<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)
- --------------------------------------------------------------------------------
(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 7, 1996
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 Thursday, November 7, 1996,
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 ratify the selection of Coopers & Lybrand L.L.P.
as independent public accountants for the fiscal year ending
June 30, 1997.
3. 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
10, 1996 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 1, 1996
<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 Thursday, November 7, 1996. This Proxy Statement and accompanying
proxy are being sent to the shareholders of the Company on or about October 1,
1996.
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 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 10, 1996, 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 10, 1996 was 3,528,360.
<PAGE> 4
PRINCIPAL SHAREHOLDERS AND HOLDINGS OF MANAGEMENT
At September 10, 1996, 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 511,862 (2) 14.4%
10225 Thomas Payne Circle
Charlotte, North Carolina 28277
David L. Babson & Co., Inc. 391,100 (3) 11.1%
One Memorial Drive
Cambridge, MA 02142-1300
Dimensional Fund Advisors Inc. 207,600 (4) 5.9%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Morgan Grenfell Capital 248,100 (5) 7.0%
Management Incorporated
855 Third Avenue, Suite 3200
New York, New York 10022
T. Rowe Price Associates, Inc. 277,000 (6) 7.9%
100 E. Pratt Street
Baltimore, MD 21202
</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 31,720 shares subject to options that are currently exercisable
or which are exercisable within 60 days and 9,150 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 292,900 of the shares, shared voting power over
98,200 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 12, 1996.
(4) Dimensional Fund Advisors Inc. (Dimensional), a registered investment
advisor, is deemed to have beneficial ownership of 207,600 shares as of
June 30, 1996. Dimensional has sole voting power over 162,300, shared
voting power over 45,300 and sole dispositive power over all of the
shares. All of the 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 by letter dated September 11,
1996.
2
<PAGE> 5
(5) Morgan Grenfell Capital Management, Inc. (Morgan), a registered investment
advisor, has sole voting power over 159,000 shares, shared voting power
over 89,100 shares and sole dispositive power over all of the shares. All
information herein concerning Morgan is based upon that furnished by
Morgan in a Schedule 13G filed February 13, 1996.
(6) The securities are owned by the T. Rowe Price Small-Cap Value Fund which
T. Rowe Price Associates, Inc. (Price Associates) serves as investment
adviser. For purposes of the reporting requirements of the Securities
Exchange Act of 1934, Price Associates is deemed to be a beneficial owner
of such securities; however, Price Associates expressly disclaims that it
is, in fact, the beneficial owner of such securities. All information
herein concerning Price Associates is based upon that furnished by Price
Associates by letter dated September 12, 1996.
The following table sets forth, as of September 10, 1996, information
as to the beneficial ownership of the Common Stock by all Directors and
Executive Officers of the Company as a group and by 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 640,821 (3) 17.5%
Officers as a group
(7 persons)
43,768 (4) 1.2%
James A. Prendergast
23,452 (5) (6)
Brian W. Renoe
15,734 (7) (6)
Richard N. Decker
</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 141,770 shares subject to options held by Directors and
Executive Officers that are currently exercisable or that are
exercisable within 60 days.
(4) Includes 40,800 shares subject to options that are currently
exercisable or that are exercisable within 60 days.
(5) Includes 21,250 shares subject to options that are currently
exercisable or that are exercisable within 60 days.
(6) Less than 1%.
(7) Includes 14,000 shares subject to options that are currently
exercisable or that are exercisable within 60 days.
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 four.
At the meeting, four Directors will be elected to serve, subject to
the provisions of the Bylaws, until the 1997 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 four nominees were
elected to their current terms, which expire in 1996, at the Annual Meeting of
Shareholders held on November 8, 1995.
<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 54 President and Chief Executive 511,862 (4) 14.4%
1971 Officer of the Company since 1978;
Chairman of the Board of the Company
1986-1992
Ronald A. Norelli 51 Chairman of the Board of the Company 24,405 (5) (6)
1985 since 1992; President and Chief
Executive Officer of Norelli & Company
(strategic management consulting firm)
since 1981
John L. Chanon 53 Managing Partner of Tatum CFO Partners 16,100 (7) (6)
1987 LP (management consulting) since 1996;
Senior Vice President - Finance of
Harris-Teeter, Inc. (regional
supermarket chain) 1993-1996; President
of Jordan Graphics, Inc. (printing
company) 1989-1993; Harris-Teeter, Inc.
and Jordan Graphics, Inc. are a
subsidiary and former subsidiary, re-
spectively, 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 49 Vice Chairman, President and Chief 5,500 (8) (6)
1995 Executive Officer of Nucor Corporation
(steel manufacturer) since 1996,
President and Chief Operating Officer
1991-1996, 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 10, 1996.
