<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
[X] Definitive Proxy Statement RULE 14C-5(D)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Thermo Instrument Systems Inc.
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Thermo Instrument Systems Inc.
------------------------------------------------------------------------
(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), 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:
Notes:
<PAGE>
THERMO INSTRUMENT
Systems Inc.
504 Airport Road
Post Office Box 2108
Santa Fe, New Mexico 87504-2108
April 25, 1995
Dear Stockholder:
The enclosed Notice calls the 1995 Annual Meeting of the Stockholders of
Thermo Instrument Systems Inc. I respectfully request all Stockholders attend
this meeting, if possible.
Our Annual Report for the year ended December 31, 1994, is enclosed. I hope
you will read it carefully. Feel free to forward any questions you may have if
you are unable to be present at the Meeting.
Enclosed with this letter is a Proxy authorizing three officers of the
Corporation to vote your shares for you if you do not attend the Meeting.
Whether or not you are able to attend the Meeting, I urge you to complete your
Proxy and return it to our transfer agent, American Stock Transfer and Trust
Company, in the enclosed addressed, postage-paid envelope, as a quorum of the
Stockholders must be present at the Meeting, either in person or by Proxy.
I would appreciate your immediate attention to the mailing of this Proxy.
Yours very truly,
Arvin H. Smith
President and Chief Executive
Officer
<PAGE>
THERMO INSTRUMENT
Systems Inc.
504 Airport Road,
Post Office Box 2108,
Santa Fe, New Mexico 87504-2108
April 25, 1995
To the Holders of the Common Stock of
Thermo Instrument Systems Inc.
NOTICE OF ANNUAL MEETING
The 1995 Annual Meeting of the Stockholders of Thermo Instrument Systems Inc.
(the "Corporation") will be held on Monday, May 22, 1995, at 8:45 a.m. at the
Hyatt Regency Hotel, Hilton Head, South Carolina. The purposes of the Meeting
are to consider and take action upon the following matters:
1. Election of ten Directors.
2. A proposal recommended by the Board of Directors to amend the Directors
Stock Option Plan to change the formula for the award of stock options to
purchase common stock of the Corporation to its outside Directors and also
to provide for the automatic grant of stock options to purchase common
stock of majority-owned subsidiaries of the Corporation to its outside
Directors.
3. Such other business as may properly be brought before the Meeting and any
adjournment thereof.
The transfer books of the Corporation will not be closed prior to the
Meeting, but, pursuant to appropriate action by the Board of Directors, the
record date for the determination of the Stockholders entitled to notice of and
vote at the Meeting is April 6, 1995.
The By-laws require that the holders of a majority of the stock issued and
outstanding and entitled to vote be present or represented by Proxy at the
Meeting in order to constitute a quorum for the transaction of business. It is
important that your stock be represented at the Meeting regardless of the
number of shares you may hold. Whether or not you are able to be present in
person, please sign and return promptly the enclosed Proxy in the accompanying
envelope, which requires no postage if mailed in the United States.
This Notice, the Proxy and Proxy Statement enclosed herewith are sent to you
by order of the Board of Directors.
Sandra L. Lambert
Secretary
<PAGE>
PROXY STATEMENT
The enclosed Proxy is solicited by the Board of Directors of Thermo
Instrument Systems Inc. (the "Corporation") for use at the 1995 Annual Meeting
of the Stockholders (the "Meeting") to be held on Monday, May 22, 1995, at 8:45
a.m. at the Hyatt Regency Hotel, Hilton Head, South Carolina, and any
adjournment thereof. The mailing address of the executive office of the
Corporation is 504 Airport Road, Santa Fe, New Mexico 87504-2108. This Proxy
Statement and the enclosed Proxy were first furnished to Stockholders of the
Corporation on or about April 27, 1995.
VOTING PROCEDURES
The Board of Directors intends to present to the Meeting the election of ten
Directors, constituting the entire Board of Directors, as well as one other
matter: a proposal to amend the Directors Stock Option Plan to change the
formula for the award to its outside Directors of stock options to purchase
common stock of the Corporation and also to provide for the automatic grant to
its outside Directors of stock options to purchase common stock of majority-
owned subsidiaries of the Corporation.
The representation in person or by proxy of a majority of the outstanding
shares of common stock of the Corporation, $.10 par value ("Common Stock"),
entitled to vote at the Meeting is necessary to provide a quorum for the
transaction of business at the Meeting. Shares can only be voted if the
Stockholder is present in person or is represented by returning a properly
signed proxy. Each Stockholder's vote is very important. Whether or not you
plan to attend the Meeting in person, please sign and promptly return the
enclosed proxy card, which requires no postage if mailed in the United States.
All signed and returned proxies will be counted towards establishing a quorum
for the Meeting, regardless of how the shares are voted.
Shares represented by proxy will be voted in accordance with your
instructions. You may specify your choice by marking the appropriate box on the
proxy card. If your proxy card is signed and returned without specifying
choices, your shares will be voted for the management nominees for Directors,
for the management proposal, and as the individuals named as proxy holders on
the proxy deem advisable on all other matters as may properly come before the
Meeting.
In order to be elected a Director, a nominee must receive the affirmative
vote of a majority of the shares of Common Stock present and entitled to vote
on the election. For all other matters to be voted upon at the Meeting the
affirmative vote of a majority of shares present in person or represented by
proxy, and entitled to vote on the matter, is necessary for approval.
Withholding authority to vote for a nominee for Director or an instruction to
abstain from voting on a proposal will be treated as shares present and
entitled to vote and, for purposes of determining the outcome of the vote, will
have the same effect as a vote against the nominee or a proposal. A broker
"non-vote" occurs when a nominee holding shares for a beneficial holder does
not have discretionary voting power and does not receive voting instructions
from the beneficial owner. Broker "non-votes" will not be treated as shares
present and entitled to vote on a voting matter and will have no effect on the
outcome of the vote.
A Stockholder who returns a proxy may revoke it at any time before the
Stockholder's shares are voted at the Meeting by written notice to the
Secretary of the Corporation received prior to the Meeting, by executing and
returning a later-dated proxy or by voting by ballot at the Meeting.
The outstanding stock of the Corporation entitled to vote (excluding shares
held in treasury by the Corporation) as of April 6, 1995, consisted of
72,017,153 shares of Common Stock, as adjusted to reflect the three-for-two
stock split effected in the form of a 50% stock dividend on April 14, 1995.
Only Stockholders of record at the close of business on April 6, 1995, are
entitled to vote at the Meeting. Each share is entitled to one vote.
<PAGE>
-- PROPOSAL 1 --
ELECTION OF DIRECTORS
Ten Directors are to be elected at the Meeting, each to hold office until his
successor is chosen and qualified or until his earlier resignation, death or
removal.
NOMINEES FOR DIRECTORS
Set forth below are the names of the persons nominated as Directors, their
ages, their offices in the Corporation, if any, their principal occupation or
employment for the past five years, the length of their tenure as Directors and
the names of other public companies in which such persons hold directorships.
Information regarding their beneficial ownership of the Corporation's Common
Stock and of the common stock of its parent corporation, Thermo Electron
Corporation ("Thermo Electron"), is reported under the caption "Stock
Ownership." All of the nominees are currently Directors of the Corporation.
- --------------------------------------------------------------------------------
<TABLE>
<C> <S>
MARSHALL J. ARMSTRONG Mr. Armstrong, 59, has been a Director of the
Corporation since December 1990. Mr. Armstrong has
been chief executive officer of Thermo Power
Corporation since 1991 and a vice president of
Thermo Electron since 1986. Mr. Armstrong is also a
director of SatCon Technology Corporation and Thermo
Power Corporation.
- -----------------------------------------------------------------------------------------------------------------------------------
FRANK BORMAN Mr. Borman, 67, has been a Director of the
Corporation since 1986. Mr. Borman is president and,
since 1988, chief executive officer of Patlex
Corporation, a patent licensing company. Mr. Borman
is also a director of American Superconductor
Corporation, Auto Finance Group, Inc., Outboard
Marine Group and The Home Depot, Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
DR. ELIAS P. GYFTOPOULOS Dr. Gyftopoulos, 67, has been a Director of the
Corporation since 1986. Dr. Gyftopoulos has been the
Ford Professor of Mechanical Engineering and of
Nuclear Engineering at the Massachusetts Institute
of Technology for more than five years. Dr.
Gyftopoulos is also a director of Thermo Electron,
Thermo Cardiosystems Inc., ThermoLase Corporation,
Thermo Remediation Inc. and Thermo Voltek Corp.
- -----------------------------------------------------------------------------------------------------------------------------------
DR. GEORGE N. HATSOPOULOS Dr. Hatsopoulos, 68, has been a Director of the
Corporation since 1986. Dr. Hatsopoulos has been the
Chairman of the Board, President and Chief Executive
Officer of Thermo Electron since 1956. Dr.
Hatsopoulos is also a director of Bolt, Beranek &
Newman, Inc., Thermedics Inc., Thermo Ecotek
Corporation, Thermo Electron, Thermo Fibertek Inc.,
Thermo Power Corporation, Thermo Process Systems
Inc., and ThermoTrex Corporation. Dr. Hatsopoulos is
the brother of John N. Hatsopoulos, a Director and
Vice President and Chief Financial Officer of the
Corporation.
- -----------------------------------------------------------------------------------------------------------------------------------
JOHN N. HATSOPOULOS Mr. Hatsopoulos, 61, has been a Director of the
Corporation since 1986 and a Vice President and
Chief Financial Officer of the Corporation since
1988. Mr. Hatsopoulos has been the Chief Financial
Officer of Thermo Electron Corporation since 1988
and an Executive Vice President of Thermo Electron
Corporation since 1986. Mr. Hatsopoulos is also a
director of Lehman Brothers Funds, Inc., Thermedics
Inc., Thermo Ecotek Corporation, Thermo Fibertek
Inc., Thermo Power Corporation., Thermo Process
Systems Inc. and ThermoTrex Corporation. Mr.
Hatsopoulos is the brother of Dr. George N.
Hatsopoulos, a Director of the Corporation.
</TABLE>
- --------------------------------------------------------------------------------
2
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <S>
ROBERT C. HOWARD Mr. Howard, 64, has been a Director of the Corporation
since 1986. Mr. Howard has been an Executive Vice
President of Thermo Electron since 1986. He is also a
Director of Thermedics Inc., Thermo Cardiosystems Inc.,
Thermo Ecotek Corporation, ThermoLase Corporation,
Thermo Power Corporation and ThermoTrex Corporation.
- ------------------------------------------------------------------------------------------------------------------------------------
FRANK JUNGERS Mr. Jungers, 68, has been a Director of the Corporation
since 1990. Mr. Jungers has been a consultant on
business and energy matters since 1977. Mr. Jungers was
Vice Chairman of Riedel Environmental Technologies Inc.
from July 1989 to October 1991 and was President of that
company from January 1989 to July 1989. Mr. Jungers was
employed by the Arabian American Oil Company from 1974
through 1977 as Chairman and Chief Executive Officer.
Mr. Jungers is also a director of The AES Corporation,
Dual Drilling Company, Georgia-Pacific Corporation,
Pacific Rehabilitation and Sports Medicine, Inc. Star
Technologies Inc., Thermo Ecotek Corporation and Thermo
Electron.
- ------------------------------------------------------------------------------------------------------------------------------------
ROBERT A. MCCABE Mr. McCabe, 60, has been a Director of the Corporation
since 1986. Mr. McCabe has served as President of Pilot
Capital Corporation, which engages in private
investments and provides acquisition services, since
1987. Prior to that time, Mr. McCabe was a Managing
Director of Lehman Brothers Inc., an investment banking
firm. Mr. McCabe is also a director of Borg-Warner
Security Corporation, Church & Dwight Company, Morrison-
Knudsen Corporation, and Thermo Electron.
- ------------------------------------------------------------------------------------------------------------------------------------
ARVIN H. SMITH Mr. Smith, 65, has been a Director and President and
Chief Executive Officer of the Corporation since 1986.
