SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ]Preliminary Proxy Statement [ ]Confidential, for
Use of the Commission
Only (as Permitted by
Rule 14a-6(e)(2))
[ X ]Definitive Proxy Statement
[ ]Definitive Additional Materials
[ ]Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
THERMO INSTRUMENT SYSTEMS INC.
------------------------------
(Name of Registrant as Specified in Charter)
--------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ]No fee required.
[ ]Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction
applies: ______________________________________________
(2) Aggregate number of securities to which transaction
applies: ______________________________________________
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth
the amount on which the filing fee is calculated and
state how it was determined): _________________________
(4) Proposed maximum aggregate value of transaction: ______
(5) Total fee paid: _______________________________________
[ ]Fee paid previously with preliminary materials.
[ ]Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
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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:
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THERMO INSTRUMENT SYSTEMS INC.
1275 Hammerwood Avenue
Sunnyvale, California 94089
April 29, 1997
Dear Stockholder:
The enclosed Notice calls the 1997 Annual Meeting of the
Stockholders of Thermo Instrument Systems Inc. We respectfully
request all Stockholders attend this meeting, if possible.
Our Annual Report for the year ended December 28, 1996, is
enclosed. We 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, We 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.
We would appreciate your immediate attention to the mailing
of this proxy.
Yours very truly,
ARVIN H. SMITH
Chairman and Chief Executive
Officer
EARL R. LEWIS
President and Chief Operating
Officer
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THERMO INSTRUMENT SYSTEMS INC.
1275 Hammerwood Avenue
Sunnyvale, California 94089
April 29, 1997
To the Holders of the Common Stock of
THERMO INSTRUMENT SYSTEMS INC.
NOTICE OF ANNUAL MEETING
The 1997 Annual Meeting of the Stockholders of Thermo
Instrument Systems Inc. (the "Corporation") will be held on
Monday, June 2, 1997, at 10:00 a.m. at The Hyatt Regency Hotel,
Hilton Head, South Carolina. The purpose of the meeting is to
consider and take action upon the following matters:
1. Election of five directors.
2. A proposal recommended by the Board of Directors to extend
the term of the Corporation's employee's stock purchase plan to
November 2, 2005.
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 7, 1997.
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
shares 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
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3PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of
Thermo Instrument Systems Inc. (the "Corporation") for use at the
1997 Annual Meeting of the Stockholders (the "Meeting") to be
held on Monday, June 2, 1997, at 10:00 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
1275 Hammerwood Avenue, Sunnyvale, California 94089. This proxy
statement and the enclosed proxy were first furnished to
Stockholders of the Corporation on or about May 2, 1997.
VOTING PROCEDURES
The Board of Directors intends to present to the Meeting the
election of five directors, constituting the entire Board of
Directors, as well as one other matter: a proposal to extend the
term of the Corporation's employees' stock purchase plan to
November 2, 2005.
The representation in person or by proxy of a majority of
the outstanding shares of common stock, $.10 par value ("Common
Stock"), of the Corporation 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 the management
proposal to extend the term of the Corporation's employees' stock
purchase plan, the affirmative vote of a majority of the 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 the 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
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or the proposal. With respect to the election of directors and
the management proposal, 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 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.
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 7, 1997 consisted of 97,222,325 shares of Common Stock.
Only Stockholders of record at the close of business on April 7,
1997 are entitled to vote at the Meeting. Each share is entitled
to one vote.
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- PROPOSAL 1 -
ELECTION OF DIRECTORS
The Board of Directors has fixed the number of directors at
five, and five directors are to be elected at the Meeting,
constituting the entire Board of Directors, 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 the common stock of its
subsidiaries and its parent company, Thermo Electron Corporation
("Thermo Electron"), a diversified high technology company, is
reported under the caption "Stock Ownership." All of the nominees
are currently directors of the Corporation.
Frank Borman Col. Borman, 69, has been a director of the
Corporation since 1986. Col. Borman has
been president and chief executive officer
of Patlex Corporation, a patent licensing
company, and a trustee of the National
Geographic Society, for at least five
years. Col. Borman is also a director of
American Superconductor Corporation,
Database Online Corporation, Outboard
Marine Group Inc. and The Home Depot, Inc.
George N. Dr. Hatsopoulos, 70, has been a director of
Hatsopoulos the Corporation since 1986. Dr.
