs. Prendergast, Renoe and Decker were each granted an option
(and related stock appreciation rights (SARs)) to purchase 6,000 shares of
Common Stock under the Management Equity Plan.
Mr. Collins' 1995 annual compensation consisted of a base salary and a
bonus earned pursuant to the terms of the MICP. Mr. Collins' base salary was
determined based on a number of factors, including the performance of the
Company and his individual performance and by comparison to the salaries of
chief executive officers at comparable companies. Mr. Collins' salary was
increased by 6.7% for 1995 over 1994. All of Mr. Collins' bonus was
determined by the performance of the Company. Mr. Collins had the option of
receiving his entire bonus in cash and elected to do so for the 1995 fiscal
year.
The Compensation Committee report is presented by Ronald A. Norelli,
John L. Chanon and Francis H. Zenie.
SHAREHOLDER RETURN PERFORMANCE GRAPH
Included below is a line graph comparing the yearly percentage change
in the cumulative total shareholder return on the Company's Common Stock
against the cumulative total return of the NASDAQ Stock Market (U.S. Companies)
Index and the Company's Peer Group for the period commencing June 30, 1990 and
ending June 30, 1995 covering the Company's five fiscal years ended June 30,
1995.
The Company has selected a Peer Group consisting of the six
publicly-traded companies, named below, which are in the laboratory and
analytical instrument industry. Many of the Company's direct competitors and
peers are privately-held companies or subsidiaries or divisions of larger
publicly-held companies so that the available members of the Peer Group are
limited.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG THE COMPANY, NASDAQ STOCK MARKET INDEX AND PEER GROUP
<TABLE>
<CAPTION>
6/29/90 6/28/91 6/30/92 6/30/93 6/30/94 6/30/95
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
CEM Corp. 100.000 114.865 100.000 100.000 124.324 135.135
NASDAQ (U.S. Co.s) 100.000 105.889 127.251 159.988 161.613 215.325
Peer Group 100.000 113.238 114.790 95.447 113.013 163.700
</TABLE>
This graph assumes that $100 was invested in the Company's Common Stock on June
30, 1990, in the NASDAQ Stock Market (U.S. Companies) Index and in the Peer
Group, which consists of Bio-Rad
7
<PAGE> 10
Laboratories, Inc., Instron Corporation, Isco, Inc., Modern Controls, Inc.,
O.I. Corporation and Pacific Scientific Company, and that dividends are
reinvested.
EXECUTIVE COMPENSATION
The table below shows the compensation paid or accrued by the Company,
for the three fiscal years ended June 30, 1995, to or for the account of the
Chief Executive Officer and James A. Prendergast, Brian W. Renoe and Richard N.
Decker, the only Executive Officers of the Company whose total annual salary
and bonus exceeded $100,000 for the 1995 fiscal year (collectively, the named
Executive Officers).
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- -----------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG TERM
COMPENSATION
-----------------------------------------------------------
AWARDS
----------------------
OTHER
ANNUAL RESTRICTED
NAME AND COMPEN- STOCK OPTIONS/ ALL OTHER
PRINCIPAL FISCAL SALARY BONUS SATION AWARD(S) SARS COMPENSATION
POSITION YEAR ($) ($) ($)(1) ($)(2) (#)(3) ($)(4)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael J. Collins 1995 191,769 35,222 -- 0 0 3,000/19,848
President and Chief 1994 177,902 52,600 -- 0 15,000 3,198/15,986
Executive Officer 1993 160,317 10,000 -- 0 0 2,909/11,783
James A. Prendergast 1995 130,200 18,860(5) -- 4,771 6,000 2,331/13,489
Vice President -- 1994 122,448 28,488(6) -- 7,560 7,000 2,549/10,845
Sales & Service 1993 120,202 5,000 -- 0 0 2,400/8,836
Brian W. Renoe 1995 116,888 17,233(5) -- 4,355 6,000 1,880/12,159
Vice President -- 1994 108,718 26,039(6) -- 6,930 10,000 1,162/9,888
Technology(7)
Richard N. Decker 1995 110,125 15,768(5) -- 3,991 6,000 2,717/11,369
Secretary, 1994 102,201 23,690(6) -- 6,300 3,000 800/8,908
Treasurer 1993 41,667 2,500 -- 0 10,000 11,441(8)
& Chief Financial
Officer
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) No named Executive Officer has received personal benefits during the
listed years in excess of 10% of annual salary.