Mr. Smith has been an executive vice president of Thermo
Electron since 1991 and a senior vice president of that
corporation since 1986. Mr. Smith is also a director of
Thermedics Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
POLYVIOS C. VINTIADIS Mr. Vintiadis, 58, has been a Director of the
Corporation since July 1993. Mr. Vintiadis has been the
Chairman and Chief Executive Officer of Towermarc
Corporation, a real estate development company, since
1984. Prior to joining Towermarc, Mr. Vintiadis was a
principal of Morgens, Waterfall & Vintiadis, Inc., a
financial services firm, with whom he remains
associated. For more than 20 years prior to that time,
Mr. Vintiadis was employed by Arthur D. Little &
Company, Inc. Mr. Vintiadis is also a director of Thermo
Process Systems Inc.
</TABLE>
- --------------------------------------------------------------------------------
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETINGS
The Board of Directors has established an Executive Committee, an Audit
Committee and a Human Resources Committee. The present members of the Executive
Committee are Dr. G. Hatsopoulos (Chairman) and Mr. Borman, Mr. Howard, Mr.
Smith and Mr. Vintiadis. The Executive Committee is empowered to act when it is
impractical to call a meeting of the entire Board of Directors and with certain
exceptions has the powers of the Board of Directors. The Audit Committee
consists solely of outside directors, and its present members are Mr. McCabe
(Chairman), Mr. Jungers and Mr. Vintiadis. The Audit Committee reviews the
scope of the audit with the Corporation's independent public accountants and
meets with them for the purpose of reviewing the results of the audit
subsequent to its completion. The Human Resources Committee consists solely of
outside directors, and its present members are Mr. Jungers (Chairman), Mr.
Borman and Dr. Gyftopoulos. The Human Resources Committee reviews the
performance of senior members of management, recommends executive compensation
and administers the Corporation's stock option and other stock plans. The
Corporation does not have a nominating committee of the Board of Directors. The
Board of Directors met ten times, the Audit Committee met twice and the Human
Resources Committee met four
3
<PAGE>
times during fiscal 1994. No meetings of the Executive Committee were held
during 1994. Each Director attended at least 75% of all meetings of the Board
of Directors and Committees on which he served held during his tenure, except
for Mr. Armstrong who attended 70% of such meetings.
COMPENSATION OF DIRECTORS
Effective January 1, 1995, Directors who are not employees of the
Corporation, of Thermo Electron or any other companies affiliated with Thermo
Electron (also referred to as "outside directors"), receive an annual retainer
of $8,000 and a fee of $1,000 per day for attending regular meetings of the
Board of Directors and $500 per day for participating in meetings of the Board
of Directors held by means of conference telephone and for participating in
certain meetings of committees of the Board of Directors. Prior to January 1,
1995, the annual retainer paid to outside Directors was $2,000. Directors are
also reimbursed for out-of-pocket expenses incurred in attending such
meetings. Payment of Directors' fees is made quarterly. Mr. Armstrong, Dr. G.
Hatsopoulos, Mr. J. Hatsopoulos, Mr. Howard and Mr. Smith are all employees of
Thermo Electron companies and do not receive any cash compensation from the
Corporation for their services as Directors.
Under the Deferred Compensation Plan for Directors (the "Deferred
Compensation Plan"), a Director has the right to defer receipt of his cash
fees until he ceases to serve as a Director, dies or retires from his
principal occupation. In the event of a change in control or proposed change
in control of the Corporation that is not approved by the Board of Directors,
deferred amounts become payable immediately. Either of the following is deemed
to be a change of control: (a) the occurrence, without the prior approval of
the Board of Directors, of the acquisition, directly or indirectly, by any
person of 50% or more of the outstanding Common Stock or the outstanding
common stock of Thermo Electron; or (b) the failure of the persons serving on
the Board of Directors immediately prior to any contested election of
directors or any exchange offer or tender offer for the Common Stock or the
common stock of Thermo Electron to constitute a majority of the Board of
Directors at any time within two years following any such event. Amounts
deferred pursuant to the Deferred Compensation Plan are valued on the date of
deferral as units of the Corporation's Common Stock. When payable, amounts
deferred may be disbursed solely in shares of Common Stock accumulated under
the Deferred Compensation Plan. A total of 98,802 shares of Common Stock has
been reserved for issuance under the Deferred Compensation Plan. As of January
28, 1995, deferred units equal to 31,205.65 shares of Common Stock were
accumulated under the Deferred Compensation Plan.
In 1991, the Corporation adopted a directors stock option plan (the
"Directors Plan"). The Directors Plan provides for the grant of stock options
to purchase shares of Common Stock to outside Directors as additional
compensation for their service as Directors. In December 1994, the Board of
Directors approved amendments to the Directors Plan that are subject to
Stockholder approval at this meeting. The amendments are described under
Proposal 2 to this Proxy Statement. Prior to the amendment of the Plan,
eligible Directors were granted options to purchase Common Stock on a
quarterly basis according to the following formula: 200 shares for each
meeting of the Board of Directors held during the quarter and attended in
person by the recipient and 100 shares for each telephone meeting or committee
meeting of the Board of Directors held during the quarter in which the
recipient participated. The amendments to the plan would eliminate the grant
of stock options based on meeting attendance and substitute an annual grant of
options to purchase 1,000 shares of Common Stock to each eligible Director. In
addition, the Directors Plan would provide for the automatic grant every five
years of options to purchase 1,500 shares of the common stock of a majority-
owned subsidiary of the Corporation that is "spunout" to outside investors.
The exercise price for options that have been granted to date under the
Directors Plan is determined by the average of the closing prices of the
Common Stock as reported on the American Stock Exchange for the five trading
days preceding and including the date of grant. Outstanding options are
exercisable six months after the date of grant and if granted prior to 1995,
generally expire seven years from the date of grant. An aggregate of 112,500
shares of Common Stock has been reserved for issuance under the Directors
Plan. As of January 28, 1995, options to purchase 45,000 shares of Common
Stock were outstanding under the Directors Plan at an average exercise price
of $15.95 per share, 1,575 shares of Common Stock had been issued pursuant to
the exercise of options and 2,250 options to purchase shares of Common Stock
had lapsed. Options to purchase 65,925 shares of Common Stock were reserved
and available for grant under the Directors Stock Plan as of January 28, 1995.
4
<PAGE>
STOCK OWNERSHIP
The following table sets forth the beneficial ownership of Common Stock, as
well as the common stock of Thermo Electron and the Corporation's majority-
owned subsidiary, ThermoSpectra Corporation, as of January 28, 1995, with
respect to (i) each person who was known by the Corporation to own beneficially
more than 5% of the outstanding shares of common stock, (ii) each Director,
(iii) each executive officer named in the summary compensation table under the
heading "Executive Compensation" and (iv) all Directors and executive officers
as a group. The shares of Common Stock reported below have been adjusted as
applicable to reflect a three-for-two stock split effected on April 14, 1995.
<TABLE>
<CAPTION>
THERMO INSTRUMENT THERMO ELECTRON THERMOSPECTRA
NAME (1) SYSTEMS INC. (2) CORPORATION (3) CORPORATION (4)
-------- ----------------- --------------- ---------------
<S> <C> <C> <C>
Thermo Electron Corporation
(5)......................... 67,321,196 N/A N/A
Marshall J. Armstrong........ 13,002 81,539 2,500
Frank Borman ................ 15,228 0 0
Richard W. K. Chapman........ 128,029 35,869 4,000
Elias P. Gyftopoulos......... 35,268 29,920 0
George N. Hatsopoulos........ 114,639 1,563,847 20,000
John N. Hatsopoulos.......... 95,129 282,651 20,000
Denis A. Helm................ 131,955 71,620 4,000
Robert C. Howard............. 12,495 91,598 10,000
Barry S. Howe................ 80,522 38,478 4,000
Frank Jungers................ 38,496 107,557 0
Earl R. Lewis................ 107,395 80,822 55,000
Robert A. McCabe............. 30,098 19,451 0
Arvin H. Smith............... 345,321 273,653 20,000
Polyvios C. Vintiadis........ 3,364 0 0
All Directors and executive
officers as a group
(15 persons)................ 1,170,932 2,753,528 144,500
</TABLE>
- --------
(1) Shares of the common stock of the Corporation, Thermo Electron and
ThermoSpectra Corporation beneficially owned include shares owned by the
indicated person, by that person's spouse, by that person and his spouse,
and by that person and his spouse (or either of them) for the benefit of
minor children. Except as reflected in the footnotes to this table, all
share ownership includes sole voting and investment power.
(2) Shares of the Common Stock beneficially owned by Mr. Borman, Dr. Chapman,
Dr. Gyftopoulos, Dr. G. Hatsopoulos, Mr. J. Hatsopoulos, Mr. Helm, Mr.
Howe, Mr. Jungers, Mr. Lewis, Mr. McCabe, Mr. Smith, Mr. Vintiadis and all
Directors and executive officers as a group include 8,025, 123,802, 9,225,
75,000, 75,000, 90,000, 72,000, 8,550, 90,000, 7,050, 187,500, 2,550 and
760,702 shares, respectively, that such person or group has the right to
acquire within 60 days of January 28, 1995 through the exercise of stock
options. Shares beneficially owned by Mr. Armstrong, Dr. G. Hatsopoulos,
Mr. J. Hatsopoulos, Mr. Helm, Mr. Howard, Mr. Howe, Mr. Lewis, Mr. Smith
and all Directors and executive officers as a group include 315, 410, 410,
302, 387, 208, 273, 411 and 3,020 full shares, respectively, allocated
through January 28, 1995 to their respective accounts maintained pursuant
to Thermo Electron's employee stock ownership plan (the "ESOP"). Shares
beneficially owned by Mr. Borman, Mr. Jungers, Mr. McCabe, Mr. Vintiadis
and all Directors and executive officers as a group include 7,203, 8,999,
5,701, 814 and 22,717 full shares, respectively, allocated through January
28, 1995 to their respective accounts maintained under the Corporation's
Deferred Compensation Plan for Directors. No Director or executive officer
beneficially owned more than 1% of the Common Stock outstanding as of
January 28, 1995; all Directors and executive officers as a group
beneficially owned 1.63% of the Common Stock outstanding as of such date.
(Footnotes continued on following pages)
5
<PAGE>
(3) Shares of the common stock of Thermo Electron shown in the table do not
reflect a three-for-two split of such stock to be effected on May 24, 1995
to shareholders of record on April 26, 1995. Shares of the common stock of
Thermo Electron beneficially owned by Mr. Armstrong, Dr. Chapman, Dr.
Gyftopoulos, Dr. G. Hatsopoulos, Mr. J. Hatsopoulos, Mr. Helm, Mr. Howard,
Mr. Howe, Mr. Jungers, Mr. Lewis, Mr. McCabe, Mr. Smith and all Directors
and executive officers as a group include 62,300, 35,550, 2,500, 738,544,
230,100, 50,350, 32,190, 31,175, 2,500, 77,050, 2,500, 169,900 and
1,479,184 shares, respectively, that such person or group has the right to
acquire within 60 days of January 28, 1995 through the exercise of stock
options. Shares beneficially owned by Mr. Armstrong, Dr. G. Hatsopoulos,
Mr. J. Hatsopoulos, Mr. Helm, Mr. Howard, Mr. Howe, Mr. Lewis, Mr. Smith
and all Directors and executive officers as a group include 1,003, 924,
753, 484, 1,245, 245, 348, 657 and 6,141 full shares, respectively,
allocated through January 28, 1995 to their respective accounts maintained
pursuant to the ESOP. Shares beneficially owned by Mr. Jungers, Mr. McCabe,
and all Directors and executive officers as a group include 35,745, 15,433
and 51,178 full shares, respectively, allocated through January 28, 1995,
to their respective accounts maintained pursuant to Thermo Electron's
Deferred Compensation Plan for directors. Except for Dr. G. Hatsopoulos,
who beneficially owned 3.06% of the Thermo Electron common stock
outstanding as of January 28, 1995, no Director or executive officer
beneficially owned more than 1% of such common stock outstanding as of such
date; all Directors and executive officers as a group beneficially owned
approximately 5.04% of the Thermo Electron common stock outstanding as of
January 28, 1995.