Hatsopoulos has been the chairman and chief
executive officer of Thermo Electron since
he founded the company in 1956 and
president of Thermo Electron from 1956
until January 1997. He was also chairman
of the board of the Corporation from 1986
to March 1997. Dr. Hatsopoulos is also a
director of Photoelectron Corporation,
Thermedics Inc., Thermo Ecotek Corporation,
Thermo Electron, Thermo Fibertek Inc.,
Thermo Optek Corporation, ThermoQuest
Corporation and ThermoTrex Corporation. Dr.
Hatsopoulos is the brother of Mr. John N.
Hatsopoulos, a director and the chief
financial officer and a vice president of
the Corporation.
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John N. Hatsopoulos Mr. Hatsopoulos, 62, has been a director of
the Corporation since 1986 and chief
financial officer and a vice president of
the Corporation since 1988. Mr.
Hatsopoulos has been the president of
Thermo Electron since January 1997 and the
chief financial officer of Thermo Electron
since 1988. He was also an executive vice
president of Thermo Electron Corporation
from 1986 to January 1997. Mr. Hatsopoulos
is also a director of LOIS/USA Inc.,
Thermedics Inc., Thermo Ecotek Corporation,
Thermo Fibertek Inc., Thermo Power
Corporation, Thermo TerraTech Inc. and
ThermoTrex Corporation. Mr. Hatsopoulos is
the brother of Dr. George N. Hatsopoulos, a
director of the Corporation.
Arvin H. Smith Mr. Smith, 67, has been a director and
chief executive officer of the Corporation
since 1986, and chairman of the board since
March 1997. He was also president of the
Corporation from 1986 to March 1997. Mr.
Smith has been an executive vice president
of Thermo Electron since 1991 and was a
senior vice president of that company from
1986 to 1991. Mr. Smith is also a director
of Thermo BioAnalysis Corporation, Thermo
Optek Corporation, Thermo Power
Corporation, ThermoQuest Corporation and
ThermoSpectra Corporation.
Polyvios C. Mr. Vintiadis, 61, has been a director of
Vintiadis 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
TerraTech Inc.
Committees of the Board of Directors and Meetings
The Board of Directors has established an Audit Committee
and a Human Resources Committee. The Audit Committee consists
solely of outside directors, and its present members are Mr.
Vintiadis (Chairman), and Col. Borman. The Audit Committee
reviews the scope of the audit with the Corporation's independent
public accountants and meets with them for the purpose of
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reviewing the results of the audit subsequent to its completion.
The Human Resources Committee consists solely of outside
directors, and its present members are Col. Borman (Chairman) and
Mr. Vintiadis. 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-based compensation plans. The Corporation does not
have a nominating committee of the Board of Directors. The Board
of Directors met nine times, the Audit Committee met twice and
the Human Resources Committee met seven times during fiscal 1996.
Each director attended at least 75% of all meetings of the Board
of Directors and committees on which he served held during fiscal
1996, except Mr. J. Hatsopoulos who attended two-thirds of such
meetings. Mr. J. Hatsopoulos is the chief financial officer of
Thermo Electron and each of its publicly held subsidiaries, and
his responsibilities require him to travel extensively on company
business.
Compensation of Directors
Cash Compensation
Directors who are not employees of the Corporation, of
Thermo Electron or of 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. Payment of
directors' fees is made quarterly. Dr. G. Hatsopoulos, Mr. J.
Hatsopoulos 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. Directors are also
reimbursed for out-of-pocket expenses incurred in attending such
meetings.
Deferred Compensation Plan
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 25% or more of 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
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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 at the end of each quarter 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 123,502 shares of Common Stock has
been reserved for issuance under the Deferred Compensation Plan.
As of March 1, 1997, deferred units equal to 44,699.82 shares of
Common Stock were accumulated under the Deferred Compensation
Plan.
Directors Stock Option Plan
The Corporation's directors stock option plan (the
"Directors Plan"), provides for the grant of stock options to
purchase shares of common stock of the Corporation and its
majority-owned subsidiaries to outside directors as additional
compensation for their service as directors. Under the Directors
Plan, outside directors are automatically granted options to
purchase 1,000 shares of the Common Stock annually. In addition,
the Directors Plan provides 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 "spun out"
to outside investors.
Pursuant to the Directors Plan, outside directors receive an
annual grant of options to purchase 1,000 shares of Common Stock
at the close of business on the date of each Annual Meeting of
the Stockholders of the Corporation. Options evidencing annual
grants 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. Shares acquired upon exercise of the options are subject
to repurchase by the Corporation at the exercise price if the
recipient ceases to serve as a director of the Corporation or any
other Thermo Electron company prior to the first anniversary of
the grant date.