(2) The value of these awards is based on the closing market price of the
Common Stock on the dates such shares were awarded. These restricted
shares were awarded as a portion of such executive officer's bonus earned
under the MICP. Rights to such shares issued for the fiscal years 1994
and 1995 vest on July 29, 1995 and August 3, 1996, respectively, subject
to forfeiture in the event such officer's employment with the Company is
terminated for any reason other than death, disability or retirement with
the consent of the Company. Dividends, if any, will be paid on the
restricted shares. At the end of the fiscal year Messrs. Prendergast,
Renoe
8
<PAGE> 11
and Decker held 672, 616 and 560 restricted shares valued at $8,400,
$7,700 and $7,000, respectively.
(3) The options granted to the named Executive Officers during the fiscal year
ended June 30, 1995 included related stock appreciation rights (SARs).
No SARs were granted to the named Executive Officers during the two
fiscal years ended June 30, 1994.
(4) The numbers represent amounts contributed by the Company under the
Company's 401(k) plan/profit-sharing plan.
(5) Includes 367, 335 and 307 shares issued to Messrs. Prendergast, Renoe and
Decker, respectively, as a portion of a bonus earned under the MICP. The
fair market value of such shares, based on the average of the high and
low prices of the Common Stock on the date of award as reported on
NASDAQ/NMS, was $4,771, $4,355 and $3,991, respectively.
(6) Includes 672, 616 and 560 shares issued to Messrs. Prendergast, Renoe and
Decker, respectively, as a portion of a bonus earned under the MICP. The
fair market value of such shares, based on the average of the high and
low prices of the Common Stock on the date of award as reported on
NASDAQ/NMS, was $7,392, $6,776 and $6,160, respectively.
(7) Mr. Renoe first became an executive officer in July 1993.
(8) Mr. Decker was paid $11,441 to defray his moving expenses in connection
with his employment by the Company in January 1993. No amounts were
contributed by the Company in fiscal year 1993 under its 401(k)
plan/profit sharing plan for Mr. Decker.
The table below shows all option grants during the fiscal year ended
June 30, 1995 to the Chief Executive Officer and each named Executive Officer
and the potential realizable value of each grant of options assuming annualized
appreciation in the Common Stock at the rate of 5% and 10% over the term of the
option.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM
----------------- --------------------
OPTIONS/ % OF TOTAL OPTIONS EXERCISE
SARS GRANTED TO OR BASE
GRANTED EMPLOYEES IN PRICE EXPIRATION
NAME (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
---- --------- ------------------ ----------- ---------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Michael J. Collins 0 - - - - -
James A. Prendergast 6,000 10.4% $11.00 7/28/2004 41,507 105,187
Brian W. Renoe 6,000 10.4% $11.00 7/28/2004 41,507 105,187
Richard N. Decker 6,000 10.4% $11.00 7/28/2004 41,507 105,187
</TABLE>
9
<PAGE> 12
The table below shows, on an aggregated basis, each exercise of stock
options or SARs during the fiscal year ended June 30, 1995 by each of the named
Executive Officers and the 1995 fiscal year-end value of unexercised options
and SARs.
AGGREGATED OPTION/SAR EXERCISES IN THE 1995 FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY OPTIONS
FY-END (#SH) /SARS AT FY-END ($)(1)
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#SH) VALUE REALIZED ($) UNEXERCISABLE UNEXERCISABLE
---- ----------------- ------------------ ----------------- -----------------
<S> <C> <C> <C> <C>
Michael J. Collins 0 0 23,720/11,750 68,487/24,719
James A. 0 0 33,100/11,700 65,913/18,638
Prendergast
Brian W. Renoe 0 0 10,000/16,000 11,875/24,875
Richard N. Decker 0 0 5,750/13,250 17,219/27,156
</TABLE>
___________________
(1) Represents the total gain which would be realized if all options for
which the fair market value of the stock at year-end ($12.125) was
greater than the exercise price were exercised.
DIRECTOR COMPENSATION
Directors who are employees of the Company or its subsidiaries receive
no additional compensation for serving as directors. Directors who are not
employees of the Company or its subsidiaries receive an annual retainer of
$7,000 and $500 for each Committee meeting attended, except the fee for a
Committee meeting held on the same day as a Board meeting is $250. Ronald A.