(3) Based on the number of shares outstanding plus options held by Directors
that are currently exercisable or exercisable within 60 days.
(4) Includes 31,720 shares subject to options that are presently exercisable
or that are exercisable within 60 days and 9,150 shares held by his wife
as custodian for their children.
(5) Includes 16,000 shares subject to presently exercisable options and 405
shares held as custodian for his children.
(6) Less than 1%.
(7) Includes 13,000 shares subject to presently exercisable options and 100
shares held by his son.
(8) Includes 5,000 shares subject to options that are presently exercisable
or that are exercisable within 60 days.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors met five 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 John D. Correnti 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. Francis
H. Zenie served on the Compensation Committee until his retirement from the
Board of Directors in November, 1995. Ronald A. Norelli is Chairman of the
Compensation Committee. The Compensation Committee met twice during the fiscal
year.
5
<PAGE> 8
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 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 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' 1996 annual compensation consisted of a base salary. No bonus was
earned for the 1996 fiscal year 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 1996, 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 1996 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
1996 over 1995 which averaged 4.5% 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 1996 fiscal year, no bonus awards were made under the MICP.
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 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 1996 fiscal year, Messrs.
Prendergast, Renoe and Decker were each granted an
6
<PAGE> 9
option (and related stock appreciation rights (SARs)) to purchase 3,000, 3,000
and 5,000, respectively, shares of Common Stock under the Management Equity
Plan.
Mr. Collins' 1996 annual compensation consisted of a base salary. No
bonus was earned for the 1996 fiscal year 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' base salary was increased by 4.2% for 1996 over 1995.
The Compensation Committee report is presented by Ronald A. Norelli, John
L. Chanon and John D. Correnti.
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, 1991 and ending
June 30, 1996 covering the Company's five fiscal years ended June 30, 1996.
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>
6/28/91 6/30/92 6/30/93 9/30/94 9/30/95 6/28/96
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
CEM Corp. 100.000 87.056 87.059 108.235 117.647 124.706
NASDAQ (U.S. Co.s) 100.000 120.132 151.077 152.522 203.589 261.403
Peer Group 100.000 101.370 84.288 99.801 144.545 167.131
</TABLE>
This graph assumes that $100 was invested in the Company's Common Stock on June
30, 1991, in the Nasdaq Stock Market (U.S. Companies) Index and in the Peer
Group, which consists of Bio-Rad Laboratories, Inc., Instron Corporation, Isco,
Inc., Modern Controls, Inc., O.I. Corporation and Pacific Scientific Company,
and that dividends are reinvested.
7
<PAGE> 10
EXECUTIVE COMPENSATION
The table below shows the compensation paid or accrued by the Company,
for the three fiscal years ended June 30, 1996, 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 $100,000 for the 1996 fiscal year (collectively, the named
Executive Officers).
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------- ------------
AWARDS
------
OTHER
ANNUAL RESTRICTED
NAME AND FIS- COMPEN- STOCK OPTIONS/ ALL OTHER
PRINCIPAL CAL SALARY BONUS SATION AWARD(S) SARS COMPENSATION
POSITION YEAR ($) ($) ($)(1) ($)(2) (#)(3) ($)(4)
-------- ---- ------ ----- ------- ---------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael J. Collins 1996 201,264 0 -- 0 0 3,000/2,188
President and 1995 191,769 35,222 -- 0 0 3,000/19,848
Chief 1994 177,902 52,600 0 15,000 3,198/15,986
Executive Officer --
James A. 1996 128,957 0 -- 0 3,000 2,341/1,412
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
Marketing
Brian W. Renoe 1996 121,904 0 -- 0 3,000 2,152/1,328
Vice President -- 1995 116,888 17,233(5) -- 4,355 6,000 1,880/12,159
Technology 1994 108,718 26,039(6) 6,930 10,000 1,162/9,888
--
Richard N. Decker 1996 119,087 0 -- 0 5,000 2,777/1,285
Vice President -- 1995 110,125 15,768(5) -- 3,991 6,000 2,717/11,369
Finance, Chief 1994 102,201 23,690(6) -- 6,300 3,000 800/8,908
Financial Officer,
Secretary & Treasurer
</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. At the end of the fiscal year Messrs. Prendergast, Renoe
and Decker held 367, 335, and 307 restricted shares, respectively, valued
at $4,496, $4,104 and $3,761, respectively. Rights to such shares issued
for the fiscal years 1994 and 1995 vested on July 29, 1995 and August 3,
1996, respectively.