(4) Shares of the common stock of ThermoSpectra Corporation beneficially owned
by Mr. Armstrong, Mr. Chapman, Dr. G. Hatsopoulos, Mr. J. Hatsopoulos, Mr.
Helm, Mr. Howard, Mr. Howe, Mr. Lewis, Mr. Smith and all Directors and
executive officers as a group include 2,500, 4,000, 20,000, 20,000, 4,000,
10,000, 4,000, 50,000, 20,000 and 139,500 shares, respectively, that such
person or group has the right to acquire within 60 days of January 28, 1995
through the exercise of stock options. No Director or executive officer,
nor all Directors and executive officers as a group, beneficially owned
more than 1% of such common stock outstanding as of January 28, 1995.
(5) Shares of the Common Stock beneficially owned by Thermo Electron include
6,452,307 shares which Thermo Electron has the right to acquire within 60
days of January 28, 1995 pursuant to the conversion of certain convertible
notes of the Corporation held by Thermo Electron. Thermo Electron owned
85.98% of the Common Stock outstanding as of January 28, 1995. Thermo
Electron's address is 81 Wyman Street, Waltham, Massachusetts 02254-9046.
DISCLOSURE OF CERTAIN LATE FILINGS
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's Directors and executive officers, and beneficial owners of more
than 10% of the Common Stock, such as Thermo Electron, to file with the
Securities and Exchange Commission initial reports of ownership and periodic
reports of changes in ownership of the Corporation's securities. Based upon a
review of such filings, all Section 16(a) filing requirements applicable to
such persons were complied with during 1994, except in the following instances.
The initial reports of ownership for two of the Corporation's executive
officers, Mr. Richard W. K. Chapman and Mr. Barry S. Howe were filed 12 days
late. In April 1994, Thermo Electron amended its filing for February 1994 to
report a purchase of 7,109 shares of the Corporation's Common Stock.
6
<PAGE>
EXECUTIVE COMPENSATION
NOTE: The shares of Common Stock reported below have, in all cases, been
adjusted as applicable to reflect a three-for-two stock split effected on April
14, 1995.
SUMMARY COMPENSATION TABLE
The following table summarizes compensation for services to the Corporation
in all capacities awarded to, earned by or paid to the Corporation's chief
executive officer and its four other most highly compensated executive officers
for the last three fiscal years.
The Corporation is required to appoint certain executive officers and full-
time employees of Thermo Electron as executive officers of the Corporation, in
accordance with the Thermo Electron Corporate Charter. The compensation for
these executive officers is determined and paid entirely by Thermo Electron.
The time and effort devoted by these individuals to the Corporation's affairs
is provided to the Corporation under the Corporate Services Agreement between
the Corporation and Thermo Electron. Accordingly, the compensation for these
individuals is not reported in the following table.
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------------ ----------------------
SECURITIES UNDERLYING
AWARDS OF OPTIONS ALL OTHER
NAME AND FISCAL (NO. OF SHARES AND COMPEN-
PRINCIPAL POSITION YEAR SALARY BONUS COMPANY) (1) SATION(2)
- ------------------ ------ -------- -------- -------------------------------
<S> <C> <C> <C> <C> <C> <C>
Arvin H. Smith (3)...... 1994 $255,000 $280,500 -- $ 6,750
Chief Executive Officer 1993 $240,000 $304,000 187,500 (THI) $10,023
1992 $223,000 $203,800 -- $ 8,891
- ------------------------------------------------------------------------------------
Denis A. Helm........... 1994 $140,000 $ 90,000 22,200 (TMO) $ 6,750
Senior Vice President 4,000 (TSC)
1993 $127,500 $120,000 90,000 (THI) $ 9,217
13,975 (TMO)
1992 $120,000 $ 80,000 7,425 (TMO) $14,498(4)
3,000 (TFT)
- ------------------------------------------------------------------------------------
Earl R. Lewis........... 1994 $140,000 $100,000 30,000 (TMO) $ 6,750
Senior Vice President 50,000 (TSC)
1993 $131,250 $100,000 90,000 (THI) $ 6,671
22,750 (TMO)
1992 $125,000 $ 68,000 14,250 (TMO) $ 8,247
3,000 (TFT)
- ------------------------------------------------------------------------------------
Richard W. K. Chapman (THI)
(5).................... 1994 $155,000 $100,000 22,500 $ 7,750
Senior Vice President 20,050 (TMO)
4,000 (TSC)
- ------------------------------------------------------------------------------------
Barry S. Howe (5)....... 1994 $130,000 $ 45,000 10,500 (TMO) $ 6,750
Vice President 4,000 (TSC)
</TABLE>
- --------
(1) Mr. Smith has served as an executive officer of Thermo Electron since 1986
and has been granted options to purchase common stock of Thermo Electron
and certain of its subsidiaries other than the Corporation
(footnotes continued on following page)
7
<PAGE>
and its subsidiary, ThermoSpectra Corporation, from time to time by Thermo
Electron or such other subsidiaries. These options are not reported here as
they were granted as compensation for service to other Thermo Electron
companies in capacities other than his capacity as the chief executive
officer of the Corporation. Options granted by the Corporation are
designated in the table as "THI." During the past three fiscal years, Mr.
Helm, Mr. Lewis, Mr. Chapman and Mr. Howe have been granted options to
purchase common stock of the following Thermo Electron companies: Thermo
Fibertek Inc. (designated in the table as "TFT"), Thermo Electron
Corporation (designated in the table as "TMO") and ThermoSpectra Corporation
(designated in the table as "TSC").
(2) Represents the amount of matching contributions made on behalf of the
executive officers participating in the Thermo Electron 401(k) plan or, in
the case of Mr. Chapman, the 401(k) plan maintained by Finnigan
Corporation, a subsidiary of the Corporation.
(3) Mr. Smith is an executive vice president of Thermo Electron, as well as the
president and chief executive officer of the Corporation. Reported in the
table under "Annual Compensation" and "All Other Compensation" are total
amounts paid to Mr. Smith for his service in all capacities to Thermo
Electron companies. The Human Resources Committee of the Board of Directors
of the Corporation reviews total annual compensation to be paid to Mr.
Smith from all sources within the Thermo Electron organization and approves
the allocation of a percentage of annual compensation (salary and bonus)
for the time he devotes to the affairs of the Corporation. For 1994, 40% of
Mr. Smith's annual compensation was allocated to the Corporation. In 1993
and 1992, 50% of Mr. Smith's annual compensation was allocated to the
Corporation.
(4) In addition to the matching contribution referred to in footnote (2), such
amount includes $4,088, representing the market value of 150 shares of
Thermo Electron common stock received by Mr. Helm in May 1992 in
recognition of his managerial achievements voted by managers of Thermo
Electron at its annual management conference.
(5) Mr. Chapman and Mr. Howe were first named executive officers of the
Corporation in January 1994.
8
<PAGE>
STOCK OPTIONS GRANTED DURING FISCAL 1994
The following table sets forth information concerning individual grants of
stock options made during fiscal 1994 to the Corporation's chief executive
officer and the other named executive officers. It has not been the
Corporation's policy in the past to grant stock appreciation rights, and no
such rights were granted during fiscal 1994.
OPTIONS GRANTS IN FISCAL 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
NUMBER OF OF STOCK PRICE
SECURITIES PERCENT OF TOTAL APPRECIATION FOR OPTION
UNDERLYING OPTIONS GRANTED TERM
OPTIONS TO EMPLOYEES IN EXERCISE PRICE EXPIRATION --------------------------
NAME GRANTED(1) FISCAL YEAR(2) PER SHARE DATE 5% 10%
---- ---------- ---------------- -------------- ---------- -- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Arvin H. Smith(3)....... 20,000 (TSC) 7.0% $10.00 10/26/06 $ 159,171 $ 427,686
- ---------------------------------------------------------------------------------------------------------------
Denis A. Helm........... 4,000 (TSC) 1.4% $10.00 10/25/06 $ 31,834 $ 85,537
2,200 (TMO) 0.3% $40.25 07/19/01 $ 36,049 $ 84,009
20,000 (TMO)(4) 2.8% $45.10 11/28/06 $ 717,862 $1,928,862
- ---------------------------------------------------------------------------------------------------------------
Earl L. Lewis........... 50,000 (TSC) 17.5% $10.00 10/26/06 $ 397,928 $1,069,214
30,000 (TMO)(4) 4.2% $45.10 11/28/06 $1,076,794 $2,893,294
- ---------------------------------------------------------------------------------------------------------------
Richard W. K. Chapman... 22,500 (THI) 3.9% $19.40 11/30/06 $ 347,391 $ 933,424
4,000 (TSC) 1.4% $10.00 10/25/06 $ 31,834 $ 85,537
50 (TMO) 0.0% $40.25 07/19/01 $ 819 $ 1,909
20,000 (TMO)(4) 2.8% $45.10 11/28/06 $ 717,862 $1,928,862
- ---------------------------------------------------------------------------------------------------------------
Barry S. Howe........... 4,000 (TSC) 1.4% $10.00 10/25/06 $ 31,834 $ 85,537
500 (TMO) 0.1% $40.25 07/19/01 $ 8,193 $ 19,093
10,000 (TMO)(4) 1.4% $45.10 11/28/06 $ 358,931 $ 964,431
</TABLE>
- --------
(1) All of the options granted during the fiscal year are immediately
exercisable at the date of grant, except options to purchase the common
stock of ThermoSpectra Corporation (designated in the table as TSC), which
generally are not exercisable until that company's stock is publicly
traded. However, the shares acquired upon exercise are subject to
repurchase by the granting corporation at the exercise price if the
optionee ceases to be employed by such corporation or any other Thermo
Electron company. The granting corporation may exercise its repurchase
rights within six months after the termination of the optionee's
employment. For publicly traded companies, the repurchase rights lapse
ratably over a five- to ten-year period, depending on the option term,
which may very from seven to twelve years, provided that the optionee
continues to be employed by the Corporation or another Thermo Electron
company. For companies whose shares are not publicly traded, the repurchase
rights lapse in their entirety on the ninth anniversary of the grant date.
The granting corporation may permit the holders of such options to exercise
options and to satisfy tax withholding obligations by surrendering shares
equal in fair market value to the exercise price or withholding obligation.
(2) The options to purchase shares of the common stock of Thermo Electron (TMO)
reported in the table were granted under stock option plans maintained by
Thermo Electron and accordingly are reported as a percentage of total
options granted to employees of Thermo Electron and its public
subsidiaries.
(3) Mr. Smith has served as an executive officer of Thermo Electron since 1986
and has been granted options to purchase common stock of Thermo Electron
and certain of its subsidiaries other than the Corporation. These options
are not reported in the table as they were granted as compensation for
service to other Thermo Electron companies in capacities other than his
capacity as chief executive officer of the Corporation. Options granted by
the Corporation and its majority-owned subsidiaries are reported in the
table.
(4) Options to purchase 20,000, 30,000, 20,000 and 10,000 shares of the common
stock of Thermo Electron granted to Mr. Helm, Mr. Lewis, Dr. Chapman and
Mr. Howe, respectively, are subject to the same terms as described in
footnote (1), except that the repurchase rights of the granting corporation
generally do not lapse until the tenth anniversary of the grant date. In
the event of the employee's death or involuntary termination prior to the
tenth anniversary of the grant date, the repurchase rights of the granting
corporation shall be deemed to have lapsed ratably over a five-year period
commencing with the fifth anniversary of the grant date.
9
<PAGE>
STOCK OPTIONS EXERCISED DURING FISCAL 1994
The following table reports certain information regarding stock option
exercises during fiscal 1994 and outstanding stock options held at the end of
fiscal 1994 by the Corporation's chief executive officer and the other named
executive officers. No stock appreciation rights were exercised or were
outstanding during fiscal 1994.