Norelli also receives $31,000 per year as Chairman of the Board of the Company.
The 1986 Director Plan, which was terminated on November 16, 1993 upon
approval by the shareholders of the 1993 Nonqualified Stock Option Plan for
Non-Employee Directors (the 1993 Director Plan), provided for the issuance of
up to 90,000 shares of Common Stock. Options for a total of 43,000 shares were
granted under the 1986 Director Plan prior to its termination.
On September 16, 1993, the Board of Directors adopted the 1993
Director Plan. The shareholders approved the 1993 Director Plan at the 1993
Annual Meeting on November 16, 1993.
The Board of Directors has reserved 25,000 shares of Common Stock for
issuance upon exercise of options granted under the 1993 Director Plan. This
number, as well as the number of shares issuable upon exercise of an option, is
subject to adjustment in the event of stock dividends and splits,
recapitalizations and similar transactions.
The only persons eligible to receive options under the 1993 Director
Plan are Directors of the Company who are not regular employees of the Company
on the date of grant of the option. Under the 1993 Director Plan, each
Director who was eligible to receive options under the Plan was automatically
granted an option to purchase 500 shares of Common Stock on February 1, 1994
and 1995, and will automatically be granted an option to purchase 1,000 shares
of Common Stock on February 1, 1996, each subject to adjustment in the event of
stock dividends and splits, recapitalizations and similar transactions. The
Board of Directors has adopted, subject to shareholder approval, amendments to
the 1993 Director Plan to provide for the automatic grant to each eligible
newly elected Director of an option to purchase 5,000 shares of Common Stock
and to extend the current Plan to grant all eligible Directors an option to
purchase 1,000 shares on February 1, 1997 and 1998. The
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<PAGE> 13
amendments are described more fully below. If there are not sufficient shares
reserved for such grants, the eligible Directors will receive an option for a
pro rata number of the remaining shares reserved for grant. The exercise price
of options granted under the 1993 Director Plan is the fair market value of the
Common Stock on the date of grant. On February 1, 1995 Messrs. Norelli, Chanon
and Zenie each received an option to purchase 500 shares of Common Stock at an
exercise price of $13.625 per share.
An option granted under the 1993 Director Plan is not exercisable
unless the optionee remains available to serve as a Director of the Company
until the first anniversary of the date of grant. On or after such first
anniversary, any or all of such option may be exercised until the expiration or
termination of the option. Upon the exercise of an option or portion thereof,
the exercise price must be paid in full in cash or its equivalent.
APPROVAL OF AMENDMENTS TO 1993 NONQUALIFIED STOCK OPTION PLAN FOR NON-EMPLOYEE
DIRECTORS
On August 3, 1995, the Board of Directors adopted amendments to the
1993 Nonqualified Stock Option Plan for Non-Employee Directors, subject to
approval by the shareholders at the 1995 Annual Meeting. The amendments to the
1993 Director Plan added the automatic grant to each eligible Director, newly
elected on or after August 1, 1995, of an option to purchase 5,000 shares of
Common Stock and the automatic grant of options to purchase 1,000 shares of
Common Stock on February 1, 1997 and 1998. The 1993 Director Plan as amended
by the Board of Directors (the Amended Plan) is intended to provide Directors
who are not employees of the Company with a sense of proprietorship and
personal involvement in the development and financial success of the Company
and to encourage such Directors to remain with and to devote their best efforts
to the Company.
The Board of Directors has reserved 25,000 shares of Common Stock
(approximately 0.7% of the shares of Common Stock outstanding as of September
15, 1995) for issuance upon exercise of the options granted under the 1993
Director Plan. As of September 15, 1995, no shares have been issued under the
1993 Director Plan, but options for 3,000 shares have been granted. No
additional shares have been reserved as a result of the amendments to the 1993
Director Plan. The number of shares reserved, as well as the number of shares
issuable upon exercise of an option, is subject to adjustment in the event of
stock dividends and splits, recapitalizations and similar transactions.
The Amended Plan is administered by the Board of Directors. However,
no discretion concerning decisions regarding the Amended Plan will be afforded
to a person who is not a "disinterested person" as defined in the rules and
regulations under Section 16 of the Securities Exchange Act of 1934 (the
Exchange Act). In the event the Board of Directors is precluded from exercising
such discretion, it may delegate its authority to exercise such discretion to a
person or committee of persons, each of whom is a "disinterested person."