In addition, under the Directors Plan, outside directors are
automatically granted every five years options to purchase 1,500
shares of common stock of each majority-owned subsidiary of the
Corporation that is "spun out" to outside investors. The grant
occurs on the close of business on the date of the first Annual
Meeting of the Stockholders next following the subsidiary's
spinout, which is the first to occur of either an initial public
offering of the subsidiary's common stock or a sale of such stock
to third parties in an arms-length transaction, and also as of
the close of business on the date of every fifth Annual Meeting
of the Stockholders of the Corporation that occurs thereafter
during the duration of the Plan. The options granted vest and
become exercisable on the fourth anniversary of the date of
grant, unless prior to such date the subsidiary's common stock is
registered under Section 12 of the Securities Exchange Act of
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1934, as amended (''Section 12 Registration"). In the event that
the effective date of Section 12 Registration occurs before the
fourth anniversary of the grant date, 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 or any other Thermo Electron company. In the event
of Section 12 Registration, the restrictions and repurchase
rights shall lapse or be deemed to lapse at the rate of 25% per
year, starting with the first anniversary of the grant date.
These options expire after five years. Under this provision of
the Directors Plan, each outside director was granted options to
purchase 1,500 shares of common stock of each of ThermoQuest
Corporation, at an exercise price of $16.70 per share, on May 19,
1996, the date of last year's Annual Meeting of the Stockholders.
In addition, each outside director reelected at this year's
Annual Meeting of the Stockholders will be granted options to
purchase 1,500 shares of common stock of Metrika Systems
Corporation and Thermo Optek Corporation.
The exercise price for options granted under the Directors
Plan is the average of the closing prices of the common stock as
reported on the American Stock Exchange (or other principal
market on which the common stock is then traded) for the five
trading days preceding and including the date of grant, or, if
the shares are not then traded, at the last price per share paid
by third parties in an arms-length transaction prior to the
option grant. As of March 31, 1997, options to purchase 69,620
shares had been granted under the Directors Plan, options to
purchase 2,811 shares had been exercised, options to purchase
2,811 shares had lapsed, and an aggregate of 74,176 shares of
Common Stock was reserved for future grant under the Directors
Plan.
Stock Ownership Policies for Directors
During 1996, the Human Resources Committee of the Board of
Directors (the "Committee") established a stock holding policy
for directors. The stock holding policy requires each director
to hold a minimum of 1,000 shares of Common Stock. Directors are
requested to achieve this ownership level by the 1998 Annual
meeting of Stockholders. Directors who are also executive
officers of the Corporation are required to comply with a
separate stock holding policy established by the Committee in
1996, which is described in "Committee Report on Executive
Compensation - Stock Ownership Policies."
In addition, the Committee adopted a policy requiring
directors to hold shares of the Corporation's Common Stock equal
to one-half of their net option exercises over a period of five
years. The net option exercise is determined by calculating the
number of shares acquired upon exercise of a stock option, after
deducting the number of shares that could have been traded to
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exercise the option and the number of shares that could have been
surrendered to satisfy tax withholding obligations attributable
to the exercise of the option. This policy is also applicable to
executive officers and is described in "Committee Report on
Executive Compensation - Stock Ownership Policies."
STOCK OWNERSHIP
The following table sets forth the beneficial ownership of
Common Stock, as well as the common stock of Thermo Electron and
each majority-owned subsidiary of the Corporation, as of March 1,
1997, 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 current
executive officers as a group.
While certain directors and executive officers of the
Corporation are also directors and executive officers of Thermo
Electron or its subsidiaries other than the Corporation, all such
persons disclaim beneficial ownership of the shares of Common
Stock owned by Thermo Electron.
<TABLE>
<CAPTION>
Thermo
Thermo Thermo Bio- Thermo Thermo- Thermo- Metrika
Instrument Electron Analysis Optek Quest Spectra Systems
Name (1) Systems Corp Corp Corp Corp Corp Corp
Inc.