AGGREGATED OPTION EXERCISES IN FISCAL 1994 AND FISCAL 1994 YEAR-END OPTION
VALUES
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NO. OF UNEXERCISED
OPTIONS AT FISCAL VALUE OF UNEXERCISED
SHARES YEAR-END(1) IN-THE-MONEY OPTIONS($)
ACQUIRED ON VALUE -------------------------- --------------------------
NAME COMPANY EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Arvin H. Smith(2)....... Thermo Instrument -- -- 187,500 0 60,000 0
ThermoSpectra -- -- 0 20,000 0 0(3)
- ---------------------------------------------------------------------------------------------------------------------
Denis A. Helm........... Thermo Instrument -- -- 90,000 0 28,800 0
ThermoSpectra -- -- 0 4,000 0 0(3)
Thermo Ecotek -- -- 4,000 0 0(3) 0
Thermo Electron 2,100 $ 52,898 50,350(4) 0 396,226 0
Thermo Fibertek -- -- 3,000 0 27,375 0
ThermoTrex -- -- 2,100 0 $19,005 0
- ---------------------------------------------------------------------------------------------------------------------
Earl R. Lewis........... Thermo Instrument -- -- 90,000 0 28,800 0
ThermoSpectra -- -- 0 50,000 0 0(3)
Thermo Ecotek -- -- 4,000 0 0(3) 0
Thermo Electron -- -- 79,300(4) 0 654,319 0
Thermo Fibertek 600 $ 4,575 1,800 0 16,425 0
ThermoTrex 420 $ 4,589 840 0 7,602 0
- ---------------------------------------------------------------------------------------------------------------------
Richard W. K. Chapman... Thermo Instrument 805 $ 14,096 123,802 0 553,458 0
ThermoSpectra -- -- 0 4,000 0 0(3)
Thermo Electron -- -- 35,550(4) 0 135,163 0
Thermo Fibertek -- -- 3,000 0 27,375 0
ThermoTrex -- -- 270 0 2,444 0
- ---------------------------------------------------------------------------------------------------------------------
Barry S. Howe........... Thermo Instrument 11,250 $157,500 71,250 0 141,488 0
ThermoSpectra -- -- 0 4,000 0 0(3)
Thermedics -- -- 4,000 0 0 0
Thermo Ecotek -- -- 7,500 0 0(3) 0
Thermo Electron 8,250 $192,194 34,011(4) 0 255,965 0
Thermo Fibertek -- -- 7,000 0 34,275 0
Thermo Power -- -- 4,000 0 1,100 0
Thermo Process -- -- 4,000 0 0 0
ThermoTrex -- -- 5,350 0 $12,218 0
</TABLE>
- --------
(1) All of the options reported outstanding at the end of the fiscal year were
immediately exercisable as of fiscal year-end, except options to purchase
the common stock of ThermoSpectra Corporation, which generally are not
exercisable until that company's stock is publicly traded. The shares
acquired upon exercise of the options reported in the table are subject to
repurchase by the granting corporation at the exercise price if the
optionee ceases to be employed by such corporation or any other Thermo
Electron company. The granting corporation may exercise its repurchase
rights within six months after the termination of the optionee's
employment. For publicly traded companies, the repurchase rights generally
lapse ratably over a five- to ten-year period, depending on the option
term, which may vary from seven to twelve years, provided that the
optionee continues to be employed by the Corporation or another Thermo
Electron company. For companies whose shares are not publicly traded, the
repurchase rights lapse in their entirety on the ninth anniversary of the
grant date.
(2) As an executive officer of Thermo Electron, Mr. Smith also holds
unexercised options to purchase common stock of Thermo Electron and
certain of its subsidiaries other than the Corporation. These options are
not reported here as they were granted as compensation for service to
other Thermo Electron companies in capacities other than his capacity as
the chief executive officer of the Corporation.
(3) No public market existed for the shares underlying these options as of
December 31, 1994. Accordingly, no value in excess of exercise price has
been attributed to these options.
(4) Options to purchase 20,000, 30,000, 20,000 and 10,000 shares of the common
stock of Thermo Electron granted to Mr. Helm, Mr. Lewis, Dr. Chapman and
Mr. Howe, respectively, are subject to the same terms as described in
footnote (1), except that the repurchase rights of the granting
corporation generally do not lapse until the tenth anniversary of the
grant date. In the event of the employee's death or involuntary
termination prior to the tenth anniversary of the grant date, the
repurchase rights of the granting corporation shall be deemed to have
lapsed ratably over a five-year period commencing with the fifth
anniversary of the grant date.
10
<PAGE>
SEVERANCE AGREEMENTS
Thermo Electron has entered into severance agreements with several of its key
employees, including key employees of the Corporation and other majority-owned
subsidiaries. These agreements provide severance benefits if there is a change
of control of Thermo Electron that is not approved by the Board of Directors of
Thermo Electron and the employee's employment with Thermo Electron or the
majority-owned subsidiary is terminated, for whatever reason, within one year
thereafter. For purposes of the agreements, a change of control exists upon (i)
the acquisition of 50% or more of the outstanding common stock of Thermo
Electron by any person without the prior approval of the board of directors of
Thermo Electron, (ii) the failure of the board of directors of Thermo Electron,
within two years after any contested election of directors or tender or
exchange offer not approved by the board of directors, to be constituted of a
majority of directors holding office prior to such event or (iii) any other
event that the board of directors of Thermo Electron determines constitutes an
effective change of control of Thermo Electron.
In 1983, Thermo Electron entered into a severance agreement with Mr. Smith,
which states the benefits to be received as an initial percentage which was
established by the Board of Directors of Thermo Electron and was generally
based upon Mr. Smith's age and length of service with Thermo Electron at the
time of severance. Benefits under this agreement are to be paid over a five-
year period. The benefit to be paid in the first year is determined by applying
this percentage to Mr. Smith's highest annual total remuneration in any twelve-
month period during the preceding three years. The benefit is reduced 10% in
each of the succeeding four years in which benefits are paid. The initial
percentage to be applied to Mr. Smith is 59.1%.
In 1988, Thermo Electron entered into severance agreements with several other
key employees, including Mr. Helm. Each of the recipients of these agreements
would receive a lump-sum benefit at the time of a qualifying severance equal to
the highest total cash compensation paid to the employee by Thermo Electron or
the majority-owned subsidiary in any 12-month period during the three years
preceding the severance event. A qualifying severance exists if (i) the
employment of the executive officer is terminated for any reason within one
year after a change in control of Thermo Electron or (ii) a group of directors
of Thermo Electron consisting of directors of Thermo Electron on the date of
the severance agreement or, if an election contest or tender or exchange offer
for Thermo Electron's common stock has occurred, the directors of Thermo
Electron immediately prior to such election contest or tender or exchange
offer, and any future directors who are nominated or elected by such directors,
determines that any other termination of the executive officer's employment
should be treated as a qualifying severance. The benefits to be provided are
limited so that the payments would not constitute so-called "excess parachute
payments" under applicable provisions of the Internal Revenue Code of 1986.
Assuming that severance benefits would have been payable under these
agreements as of December 31, 1994, Mr. Smith and Mr. Helm would have received
approximately $320,000 (with respect to the first year in which benefits would
be paid) and $250,000, respectively.
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
All decisions on compensation for the Corporation's executive officers are
made by the Human Resources Committee of the Board of Directors (the
"Committee"). In reviewing and establishing total cash compensation and stock-
based compensation for executives, the Committee follows guidelines established
by the Human Resources Committee of the Board of Directors of its parent
corporation, Thermo Electron. The executive compensation program presently
consists of annual base salary ("salary"), short-term incentives in the form of
annual cash bonuses, and long-term incentives in the form of stock options.
The Committee believes that the compensation of executive officers should
reflect the scope of their responsibilities, the success of the Corporation,
and the contributions of each executive to that success. In addition, the
Committee believes that base salaries should approximate the mid-point of
competitive salaries
11
<PAGE>
derived from market surveys and that short-term and long-term incentive
compensation should reflect the performance of the Corporation and the
contributions of each executive.
External competitiveness is an important element of the Committee's
compensation policy. The competitiveness of the Corporation's compensation for
its executives is assessed by comparing it to market data provided by its
compensation consultant and by participating in annual executive compensation
surveys, primarily "Project 777", an executive compensation survey prepared by
Management Compensation Services, a division of Hewitt Associates. The majority
of firms represented in the Project 777 survey are included in the Standard &
Poor's Index, but do not necessarily correspond to the companies included in
the Corporation's peer group.
Principles of internal equity are also central to the Committee's
compensation policies. Compensation considered for the Corporation's officers,
whether cash or stock-based incentives, is also evaluated by comparing it to
compensation of other executives within the Thermo Electron organization with
comparable levels of responsibility for comparably sized business units.
The process for determining each of these elements for the Corporation's
officers is outlined below.
BASE SALARY
Base salaries are intended to approximate the mid-point of competitive
salaries for similar organizations of comparable size and complexity to the
Corporation. Executive salaries are adjusted gradually over time and only as
necessary to meet this objective. Increases in base salary may be moderated by
other considerations, such as geographic or regional market data, industry
trends or internal fairness within the Corporation and Thermo Electron. It is
the Committee's intention that over time the base salaries for the chief
executive officer and the other named executive officers will approach the mid-
point of competitive data. The salary increases in calendar 1994 for the chief
executive officer and the other named executive officers generally reflect this
practice of gradual increases and moderation.
CASH BONUS
The Committee establishes a median potential bonus for each executive by
using the market data on total cash compensation from the same executive
compensation surveys as used to determine salaries. Specifically, the median
potential bonus plus the salary of an executive officer is approximately equal
to the mid-point of competitive total cash compensation for a similar position
and level of responsibility in businesses having comparable sales and
complexity to the Corporation. The actual bonus awarded to an executive officer
may range from minus three to three times the median potential bonus. The value
within the range (the bonus multiplier) is determined at the end of each year
by the Committee in its discretion. The Committee exercises its discretion by
evaluating each executive's performance using a methodology developed by its
parent corporation, Thermo Electron, and applied throughout the Thermo Electron
organization. The methodology incorporates measures of operating returns,
designed to measure profitability, contributions to shareholder value, and
earnings growth, and includes an evaluation of the contributions of each
executive that are not captured by operating measures but are considered
important to the creation of long-term value for the stockholders. These
measures of achievements are not financial targets that are met, not met or
exceeded, but are measures of corporate and divisional performance that are
evaluated using graphs developed by Thermo Electron designed to reward
performance that is perceived as above average and to penalize performance that
is perceived as below average. The relative weighting of these achievements
varies depending on the executive's role and responsibilities within the
organization.
STOCK OPTION PROGRAM
The primary goal of the Corporation is to excel in the creation of long-term
value for the Stockholders. The principal incentive tool used to achieve this
goal is the periodic award to key employees of options to purchase common stock
of the Corporation and other Thermo Electron Companies.
12
<PAGE>
The Committee and management believe that awards of stock options to purchase
the shares of both the Corporation and other companies within the Thermo
Electron group of companies accomplish many objectives. The grant of options to
key employees encourages equity ownership in the Corporation, and closely
aligns management's interests to the interests of all the Stockholders. The
emphasis on stock options also results in management's compensation being
closely linked to stock performance. In addition, because they are subject to
vesting periods of varying durations and to forfeiture if the employee leaves
the Corporation prematurely, stock options are an incentive for key employees
to remain with the Corporation long-term. The Committee believes stock option
awards in the parent corporation, Thermo Electron, and the other majority-owned
subsidiaries of Thermo Electron, are an important tool in providing incentives
for performance within the entire organization.
In determining awards, the Committee considers the average annual value of
all options to purchase shares of the Corporation and other companies within
the Thermo Electron organization that vest in the next five years. (Values are
established using a modified Black-Scholes option pricing model.) As a
guideline, the Committee strives to maintain the aggregate amount of awards to
all employees over a five-year period below 10% of the Corporation's
outstanding Common Stock, although other factors such as unusual transactions
and acquisitions and standards for awards of comparably situated companies may
affect the number of awards granted.
Awards are not made annually in conjunction with the annual review of cash
compensation, but are made periodically. In determining option awards, the
Committee considers total compensation of executives, actual and anticipated
contributions of each executive, as well as the value of previously awarded
options as described above. In connection with the spinout of ThermoSpectra
Corporation in 1994, options to purchase common stock of this majority-owned
subsidiary were granted to executive officers using this methodology. The
option awards made with respect to the common stock of the Corporation's
parent, Thermo Electron, were determined by the human resources committee of
the board of directors of that company using a similar analysis.