The only persons eligible to receive options under the Amended Plan
are Directors of the Company who are not regular employees of the Company on
the date of grant of the option. Under the Amended Plan, each newly elected
Director shall automatically be granted an option to purchase 5,000 shares of
Common Stock on the date of election. The Amended Plan also provides that any
Director elected after August 1, 1995 but prior to approval of the amendments
to the 1993 Director Plan by the shareholders of the Company, will
automatically be granted an option to purchase 5,000 shares of Common Stock on
the date of such approval by the shareholders. John D. Correnti, who was first
elected to the Board of Directors on August 3, 1995, will receive an option for
5,000 shares upon approval of the amendments by the shareholders.
Additionally, each Director eligible under the Amended Plan will automatically
be granted an option to purchase 1,000 shares of Common Stock on February 1 of
1996, 1997 and 1998. All such options are subject to adjustment in the event
of stock dividends and splits, recapitalizations and similar transactions. If
there are not sufficient shares
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<PAGE> 14
reserved for such grants, the eligible Directors will receive an option for a
pro rata number of the remaining shares reserved for the grant. There
currently are four Directors eligible to participate under the Amended Plan.
The exercise price of options granted under the Amended Plan will be
the fair market value of the Common Stock (calculated as the closing sale price
on the NASDAQ National Market System) on the date of grant which was $13.375 on
September 15, 1995.
An option granted under the Amended Plan is not exercisable unless the
optionee remains available to serve as a Director of the Company until the
first anniversary of the date of grant. On or after such first anniversary,
any or all of such option may be exercised until the expiration or termination
of the option. Upon the exercise of an option or portion thereof, the exercise
price must be paid in full in cash or its equivalent.
Options granted under the Amended Plan are not transferable except by
will or intestacy. An optionee's rights under all outstanding options will
terminate three months after his or her termination as a Director, unless the
termination is because of death or disability, in which case the options will
be exercisable for one year after such termination. Subject to earlier
termination as previously discussed, all options granted under the Amended Plan
shall expire ten years from the date of grant.
The Board of Directors may terminate, suspend or further amend the
Amended Plan at any time except no termination, suspension or amendment can
adversely affect the rights of an optionee as to any outstanding option(s)
without the optionee's consent unless the amendment is necessary to preserve or
provide exemptions from the applicability of Section 16(b) of the Exchange Act
to the grant, lapse, disposition, cancellation or exercise of options. In
addition, no amendment regarding the determination of the optionees, the date
of grant, the number of options granted to an optionee and the requirement that
no discretion concerning decisions regarding the Amended Plan be afforded to a
person who is not a "disinterested person" may be made more than once every six
months unless the amendment is necessary to comply with changes in the Code or
the rules and regulations under the Code.
For federal income tax purposes, the optionee will realize no taxable
income when the option is granted. Upon the exercise of an option granted
under the Amended Plan, the amount by which the fair market value of the shares
purchased pursuant to such exercise exceeds the option price will be treated as
compensation income received by the optionee. The amount of compensation
income recognized by the optionee is deductible by the Company in the year the
income is recognized. Upon the subsequent disposition of shares received upon
the exercise of an option, generally any amount realized in excess of the
optionee's basis (usually the fair market value at the time of exercise) will
be taxed as a capital gain and any amount realized which is less than the
optionee's basis will be treated as a capital loss.
The Company has registered the shares issuable pursuant to the 1993
Director Plan under the Securities Act of 1933.
The 1993 Director Plan was approved by the shareholders on November
16, 1993. The amendments to the 1993 Director Plan are effective August 3,
1995 subject to approval at the 1995 Annual Meeting of Shareholders. No
options granted under the amendments to the 1993 Director Plan may be exercised
until the amendments to the 1993 Director Plan are approved by the holders of a
plurality of the shares of Common Stock voting on the proposal at the 1995
Annual Meeting of Shareholders when a quorum is present. Abstentions and
shares not voted are not counted in determining a plurality. If such approval
is not obtained, the amendments to the 1993 Director Plan shall be void and the
1993 Director Plan as approved on November 16, 1993 shall remain in effect.
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<PAGE> 15
The Board of Directors recommends a vote FOR approval of the amendments to the
1993 Director Plan and proxies solicited by the Board of Directors will be so
voted unless shareholders specify otherwise.