8
<PAGE> 11
(3) The options granted to the named Executive Officers during the two fiscal
years ended June 30, 1996 included related stock appreciation rights
(SARs). No SARs were granted to the named Executive Officers during the
fiscal year 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 the
Nasdaq Stock Market, 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 the
Nasdaq Stock Market, was $7,392, $6,776 and $6,160, respectively.
The table below shows all option grants during the fiscal year ended
June 30, 1996 to the Chief Executive Officer and each named Executive Officer
and the potential realizable value of each grant of options assuming annualized
appreciation in the Common Stock at the rate of 5% and 10% over the ten year
term of the option.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM
----------------- --------------------
OPTIONS/ % OF TOTAL OPTIONS
SARS GRANTED TO EXERCISE OR
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION
Name (#) FISCAL YEAR ($/SH) DATE 5% ($) 10%($)
---- --------- ------------------ ------------ ---------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Michael J. Collins 0 0 - - - -
James A. Prendergast 3,000 5.5% $13.00 8/2/05 24,527 62,156
Brian W. Renoe 3,000 5.5% $13.00 8/2/05 24,527 62,156
Richard N. Decker 5,000 9.1% $13.00 8/2/05 40,878 103,593
</TABLE>
9
<PAGE> 12
The table below shows, on an aggregated basis, each exercise of stock
options or SARs during the fiscal year ended June 30, 1996 by each of the named
Executive Officers and the 1996 fiscal year-end value of unexercised options
and SARs.
AGGREGATED OPTION/SAR EXERCISES IN THE 1996 FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION> NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY OPTIONS
FY-END (#SH) /SARS AT FY-END ($)(1)
SHARES ACQUIRED EXERCISABLE/ Exercisable/
NAME ON EXERCISE(#SH) VALUE REALIZED($) UNEXERCISABLE Unexercisable
---- ---------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Michael J. Collins 0 0 27,970/7,500 108,735/24,375
James A. Prendergast 0 0 36,800/11,000 113,450/22,250
Brian W. Renoe 0 0 16,500/12,500 39,625/27,125
Richard N. Decker 0 0 10,500/13,500 40,125/26,875
- -------------------
</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 ($13.25) 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
$8,750 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.
The 1993 Director Plan was adopted by the Board of Directors and
approved by the shareholders in 1993. The 1993 Director Plan was amended in
1995 and the amendments were approved by the shareholders at the 1995 Annual
Meeting on November 8, 1996.
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 was automatically 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.
Pursuant to the 1995 amendments to the 1993 Director Plan each eligible newly
elected Director is automatically granted an option to purchase 5,000 shares of
Common Stock and all eligible Directors will be auto- matically granted an
option to purchase 1,000 shares on February 1, 1997 and 1998. 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
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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 November 8, 1995 Mr. Correnti received an option to purchase 5,000
shares of Common Stock at an exercise price of $12.75 per Share. On February
1, 1996 Messrs. Norelli, Chanon and Correnti each received an option to
purchase 1,000 shares of Common Stock at an exercise price of $13.25 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.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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, 1996, 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, 1997. 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, 1997, 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
1997 Annual Meeting of Shareholders, currently scheduled for November 6, 1997,
must be received by the Company no later than June 2, 1997, in order for the
proposal to be included in the proxy statement and form of proxy for the 1997
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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APPENDIX A
[LOGO] CEM CORPORATION PROXY
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING TO BE HELD NOVEMBER 7, 1996
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 7, 1996, 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
PROPOSAL 2 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. RATIFICATION OF SELECTION OF COOPERS & LYBRAND L.L.P. AS INDEPENDENT
PUBLIC ACCOUNTANTS
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. 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: ________________________________, 1996.
_______________________________________
_______________________________________
(When signing as attorney, executor,
administrator, trustee, guardian, etc.,
give title as such. If joint account,
each joint owner should sign.)