1994 CEO COMPENSATION
Cash compensation for Mr. Arvin H. Smith is reviewed by both the Committee
and the human resources committee of the board of directors of Thermo Electron,
due to his responsibilities as both the Corporation's chief executive officer
and as an executive vice president of Thermo Electron, the Corporation's
parent. Each committee evaluates Mr. Smith's performance and proposed
compensation using a process similar to that used for the other executive
officers of the Corporation. At the Thermo Electron level, Mr. Smith is
evaluated on his performance related to the Corporation as well as other
operating units of Thermo Electron for which he is responsible, weighted in
accordance with the amount of time and effort devoted to each operation.
Approximately 40% of Mr. Smith's bonus for 1994 performance was attributable to
his responsibilities at the Corporation. The Corporation's Committee then
reviews the analysis and determinations of the Thermo Electron committee, makes
an independent assessment of Mr. Smith's performance as it relates to the
Corporation using criteria similar to that used for the other executive
officers of the Corporation, and then agrees to an appropriate allocation of
Mr. Smith's compensation to be paid by the Corporation.
In December 1994, the Committee conducted its review of Mr. Smith's proposed
salary for 1994 and bonus for 1994 performance. In addition to the evaluation
of Mr. Smith's performance as described above, the Committee also considered
the compounded annual return to stockholders from the Corporation's initial
public offering in August 1986 through December 1994. The Corporation achieved
a rate of return to stockholders of 27.9% per year. The Committee considered
Mr. Smith's leadership and contributions in achieving this return in its
determination. The Committee concurred in the recommendations made by the
Thermo Electron committee and agreed to an allocation of 40% of Mr. Smith's
total cash compensation for 1994 to the Corporation, based on his relative
responsibilities at the Corporation and Thermo Electron. The Committee believes
that the total cash compensation for Mr. Smith for 1994 tends to be below the
competitive norm for a similarly sized company with performance comparable to
that of the Corporation, and prefers that a significant portion of total
compensation be awarded in the form of long-term incentive compensation, such
as stock options.
13
<PAGE>
POLICY ON DEDUCTIBILITY OF COMPENSATION
The Committee has also considered the application of Section 162(m) of the
Internal Revenue Code to the Corporation's compensation practices. Section
162(m) limits the tax deduction available to public companies for annual
compensation paid to senior executives in excess of $1 million unless the
compensation qualifies as "performance based". The annual cash compensation
paid to individual executives does not approach the $1 million threshold, and
it is believed that the stock incentive plans of the Corporation qualify as
"performance based". Therefore, the Committee does not believe any further
action is necessary in order to comply with Section 162(m). From time to time,
the Committee will reexamine the Corporation's compensation practices and the
effect of Section 162(m).
Mr. Frank Jungers (Chairman)
Mr. Frank Borman
Dr. Elias P. Gyftopoulos
14
<PAGE>
COMPARATIVE PERFORMANCE GRAPH
The Securities and Exchange Commission requires that the Corporation include
in this Proxy Statement a line-graph presentation comparing cumulative, five-
year shareholder returns for the Corporation's Common Stock with a broad-based
market index and either a nationally recognized industry standard or an index
of peer companies selected by the Corporation. The Corporation has compared its
performance with the American Stock Exchange Market Value Index and a peer
group of instrument companies comprised of Beckman Instruments Inc., Dionex
Inc., Emerson Electric Corp., Measurex Corp., Perkin-Elmer Corp. and Varian
Associates Inc. (the "Current Peer Group"). Last year, the Corporation included
Millipore Corp. in its peer group. In 1994, Millipore Corp. exited the
analytical instruments industry through the sale of its Waters Division. The
Corporation has also added Emerson Electric Corp. and Measurex Corp. to its
peer group due to their presence in process control instrumentation, a market
the Corporation entered in 1994. Accordingly, two peer groups are presented in
the graph, the "Current Peer Group", as described, and a "Discontinued Peer
Group", which includes Millipore Corp. and excludes Emerson Electric Corp. and
Measurex Corp.
COMPARISON OF 1989-1994 TOTAL RETURN AMONG THERMO INSTRUMENT SYSTEMS INC.,
THE AMERICAN STOCK EXCHANGE MARKET VALUE INDEX, THE
CORPORATION'S CURRENT PEER GROUP AND THE DISCONTINUED PEER GROUP.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
THI 100 90 146 211 319 291
- ---------------------------------------------------------------------------------
AMEX 100 82 105 106 126 115
- ---------------------------------------------------------------------------------
CURRENT
PEER GROUP 100 108 131 153 178 177
- ---------------------------------------------------------------------------------
DISCONTINUED
PEER GROUP 100 99 143 153 173 179
</TABLE>
15
<PAGE>
The total return for the Corporation's Common Stock (THI), the American Stock
Exchange Market Value Index (AMEX), the Current Peer Group and the Discontinued
Peer Group assumes the reinvestment of dividends, although dividends have not
been declared on the Corporation's Common Stock. The American Stock Exchange
Market Value Index tracks the aggregate performance of equity securities of
companies listed on the American Stock Exchange ("AMEX"). The Corporation's
Common Stock is traded on the AMEX under the ticker symbol "THI."
RELATIONSHIP WITH AFFILIATES
Thermo Electron has adopted a strategy of selling a minority interest in
subsidiary companies to outside investors as an important tool in its future
development. As part of this strategy, Thermo Electron and certain of its
subsidiaries have created several privately and publicly held subsidiaries.
From time to time, Thermo Electron and its subsidiaries will create other
majority-owned subsidiaries as part of its spinout strategy. (The Corporation
and the other Thermo Electron subsidiaries are hereinafter referred to as the
"Thermo Subsidiaries".)
Thermo Electron and each of the Thermo Subsidiaries recognize that the
benefits and support that derive from their affiliation are essential elements
of their individual performance. Accordingly, Thermo Electron and each of the
Thermo Subsidiaries have adopted the Thermo Electron Corporate Charter (the
"Charter") to define the relationships and delineate the nature of such
cooperation among themselves. The purpose of the Charter is to ensure that (1)
all of the companies and their stockholders are treated consistently and
fairly, (2) the scope and nature of the cooperation among the companies, and
each company's responsibilities, are adequately defined, (3) each company has
access to the combined resources and financial, managerial and technological
strengths of the others, and (4) Thermo Electron and the Thermo Subsidiaries,
in the aggregate, are able to obtain the most favorable terms from outside
parties.
To achieve these ends, the Charter identifies the general principles to be
followed by the companies, addresses the role and responsibilities of the
management of each company, provides for the sharing of group resources by the
companies and provides for centralized administrative, banking and credit
services to be performed by Thermo Electron. The services provided by Thermo
Electron include collecting and managing cash generated by members,
coordinating the access of Thermo Electron and the Thermo Subsidiaries (the
"Thermo Group") to external financing sources, ensuring compliance with
external financial covenants and internal financial policies, assisting in the
formulation of long-range financial planning and providing other banking and
credit services. Pursuant to the Charter, Thermo Electron may also provide
guarantees of debt or other obligations of the Thermo Subsidiaries or may
obtain external financing at the parent level for the benefit of the Thermo
Subsidiaries. In certain instances, the Thermo Subsidiaries may provide credit
support to, or on behalf of, the consolidated entity or may obtain financing
directly from external financing sources. Under the Charter, Thermo Electron is
responsible for determining that the Thermo Group remains in compliance with
all covenants imposed by external financing sources, including covenants
related to borrowings of Thermo Electron or other members of the Thermo Group,
and for apportioning such constraints within the Thermo Group. In addition,
Thermo Electron is also responsible for ensuring that members comply with
internal policies and procedures. The cost of the services provided by Thermo
Electron to the Thermo Subsidiaries is covered under existing corporate
services agreements between Thermo Electron and each of the Thermo
Subsidiaries.
The Charter presently provides that it shall continue in effect so long as
Thermo Electron and at least one Thermo Subsidiary participate. The Charter may
be amended at any time by agreement of the participants. Any Thermo Subsidiary,
including the Corporation, can withdraw from participation in the Charter upon
30 days' prior notice. A subsidiary's participation in the Charter will
terminate in the event the subsidiary ceases to be controlled by Thermo
Electron or ceases to comply with the Charter or the policies
16
<PAGE>
and procedures applicable to the Thermo Group. A withdrawal from the Charter
automatically terminates the corporate services agreement and tax allocation
agreement (if any) in effect between the withdrawing company and Thermo
Electron. The withdrawal from participation does not terminate outstanding
commitments to third parties made by the withdrawing company, or by Thermo
Electron or other members of the Thermo Group, prior to the withdrawal.
However, a withdrawing company is required to continue to comply with all
policies and procedures applicable to the Thermo Group and to provide certain
administrative functions mandated by Thermo Electron so long as the withdrawing
company is controlled by or affiliated with Thermo Electron.
As provided in the Charter, the Corporation and Thermo Electron have entered
into a Corporate Services Agreement (the "Services Agreement") under which
Thermo Electron's corporate staff provides certain administrative services,
including certain legal advice and services, risk management, certain employee
benefit administration, tax advice and preparation of tax returns, centralized
cash management and certain financial and other services to the Corporation.
For the fiscal year ended December 31, 1994, the Corporation was assessed an
annual fee equal to 1.25% of the Corporation's revenues for these services.
Effective January 1, 1995, the fee has been reduced to 1.2% of the
Corporation's revenues. The fee is reviewed annually and may be changed by
mutual agreement of the Corporation and Thermo Electron. During fiscal 1994,
Thermo Electron assessed the Corporation $8,277,000, in fees under the Services
Agreement. Management believes that the charges under the Services Agreement
are reasonable and that the terms of the Services Agreement are representative
of the expenses the Corporation would have incurred on a stand-alone basis. For
additional items such as employee benefit plans, insurance coverage and other
identifiable costs, Thermo Electron charges the Corporation based on charges
attributable to the Corporation. The Services Agreement automatically renews
for successive one-year terms, unless canceled by the Corporation upon 30 days'
prior notice. In addition, the Services Agreement terminates automatically in
the event the Corporation ceases to be a member of the Thermo Group or ceases
to be a participant in the Charter. In the event of a termination of the
Services Agreement, the Corporation will be required to pay a termination fee
equal to the fee that was paid by the Corporation for services under the
Services Agreement for the nine-month period prior to termination. Following
termination, Thermo Electron may provide certain administrative services on an
as-requested basis by the Corporation or as required in order to meet the
Corporation's obligations under Thermo Electron's policies and procedures.
Thermo Electron will charge the Corporation a fee equal to the market rate for
comparable services if such services are provided to the Corporation following
termination.
In January 1994, Thermo Electron entered into an Asset and Stock Purchase
Agreement (the "Agreement") with Baker Hughes Incorporated ("Baker Hughes") for
the acquisition of certain business operations of Baker Hughes (the "Acquired
Business Operations") for an aggregate purchase price of approximately
$134,000,000 (the "Total Purchase Price"). In March 1994, the Corporation was
assigned certain rights and assumed certain liabilities of Thermo Electron (the
"Assignment and Assumption") under the Agreement. Pursuant to the Assignment
and Assumption, the Corporation acquired certain of the Acquired Business
Operations from Baker Hughes for approximately $89,700,000 and the assumption
of certain liabilities related to such operations. The price paid by the
Corporation was generally determined by pro rating the Total Purchase Price on
the basis of revenues of the respective portions of the Acquired Business
Operations and was approved by the Corporation's Board of Directors. In March
1994, Thermo Electron also entered into a similar arrangement with another of
its publicly held subsidiaries pursuant to which the subsidiary acquired the
remainder of the Acquired Business Operations from Baker Hughes for the balance
of the Total Purchase Price and the assumption of certain liabilities related
to such operations.
In April 1994, the Corporation and Thermo Process Systems Inc. (another
majority owned subsidiary of Thermo Electron) agreed to form a joint venture
called Thermo Terra Tech. The Corporation has contributed its laboratory and
health physics and environmental consulting and engineering services businesses
to the joint venture. Thermo Process Systems Inc. has contributed approximately
$31 million in cash and marketable securities to the joint venture, as well as
its Terra Tech business, which provides analytical services to the petroleum
industry and to environmental firms. Subject to certain adjustments for
17
<PAGE>
the first year of the joint venture's operations, the joint venture will be
owned 51% by Thermo Process Systems Inc. and 49% by the Corporation.