COMPLIANCE WITH SECTION 16(A) OF SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's Directors and
Executive Officers and persons who own more than 10% of the Company's Common
Stock to file with the SEC initial reports of ownership and reports of changes
in ownership of the Common Stock and other equity securities. Officers,
Directors and greater than 10% shareholders are required to furnish the Company
with copies of all such reports they file. To the Company's knowledge, based
solely on a review of the copies of such reports furnished to the Company and
written representations that no other reports were required, during the fiscal
year ended June 30, 1995, all Section 16(a) filing requirements applicable to
its Executive Officers, Directors and greater than 10% beneficial shareholders
were complied with.
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Coopers & Lybrand L.L.P. as
independent public accountants to audit the financial statements of the Company
for the fiscal year ending June 30, 1996. This selection is being presented to
the shareholders for their ratification at the Annual Meeting of Shareholders.
The firm of Coopers & Lybrand L.L.P. has audited the Company's financial
statements annually since 1981 and is considered well qualified.
Representatives of Coopers & Lybrand L.L.P. are expected to be present
at the Annual Meeting of Shareholders with an opportunity to make a statement
if they desire to do so, and they are expected to be available to respond to
appropriate questions.
The Board of Directors recommends a vote FOR the ratification of the
selection of Coopers & Lybrand L.L.P. as independent public accountants to
audit the financial statements of the Company for the fiscal year ending June
30, 1996, and proxies solicited by the Board of Directors will be so voted
unless shareholders specify a different choice.
If the shareholders do not ratify the selection of Coopers & Lybrand
L.L.P., the selection of independent public accountants will be reconsidered by
the Board of Directors.
SHAREHOLDER PROPOSALS
Any proposal that a shareholder intends to present for action at the
1996 Annual Meeting of Shareholders, currently scheduled for November 14, 1996,
must be received by the Company no later than June 4, 1996, in order for the
proposal to be included in the proxy statement and form of proxy for the 1996
Annual Meeting of Shareholders. The proposal should be sent to Secretary, CEM
Corporation, Post Office Box 200, Matthews, North Carolina 28106.
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<PAGE> 16
APPENDIX A
(CEM LOGO) CEM CORPORATION PROXY
PROXY SOLICTED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING TO BE HELD NOVEMBER 8, 1995
The undersigned hereby appoints Michael J. Collins and Richard N. Decker,
and each or either of them, proxies, with full power of substitution, with the
powers the undersigned would possess if personally present, to vote, as
designated below, all shares of the $.05 par value Common Stock of the
undersigned in CEM Corporation at the Annual Meeting of Shareholders to be held
on November 8, 1995, and at any adjournment thereof.
THIS PROXY WILL BE VOTED AS SPECIFIED HEREIN AND, UNLESS OTHERWISE DIRECTED,
WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES AS DIRECTORS AND FOR PROPOSALS 2
AND 3 BELOW. The Board of Directors recommends voting FOR on each item.
1. ELECTION OF DIRECTORS: Nominees are Michael J. Collins, Ronald A. Norelli,
John L. Chanon and John D. Correnti.
/ / FOR all listed nominees (except do not vote for the nominee(s) whose
name(s) I have written below)
---------------------------------------------------------------------------
/ / WITHHOLD AUTHORITY to vote for the listed
nominees
2. APPROVAL OF AMENDMENTS TO THE 1993 NONQUALIFIED STOCK OPTION PLAN FOR
NON-EMPLOYEE DIRECTORS
/ / FOR / / AGAINST / / ABSTAIN
3. RATIFICATION OF SELECTION OF COOPERS & LYBRAND L.L.P. AS INDEPENDENT PUBLIC
ACCOUNTANTS
/ / FOR / / AGAINST / / ABSTAIN
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
(CONTINUED FROM OTHER SIDE)
Receipt of Notice of Annual Meeting of Shareholders and accompanying Proxy
Statement is hereby acknowledged.
PLEASE DATE AND SIGN EXACTLY AS
PRINTED BELOW AND RETURN PROMPTLY
IN THE ENCLOSED POSTAGE PAID
ENVELOPE.
Dated:______________________, 1995.
___________________________________
___________________________________
(When signing as attorney,
executor, administrator, trustee,
guardian, etc., give title as such.
If joint account, each joint owner
should sign.)