On March 15, 1995, Thermo BioAnalysis Corporation ("TBC"), a subsidiary of
the Corporation, completed a private placement primarily to outside investors
of minority investments in its common stock. Arvin Smith, the president and
chief executive officer of the Corporation, purchased 9,000 shares of the
common stock of TBC in such private placement at a purchase price of $10.00 per
share, the same price paid by unaffiliated buyers.
From time to time, the Corporation may transact business in the ordinary
course with other companies in the Thermo Group. All such transactions are on
terms comparable to those the Corporation would receive from unaffiliated
parties.
As of December 31, 1994, $65,955,000 of the Corporation's cash equivalents
were invested in a repurchase agreement with Thermo Electron. Under this
agreement, the Corporation in effect lends excess cash to Thermo Electron,
which Thermo Electron collateralizes with investments principally consisting of
corporate notes, U.S. government agency securities, money market funds,
commercial paper and other marketable securities, in the amount of at least
103% of such obligation. The Corporation's funds subject to the repurchase
agreement are readily convertible into cash by the Corporation and have a
maturity of three months or less. The repurchase agreement earns a rate based
on the Commercial Paper Composite Rate plus 25 basis points, set at the
beginning of each quarter.
Thermo Electron owned approximately 85% of the Corporation's outstanding
Common Stock on January 28, 1995. Thermo Electron intends for the foreseeable
future to maintain at least 80% ownership of the Corporation. This may require
the purchase by Thermo Electron of additional shares of the Corporation's
Common Stock from time to time as the number of outstanding shares issued by
the Corporation increases. These purchases may be made either in the open
market or directly from the Corporation.
-- PROPOSAL 2 --
PROPOSAL TO AMEND THE DIRECTORS STOCK OPTION PLAN
The Board of Directors has approved amendments to the Corporation's Directors
Stock Option Plan (the "Directors Plan") that would change the formula for
granting stock options to purchase Common Stock to its outside Directors and
would also provide for the automatic grant of stock options to purchase common
stock of majority-owned subsidiaries of the Corporation to its outside
Directors, subject to Stockholder approval at this Meeting.
In December 1994, as part of a review of director compensation, the Board of
Directors adopted amendments to the Directors Plan, subject to Stockholder
approval. The amendments would first change the formula by which stock options
to purchase Common Stock are automatically granted to outside Directors. The
formula, as amended, would substitute the annual grant of stock options to
purchase 1,000 shares of Common Stock to each eligible outside Director as of
the close of business on the date of the Annual Meeting of Stockholders for the
meeting attendance grants previously awarded quarterly to outside Directors
under the Directors Plan. The amendments would also provide for the automatic
grant to its outside Directors of stock options to purchase 1,500 shares of
common stock of majority-owned subsidiaries of the Corporation spunout from
time to time.
The review of director compensation was conducted in conjunction with an
overall review of director compensation for Thermo Electron and its majority-
owned subsidiaries. The purpose of the review was to evaluate compensation
practices for the entire Thermo Electron family of companies, compare total
cash compensation to comparable market data and ensure consistent and
internally equitable compensation practices among the companies within the
Thermo Electron family. For administrative simplicity, the Directors determined
that an annual award of stock options would best serve the interests of the
Corporation, in lieu of the quarterly determination and award of stock options
based on attendance at meetings of the Board of Directors and its committees.
In addition, the Directors approved the award of a fixed number of stock
options in majority-owned subsidiaries that may be spunout from time to time as
part of the corporate spinout strategy of the Corporation and Thermo Electron.
18
<PAGE>
The spinout of business units represents an integral part of the
Corporation's strategy, and the Corporation believes it is desirable and in the
best interests of the Corporation and its Stockholders that the outside
Directors of the Corporation have a personal equity interest in spinout
companies of the Corporation, such as ThermoSpectra Corporation and Thermo
BioAnalysis Corporation. The Board of Directors believes that the award of
stock options to key personnel and Directors in its spinout companies created
from time to time serves to motivate individuals to contribute significantly to
the Corporation's future growth and success and to align the long-term interest
of these individuals to those of all the Stockholders of the Corporation.
Consistent with its incentive structure for key employees and executives of the
Corporation, it is recommended that outside Directors be awarded stock options
in the spinout companies by amending the Directors Plan.
SUMMARY OF THE AMENDMENTS TO THE DIRECTORS PLAN
The full text of the Directors Plan as amended and restated is set forth in
Appendix A, to which reference is made. A brief description of the amendments
to the Directors Plan follows (the "Amendments"), but is qualified in its
entirety by reference to the full text of the plan. Except as amended, the
Directors Plan will continue in full force and effect. A brief description of
the material terms of the Directors Plan that are not affected by the
Amendments are summarized under the heading "Other Terms of the Directors
Plan." The closing price of the Common Stock on April 6, 1995 (giving effect to
the three-for-two split of the Common Stock effected on April 14, 1995), was
$22.92 per share.
ANNUAL GRANT OF CORPORATION OPTIONS
The Amendments will discontinue, as of January 1, 1995, the quarterly grant
of stock options to purchase Common Stock of the Corporation based on
attendance by outside Directors at meetings of the Board of Directors or its
committees. In lieu of such options, options to purchase 1,000 shares of Common
Stock will be granted annually to each eligible Director as of the close of
business on the date of the Corporation's Annual Meeting of Stockholders,
beginning with the Annual Meeting to which this proxy statement relates.
Options may be exercised at any time from and after the six-month anniversary
of the grant date of the option and prior to the expiration of the option on
the third anniversary of the grant date (rather than the seventh anniversary as
is currently the case). Options will be subject to restrictions on resale and
to the repurchase by the Corporation of the shares subject to option at the
exercise price if the Director ceases to serve as a director of the
Corporation, Thermo Electron or any subsidiary of Thermo Electron, for any
reason other than death, within one year from the date of grant. The option
exercise price shall be determined by the average closing price of the Common
Stock on the American Stock Exchange for the five trading days preceding and
including the date of the Annual Meeting of Stockholders.
GRANT OF SUBSIDIARY OPTIONS
The Amendments also provide that options to purchase shares of the common
stock of majority-owned subsidiaries of the Corporation will be granted
automatically to eligible outside Directors at the close of business on the
first Annual Meeting of Stockholders following the spinout of the subsidiary
(referred to as the "Spinout Subsidiary"), and also at the close of business on
the date of every fifth Annual Meeting of Stockholders thereafter during the
continuation of the plan. A "spinout" shall be the first to occur of either a
public offering of the subsidiary's common stock or a private placement of such
stock primarily to third parties in an arms-length transaction. At the close of
business on the date of the applicable Annual Meeting of Stockholders, options
to purchase 1,500 shares of common stock of the Spinout Subsidiary will be
granted to each eligible outside Director holding office immediately following
the meeting. A Director who is also a director of a Spinout Subsidiary will not
be eligible to receive options to purchase stock of that subsidiary under the
Directors Plan, although he or she will be eligible for options granted under a
comparable formula plan adopted by the subsidiary. The exercise price for
options will be determined by the average of the closing prices reported by the
American Stock Exchange (or other principal market on which such common stock
is then traded) for the five trading days immediately preceding the date on
which the option is granted, or if the shares are not then traded, at the last
price paid per share by independent investors in an arms-length private
19
<PAGE>
placement of common stock prior to the option grant under the Directors Plan.
Options to purchase the common stock of a Spinout Subsidiary will vest and be
exercisable upon the fourth anniversary of the grant date, unless the common
stock underlying the option grant is registered under Section 12 of the
Securities Exchange Act of 1934, as amended ("Section 12 Registration") prior
to such date. Section 12 Registration is normally a prerequisite to the public
trading of a security. In the event that the effective date of Section 12
Registration occurs prior to the fourth anniversary of the grant date, then the
option will become immediately exercisable and the shares acquired upon
exercise will be subject to restrictions on transfer and the right of the
Corporation to repurchase such shares at the exercise price in the event the
Director ceases to serve as a Director of the Corporation, Thermo Electron or
any subsidiary of Thermo Electron. In such event, the restrictions and
repurchase rights shall lapse or be deemed to have lapsed at the rate of 25%
per year, starting with the first anniversary of the grant date, provided the
Director has continuously served as a Director of the Corporation, Thermo
Electron or any subsidiary of Thermo Electron since the grant date. The option
will expire on the fifth anniversary of the grant date, unless the Director
dies or otherwise ceases to serve as a Director of the Corporation, Thermo
Electron or any subsidiary of Thermo Electron prior to that date.
OTHER TERMS OF THE DIRECTORS PLAN
A brief description of the other principal features of the Directors Plan
that are not affected by the Amendments follows, but it is qualified in its
entirety by reference to the full text set forth in Appendix A.
ELIGIBILITY; ADMINISTRATION
Directors of the Corporation who are not employees of the Corporation or any
subsidiary or parent corporation of the Corporation are eligible to participate
in the Directors Plan. The Directors Plan is administered by the Board of
Directors of the Corporation (the "Board"). All questions of interpretation of
the Directors Plan or of any options granted pursuant to the Plan are
determined by the Board.
TERMS AND CONDITIONS OF OPTIONS
The exercise price for options is determined by the average of the closing
prices reported by the American Stock Exchange (or other principal exchange in
which the Common Stock is then traded) for the five trading days immediately
preceding and including the date the option is granted, or, if the shares
underlying the option are not so traded, at the last price paid per share by
independent investors in an arms-length transaction prior to the option grant.
The exercise price of options granted under the Directors Plan must be paid in
full by check or by the delivery of shares of Common Stock (or shares of the
common stock of the applicable subsidiary) that have a fair market value on the
exercise date equal to the exercise price of the option. Stock options granted
under the plan are non-statutory stock options. If a Director dies or otherwise
ceases to serve as a Director of the Corporation, Thermo Electron or any
subsidiary of Thermo Electron, or the Corporation is liquidated, the options
will terminate. Options are evidenced by a written agreement and are subject to
transfer restrictions that lapse as to all of the shares on the first
anniversary of the grant date, as to annual grants of options to purchase
Common Stock of the Corporation, and ratably over a four-year period as to
options to purchase common stock of Spinout Subsidiaries of the Corporation, as
described above under the caption "Grant of Subsidiary Options". Option holders
will be permitted to tender shares of Common Stock (or shares of the common
stock of the applicable subsidiary) to satisfy withholding tax obligations, if
any.
CHANGE IN CONTROL PROVISIONS
If there is a "Change in Control" of the Corporation or its parent
corporation, Thermo Electron, as defined in the Directors Plan, any stock
options that are not then exercisable and fully vested will become fully
exercisable and vested; and the restrictions applicable to shares purchased
upon exercise of options will lapse and such shares will be free of
restrictions and fully vested. Generally, a "Change in Control" occurs if (1)
any person other than Thermo Electron becomes the beneficial owner of 50% or
more of the outstanding
20
<PAGE>
Common Stock of the Corporation, or any person becomes the beneficial owner of
25% or more of the outstanding common stock of Thermo Electron, without the
prior approval of the Board of Directors, or the board of directors of Thermo
Electron, as the case may be, (2) during any two-year period the individuals
who constituted the Board of Directors or the board of directors of Thermo
Electron at the beginning of such period no longer represent a majority of such
board, or (3) the Board of Directors or the board of directors of Thermo
Electron determines that any other event constitutes an effective change in
control of the Corporation or Thermo Electron.
AMENDMENT AND TERMINATION
The Directors Plan remains in full force and effect until suspended or
discontinued by the Board. The Board may at any time or times amend or review
the Directors Plan, provided that no amendment that is not approved by the
Stockholders of the Corporation shall be effective if it would cause the
Directors Plan to fail to satisfy the requirements of Rule 16b-3 (or any
successor rule) of the Securities Exchange Act of 1934, as amended. No
amendment of the Directors Plan or any agreement evidencing options granted
under the Directors Plan may adversely affect the rights of any recipient of
any option previously granted without such recipient's consent.
SHARES SUBJECT TO THE DIRECTORS PLAN
The number of shares of the Common Stock that has been reserved for issuance
under the Directors Plan is 112,500 shares. If the Amendments to the Directors
Plan are approved by the Stockholders at this Meeting, an additional 25,000
shares of the common stock of each Spinout Subsidiary will also be reserved for
transfer upon exercise of options granted thereunder. Options and shares that
are forfeited or otherwise reacquired by the Corporation will again be
available for the grant of options under the Directors Plan. If the outstanding
shares of Common Stock or the outstanding shares of the common stock of any
Spinout Subsidiary are increased, decreased or exchanged for a different number
or kind of shares or other securities through merger, consolidation, stock
split, stock dividend, reverse stock split or other distribution, an
appropriate proportionate adjustment may be made in the maximum number or kind
of shares reserved for issuance under the Directors Plan.
The proceeds received by the Corporation from exercises under the Directors
Plan will be used for the general purposes of the Corporation. Shares issued
under the Directors Plan may be authorized but unissued shares, or shares
reacquired by the Corporation and held in its treasury.
EFFECTIVE DATE
The Amendments will be effective as of January 1, 1995, if approved by the
Stockholders of the Corporation at this meeting.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the principal current Federal income tax
consequences of stock options granted under the Directors Plan. It does not
describe all Federal tax consequences under the Directors Plan, nor does it
describe state, local or foreign tax consequences.
The stock options granted under the Directors Plan are non-statutory stock
options and therefore no income will be realized by the optionee at the time
the option is granted. Generally, at exercise, ordinary income will be realized
by the optionee in an amount equal to the difference between the option price
and the fair market value of the shares on the date of exercise. The
Corporation receives a tax deduction for the same amount, and, upon disposition
of the shares, appreciation or depreciation after the date of exercise will be
treated as either short-term or long-term capital gain depending on how long
the shares have been held.
NEW PLAN BENEFITS
Only the outside Directors of the Corporation are eligible to participate in
the Directors Plan. The following table sets forth, to the extent determinable,
the number of shares of the common stock of the
21
<PAGE>
Corporation and its majority-owned subsidiaries that will be granted under the
Directors Plan to the "non-executive Director Group" if the Amendments are
approved by the Stockholders. Named executive officers and other employee
groups are not set forth in the table as such persons and groups are not
eligible to receive options under the Directors Plan.
<TABLE>
<CAPTION>
NUMBER
DOLLAR OF
NAME AND POSITION VALUE($) SHARES COMPANY
----------------- ---------- ------ -------
<S> <C> <C> <C>
Non-Executive Director Group (5
persons).......................... (1) 5,000 Thermo Instrument Systems
$75,000(2) 7,500 ThermoSpectra
$75,000(2) 7,500 Thermo BioAnalysis
</TABLE>
- --------
(1) Because the exercise price of options to be granted under the Directors
Plan will reflect the market value of the underlying stock at the time of
the grant, the dollar value of such options is not currently determinable.
(2) Assumes the exercise price for such options will be $10.00 per share, which
was the purchase price for the most recent private placement of the shares
underlying such options.
- --------------------------------------------------------------------------------
RECOMMENDATION
The Board of Directors believes that the Amendments to the Directors Plan
will enable the Corporation to ensure the continued services and contributions
of its outside Directors and to attract and retain other highly qualified
individuals to serve as outside Directors from time to time. Accordingly, the
Board of Directors believes that the proposal is in the best interest of the
Corporation and its Stockholders and recommends that the Stockholders vote
"FOR" the approval of the Amendments to the Directors Plan to change the
formula for the grant of stock options to outside Directors and to provide for
the automatic grant to outside Directors of options to purchase common stock of
the Corporation's majority-owned subsidiaries. If not otherwise specified,
Proxies will be voted FOR approval of this proposal. Thermo Electron, which
beneficially owned approximately 85% of the outstanding Common Stock as of
April 6, 1995, has sufficient votes to approve the proposal and has indicated
its intention to vote for the proposal.
- --------------------------------------------------------------------------------
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Arthur Andersen LLP as independent
public accountants for fiscal 1995. Arthur Andersen LLP has acted as
independent public accountants for the Corporation since 1986. Representatives
of that firm are expected to be present at the Meeting, will have the
opportunity to make a statement if they desire to do so and will be available
to respond to questions. The Board of Directors has established an Audit
Committee, presently consisting of three non-management Directors, the purpose
of which is to review the scope and results of the audit.
OTHER ACTION
Management is not aware at this time of any other matters that will be
presented for action at the Meeting. Should any such matters be presented, the
Proxies grant power to the Proxy holders to vote shares represented by the
Proxies in the discretion of such Proxy holders.
STOCKHOLDER PROPOSALS
Proposals of Stockholders intended to be presented at the 1996 Annual Meeting
of the Stockholders of the Corporation must be received by the Corporation for
inclusion in the Proxy Statement and form of Proxy relating to that meeting no
later than December 28, 1995.
22
<PAGE>
SOLICITATION STATEMENT
The cost of this solicitation of Proxies will be borne by the Corporation.
Solicitation will be made primarily by mail, but regular employees of the
Corporation may solicit Proxies personally, by telephone or telegram. Brokers,
nominees, custodians and fiduciaries are requested to forward solicitation
materials to obtain voting instructions from beneficial owners of stock
registered in their names, and the Corporation will reimburse such parties for
their reasonable charges and expenses in connection therewith.
Santa Fe, New Mexico
April 25, 1995
23
<PAGE>
APPENDIX A
THERMO INSTRUMENT SYSTEMS INC.
DIRECTORS STOCK OPTION PLAN
AS AMENDED AND RESTATED EFFECTIVE AS OF JANUARY 1, 1995 AND AS ADJUSTED TO
REFLECT THE THREE-FOR-TWO STOCK SPLIT EFFECTED ON APRIL 14, 1995.
1. PURPOSE
The purpose of this Directors Stock Option Plan (the "Plan") of Thermo
Instrument Systems Inc. (the "Company") is to encourage ownership in the
Company by outside directors of the Company whose services are considered
essential to the Company's growth and progress and to provide them with a
further incentive to become directors and to continue as directors of the
Company. The Plan is intended to be a nonstatutory stock option plan.
2. ADMINISTRATION
The Board of Directors, or a Committee (the "Committee") consisting of two or
more directors of the Company appointed by the Board of Directors, shall
supervise and administer the Plan. Grants of stock options under the Plan and
the amount and nature of the options to be granted shall be automatic in
accordance with Section 5. However, all questions of interpretation of the Plan
or of any stock options granted under it shall be determined by the Board of
Directors or the Committee and such determination shall be final and binding
upon all persons having an interest in the Plan.
3. PARTICIPATION IN THE PLAN
Directors of the Company who are not employees of the Company or any
subsidiary or parent of the Company shall be eligible to participate in the
Plan. Directors who receive grants of stock options in accordance with this
Plan are sometimes referred to herein as "Optionees."
4. STOCK SUBJECT TO THE PLAN
The maximum number of shares that may be issued under the Plan shall be one
hundred twelve thousand five hundred (112,500) shares of the Company's $.10 par
value Common Stock (the "Common Stock"), and twenty-five thousand (25,000)
shares of the common stock of each Spinout Subsidiary (as defined in Section
5(B)) as of the date of the Annual Meeting of Stockholders on which options to
purchase such common stock are first granted to eligible Directors as provided
in Section 5(B), each subject to adjustment as provided in Section 9. Shares to
be issued upon the exercise of options granted under the Plan may be either
authorized but unissued shares or shares held by the Company in its treasury.
If any option expires or terminates for any reason without having been
exercised in full, the unpurchased shares subject thereto shall again be
available for options thereafter to be granted.
5. TERMS AND CONDITIONS
A. Annual Stock Option Grants
Each Director of the Company who meets the requirements of Section 3 and who
is holding office immediately following the Annual Meeting of Stockholders,
commencing with the Annual Meeting of Stockholders held in calendar year 1995,
shall be granted an option to purchase 1,000 shares of Company common stock at
the close of business on the date of such Annual Meeting. Options granted under
this Subsection B shall be exercisable as to 100% of the shares subject to the
option as set forth in Section 5(C)(1), but shares acquired upon exercise are
subject to repurchase by the Company at the exercise price in the event that
the Optionee ceases to serve as a director of the Company, Thermo Electron
Corporation ("Thermo Electron") or any subsidiary of Thermo Electron, prior to
the first anniversary of the grant date, for any reason other than death.
A-1
<PAGE>
B. Subsidiary Stock Option Grants.
Each Director of the Company who meets the requirements of Section 3 and this
Section 5(B), from time to time in accordance with this Section 5(B), shall be
granted an option to purchase shares of the common stock of each majority-owned
subsidiary of the Company, the common stock of which shall have become publicly
traded or a portion of which shall have been sold primarily to third parties in
a private placement or other arms-length transaction (such transaction being
referred to herein as a "Spinout Transaction", and such subsidiary being
referred to herein as a "Spinout Subsidiary"), upon the following terms and
conditions.
Each eligible Director who is not a Director of the Spinout Subsidiary shall
be granted an option to purchase 1,500 shares of common stock of the Spinout
Subsidiary as of the close of business on the date of the Company's Annual
Meeting of Stockholders that first occurs after the Spinout Transaction, and
also as of the close of business on the date of every fifth Annual Meeting of
Stockholders of the Company that occurs thereafter during the duration of this
Plan.
Options granted under this Section 5(B) shall vest and be exercisable as to
100% of the shares of common stock subject to the option on the fourth
anniversary of the grant date of the option, unless, prior to such anniversary,
the underlying common stock shall have been registered under Section 12 of the
Securities Exchange Act of 1934, as amended (referred to herein as "Section 12
Registration"). From and after 90 days after the effective date of Section 12
Registration, options granted hereunder shall be immediately exercisable as to
100% of the shares subject to the option, subject to the right of the Company
to repurchase the shares at the exercise price in the event the Optionee ceases
to serve as a director of the Company, or any subsidiary of the Company or
Thermo Election during the option term. The right of the Company to so
repurchase the shares shall lapse as to one-fourth of the shares granted on
each of the first, second, third and fourth anniversaries of the grant date of
the option, provided the Optionee has remained continuously a director of the
Company, Thermo Electron or any subsidiary of Thermo Electron since the grant
date. In all other respects, the option shall be subject to the general terms
and conditions applicable to all option grants as set forth below in Section
5(C), including the determination of the exercise price of such option.
No Director, who is otherwise eligible under Section 3, shall be eligible
under this Section 5(B) to receive grants of stock options in Spinout
Subsidiaries, if such Director also serves as a director of such Spinout
Subsidiary.
In the event any subsidiary shall become a "Spinout Subsidiary" as defined
herein, then there shall be immediately reserved for transfer hereunder, on the
date options to purchase common stock of the Spinout Subsidiary are first
granted to eligible Directors and without further action required by the Board
of Directors or Stockholders of the Company, twenty-five thousand (25,000)
shares of the common stock of such Spinout Subsidiary.
C. General Terms and Conditions Applicable to All Grants.
1. Except as otherwise provided in Section 5(B), options shall be
exercisable at any time from and after the six-month anniversary of the
grant date and prior to the date which is the earliest of:
(a) three years after the grant date for options granted under
Section 5(A) and five years after the grant date for options granted
under Section 5(B), (b) three months after the later of the date (i)
the Optionee either ceases to meet the requirements of Section 3 or
(ii) otherwise ceases to serve as a director of the Company, Thermo
Electron or any subsidiary of Thermo Electron (six months in the event
the Optionee ceases to meet the requirements of this Subsection by
reason of his death), or (c) the date of dissolution or liquidation of
the Company.
2. The exercise price at which Options are granted hereunder shall be the
average of the closing prices reported by the national securities exchange
on which the common stock is principally traded for the five trading days
immediately preceding and including the date the option is granted or, if
such
A-2
<PAGE>
security is not traded on an exchange, the average last reported sale price
for the five-day period on the NASDAQ National Market List, or the average
of the closing bid prices for the five-day period last quoted by an
established quotation service for over-the-counter securities, or if none
of the above shall apply, the last price paid for shares of the Common
Stock by independent investors in a private placement; provided, however,
that such exercise price per share shall not be lower than the par value
per share or less than 50% of the fair market value of the Common Stock
until such time as the Company elects to be subject to Rule 16b-3 as
amended by SEC Rel. No. 33-28869.
3. All options shall be evidenced by a written agreement substantially in
such form as shall be approved by the Board of Directors or Committee,
containing terms and conditions consistent with the provisions of this
Plan.
6. EXERCISE OF OPTIONS
A. Exercise/Consideration
An option may be exercised in accordance with its terms by written notice of
intent to exercise the option, specifying the number of shares of stock with
respect to which the option is then being exercised. The notice shall be
accompanied by payment in the form of cash or shares of common stock of the
Company (as to options to purchase Company Common Stock) or the Spinout
Subsidiary (as to options to purchase common stock of the Spinout Subsidiary,
but only if the common stock is then publicly traded) (the shares so tendered
referred to herein as "Tendered Shares") with a then current market value equal
to the exercise price of the shares to be purchased; provided, however, that
such Tendered Shares shall have been acquired by the Optionee more than six
months prior to the date of exercise (unless such requirement is waived in
writing by the Company). Against such payment the Company shall deliver or
cause to be delivered to the Optionee a certificate for the number of shares
then being purchased, registered in the name of the Optionee or other person
exercising the option. If any law or applicable regulation of the Securities
and Exchange Commission or other body having jurisdiction in the premises shall
require the Company or the Director to take any action in connection with
shares being purchased upon exercise of the option, exercise of the option and
delivery of the certificate or certificates for such shares shall be postponed
until completion of the necessary action, which shall be taken at the Company's
expense.
B. Tax Withholding
The Company shall have the right to deduct from payments of any kind
otherwise due to the Optionee any federal, state or local taxes of any kind
required by law to be withheld with respect to any shares issued upon exercise
of options under the Plan. Subject to the prior approval of the Company, which
may be withheld by the Company in its sole discretion, the Optionee may elect
to satisfy such obligations, in whole or in part, (i) by causing the Company to
withhold shares of common stock otherwise issuable pursuant to the exercise of
an option or (ii) by delivering to the Company shares of common stock already
owned by the Optionee. The shares so delivered or withheld shall have a fair
market value equal to such withholding obligation. The fair market value of the
shares used to satisfy such withholding obligation shall be determined by the
Company as of the date that the amount of tax to be withheld is to be
determined. Notwithstanding the foregoing, no election to use shares for the
payment of withholding taxes shall be effective unless made in compliance with
any applicable requirements of Rule 16b-3.
7. TRANSFERABILITY
Options shall not be transferable, otherwise than by will or the laws of
descent and distribution or pursuant to a qualified domestic relations order as
defined in the Internal Revenue Code or Title I of the Employee Retirement
Income Security Act, or the rules thereunder (a "Qualified Domestic Relations
Order"). Options may be exercised during the life of the Optionee only by the
Optionee or a transferee pursuant to a Qualified Domestic Relations Order.
A-3
<PAGE>
8. LIMITATION OF RIGHTS TO CONTINUE AS A DIRECTOR
Neither the Plan, nor the quantity of shares subject to options granted under
the Plan, nor any other action taken pursuant to the Plan, shall constitute or
be evidence of any agreement or understanding, express or implied, that the
Company will retain a Director for any period of time, or at any particular
rate of compensation.
9. CHANGES IN COMMON STOCK
If the outstanding shares of Common Stock are increased, decreased or
exchanged for a different number or kind of shares or other securities, or if
additional shares or new or different shares or other securities are
distributed with respect to such shares of Common Stock or other securities,
through merger, consolidation, sale of all or substantially all of the assets
of the Company, reorganization, recapitalization, reclassification, stock
dividend, stock split, reverse stock split or other distribution with respect
to such shares of Common Stock, or other securities, an appropriate
proportionate adjustment may be made in the maximum number or kind of shares
reserved for issuance under the Plan. No fractional shares will be issued under
the Plan on account of any such adjustments.
10. LIMITATION OF RIGHTS IN OPTION STOCK
The Optionees shall have no rights as stockholders in respect of shares as to
which their options shall not have been exercised, certificates issued and
delivered and payment as herein provided made in full, and shall have no rights
with respect to such shares not expressly conferred by this Plan or the written
agreement evidencing options granted hereunder.
11. STOCK RESERVED
The Company shall at all times during the term of the options reserve and
keep available such number of shares of the Common Stock as will be sufficient
to permit the exercise in full of all options granted under this Plan and shall
pay all other fees and expenses necessarily incurred by the Company in
connection therewith.
12. SECURITIES LAWS RESTRICTIONS
A. Investment Representations.
The Company may require any person to whom an option is granted, as a
condition of exercising such option, to give written assurances in substance
and form satisfactory to the Company to the effect that such person is
acquiring the Common Stock subject to the option for his or her own account for
investment and not with any present intention of selling or otherwise
distributing the same, and to such other effects as the Company deems necessary
or appropriate in order to comply with federal and applicable state securities
laws.
B. Compliance with Securities Laws.
Each option shall be subject to the requirement that if, at any time, counsel
to the Company shall determine that the listing, registration or qualification
of the shares subject to such option upon any securities exchange or under any
state or federal law, or the consent or approval of any governmental or
regulatory body, or that the disclosure of non-public information or the
satisfaction of any other condition is necessary as a condition of, or in
connection with, the issuance or purchase of shares thereunder, such option may
not be exercised, in whole or in part, unless such listing, registration,
qualification, consent or approval, or satisfaction of such condition shall
have been effected or obtained on conditions acceptable to the Board of
Directors. Nothing herein shall be deemed to require the Company to apply for
or to obtain such listing, registration or qualification, or to satisfy such
condition.
A-4
<PAGE>
13. CHANGE IN CONTROL
13.1 IMPACT OF EVENT
In the event of a "Change in Control" as defined in Section 13.2, the
following provisions shall apply, unless the agreement evidencing the Award
otherwise provides:
(a) Any stock options awarded under the Plan that were not previously
exercisable and vested shall become fully exercisable and vested.
(b) Shares purchased upon the exercise of options subject to restrictions
and to the extent not fully vested, shall become fully vested and all such
restrictions shall lapse so that shares issued pursuant to such options
shall be free of restrictions.
13.2 DEFINITION OF "CHANGE IN CONTROL"
"Change in Control" means any one of the following events: (i) when any
Person other than Thermo Electron Corporation ("Thermo Electron") is or becomes
the beneficial owner (as defined in Section 13(d) of the Exchange Act and the
Rules and Regulations thereunder), together with all Affiliates and Associates
(as such terms are used in Rule 12b-2 of the General Rules and Regulations of
the Exchange Act) of such Person, directly or indirectly, of 50% or more of the
outstanding Common Stock of the Company, or the beneficial owner of 25% or more
of the outstanding common stock of Thermo Electron, without the prior approval
of the Prior Directors of the Company or Thermo Electron, as the case may be,
(ii) the failure of the Prior Directors to constitute a majority of the Board
of the Company or of the Board of Directors of Thermo Electron, as the case may
be, at any time within two years following any Electoral Event, or (iii) any
other event that the Prior Directors shall determine constitutes an effective
change in the control of the Company or Thermo Electron. As used in the
preceding sentence, the following capitalized terms shall have the respective
meanings set forth below:
(a) "Person" shall include any natural person, any entity, any
"affiliate" of any such natural person or entity as such term is defined in
Rule 405 under the Securities Act of 1933 and any "group" (within the
meaning of such term in Rule 13d-5 under the Exchange Act);
(b) "Prior Directors" shall mean the persons sitting on the Company's or
Thermo Electron's Board of Directors, as the case may be, immediately prior
to any Electoral Event (or, if there has been no Electoral Event, those
persons sitting on the applicable Board of Directors on the date of this
Agreement) and any future director of the Company or Thermo Electron who
has been nominated or elected by a majority of the Prior Directors who are
then members of the Board of Directors of the Company or Thermo Electron,
as the case may be; and
(c) "Electoral Event" shall mean any contested election of Directors, or
any tender or exchange offer for the Company's or Thermo Electron's Common
Stock, not approved by the Prior Directors, by any Person other than the
Company, Thermo Electron or a subsidiary of Thermo Electron.
14. AMENDMENT OF THE PLAN
The provisions of Sections 3 and 5 of the Plan shall not be amended more than
once every six months, other than to comport with changes in the Code, the
Employee Retirement Income Security Act of 1974, or the rules thereunder.
Subject to the foregoing, the Board of Directors may at any time, and from time
to time, modify or amend the Plan in any respect, except that if at any time
the approval of the Stockholders of the Company is required as to such
modification or amendment under Rule 16b-3, the Board of Directors may not
effect such modification or amendment without such approval.
The termination or any modification or amendment of the Plan shall not,
without the consent of an Optionee, affect his or her rights under an option
previously granted to him or her. With the consent of the Optionees affected,
the Board of Directors may amend outstanding option agreements in a manner not
inconsistent with the Plan. The Board of Directors shall have the right to
amend or modify the terms and
A-5
<PAGE>
provisions of the Plan and of any outstanding option to the extent necessary to
ensure the qualification of the Plan under Rule 16b-3.
15. EFFECTIVE DATE OF THE PLAN
The Plan shall become effective when adopted by the Board of Directors, but
no option granted under the Plan shall become exercisable until six months
after the Plan is approved by the Stockholders of the Company.
16. NOTICE
Any written notice to the Company required by any of the provisions of the
Plan shall be addressed to the Secretary of the Company and shall become
effective when it is received.
17. GOVERNING LAW
The Plan and all determinations made and actions taken pursuant hereto shall
be governed by the laws of the State of Delaware.
A-6
<PAGE>
FORM OF PROXY
THERMO INSTRUMENT SYSTEMS INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 22, 1995.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Arvin H. Smith, John N. Hatsopoulos and
Jonathan W. Painter, or any of one of them in the absence of the others, as
attorneys and proxies of the undersigned, with full power of substitution, for
and in the name of the undersigned, to represent the undersigned at the Annual
Meeting of the Stockholders of Thermo Instrument Systems, Inc., a Delaware
corporation (the "Company"), to be held on Monday, May 22, 1995, at 8:45 a.m.,
and at any postponement or adjournment thereof, and to vote all shares of common
stock of the Company standing in the name of the undersigned on April 6, 1995,
with all of the powers the undersigned would possess if personally present at
such meeting:
(IMPORTANT -- TO BE SIGNED AND DATED ON THE REVERSE SIDE.)
++++ +
Please mark your + +
[ X ] votes as in this + ++++
example.
The shares represented by this Proxy will be voted "FOR" the proposals set forth
below if no instruction to the contrary is indicated or if no instruction is
given.
FOR WITHHELD
1. ELECTION
OF
DIRECTORS [ ] [ ]
OF THE
COMPANY
(see reverse)
FOR all nominees listed at right, except authority to vote
withheld for the following nominees (if any):
- -------------------------------------------------------------
Nominees: Marshall J. Armstrong
Frank Borman
Elias P. Gyftopoulos
George N. Hatsopoulos
John N. Hatsopoulos
Robert C. Howard
Frank A. Jungers
Robert A. McCabe
Arvin H. Smith
Polyvios C. Vintiadis
FOR AGAINST ABSTAIN
2. Approve amendment to Directors Stock Option
Plan to change the formula for the award of [ ] [ ] [ ]
stock options to outside Directors and
provide for the automatic grant of stock
options to outside Directors.
3. In their discretion on such other matters as may properly come before the
Meeting.
The shares represented by this Proxy will be voted "FOR" the proposals set forth
above if no instruction to the contrary is indicated or if no instruction is
given.
Copies of the Notice of Meeting and of the Proxy Statement have been
received by the undersigned.
SIGNATURE(S) _________________________________________ DATE ___________
Note: (This proxy should be dated, signed by the shareholder(s) exactly as his
or her name appears hereon, and returned promptly in the enclosed envelope.
Persons signing in a fiduciary capacity should so indicate. If shares are held
by joint persons or as community property, both should sign.)