(2) (3) (4) (5) (6) (7) (8)
<S> <C> <C> <C> <C> <C> <C> <C>
Thermo Electron 87,575,433 N/A N/A N/A N/A N/A N/A
Corporation (9)
Frank Borman 23,941 0 1,500 0 1,500 1,500 0
Richard W. K. 139,087 82,126 40,500 15,500 240,650 4,000 0
Chapman
George N. 143,314 3,512,279 15,000 110,000 90,000 20,000 0
Hatsopoulos
John N. Hatsopoulos 81,204 526,768 25,000 120,000 92,100 20,000 0
Denis A. Helm 161,729 164,378 15,000 15,200 10,000 4,000 2,000
Barry S. Howe 99,886 81,04 64,300 15,000 90,000 4,010 0
Earl R. Lewis 128,233 124,184 56,000 254,000 50,000 55,000 0
Arvin H. Smith 431,667 513,038 39,000 98,000 90,000 20,000 0
Polyvios C. 8,896 2,500 1,500 0 1,500 1,500 0
Vintiadis
All directors and
current executive
officers as a 1,236,649 5,151,319 263,800 633,700 671,750 135,010 2,000
group (10 persons)
</TABLE>
(1) Except as reflected in the footnotes to this table, shares
of the common stock beneficially owned consist of shares owned by
the indicated person or by that person for the benefit of minor
children, and all share ownership includes sole voting and
investment power.
(2) Shares of the Common Stock beneficially owned by Col.
Borman, Dr. Chapman, Dr. G. Hatsopoulos, Mr. J. Hatsopoulos, Mr.
Helm, Mr. Howe, Mr. Lewis, Mr. Smith, Mr. Vintiadis and all
directors and executive officers as a group include 13,590,
121,287, 93,750, 65,625, 112,500, 89,062, 112,500, 234,375, 6,561
and 864,250 shares, respectively, that such person or group has
the right to acquire within 60 days of March 1, 1997, through the
exercise of stock options. Shares beneficially owned by Dr. G.
Hatsopoulos, Mr. J. Hatsopoulos, Mr. Smith and all directors and
executive officers as a group include 479, 529, 530 and 1,934
full shares, respectively, allocated through March 1, 1997, to
their respective accounts maintained pursuant to Thermo
Electron's employee stock ownership plan, of which the trustees,
who have investment power over its assets, are executive officers
of Thermo Electron (the "ESOP"). Shares beneficially owned by
Col. Borman, Mr. Vintiadis and all directors and executive
officers as a group include 10,351, 2,335 and 12,686 full shares,
respectively, allocated through March 1, 1997, to their
respective accounts maintained under the Corporation's deferred
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compensation plan for directors. Shares beneficially owned by Dr.
G. Hatsopoulos include 21,368 shares held by his spouse and 50
shares allocated through March 1, 1997, to his spouse's account
maintained pursuant to the ESOP. Shares beneficially owned by
Mr. Helm include a total of 4,212 shares held in trust for the
benefit of minor children. Shares beneficially owned by Mr. Howe
include 1,968 shares held in a trust of which Mr. Howe is the
trustee. Shares beneficially owned by Mr. Lewis include 2,390
shares held by his spouse. No director or executive officer
beneficially owned more than 1% of the Common Stock outstanding
as of March 1, 1997; all directors and executive officers as a
group beneficially owned 1.3% of the Common Stock outstanding as
of such date.
(3) Shares of the common stock of Thermo Electron shown in the
table reflect a three-for-two split of such stock distributed in
June 1996 in the form of a 50% stock dividend. Shares of the
common stock of Thermo Electron beneficially owned by Dr.
Chapman, Dr. G. Hatsopoulos, Mr. J. Hatsopoulos, Mr. Helm, Mr.
Howe, Mr. Lewis, Mr. Smith and all directors and executive
officers as a group include 80,284, 1,499,500, 429,685, 106,347,
73,287, 121,536, 222,411 and 2,630,624 shares, respectively, that
such person or group has the right to acquire within 60 days of
March 1, 1997, through the exercise of stock options. Shares
beneficially owned by Dr. G. Hatsopoulos, Mr. J. Hatsopoulos, Mr.
Smith and all directors and executive officers as a group include
2,164, 1,934, 1,717 and 7,139 full shares, respectively,
allocated through March 1, 1997, to their respective accounts
maintained pursuant to the ESOP. Shares beneficially owned by
Dr. G. Hatsopoulos include 89,601 shares held by his spouse,
168,750 shares held by a QTIP trust of which his spouse is a
trustee, 39,937 shares held by a family trust of which his spouse
is a trustee, and 153 full shares allocated through March 1,
1997, to his spouse's account maintained pursuant to the ESOP.
Except for Dr. G. Hatsopoulos, who beneficially owned 2.3% of the
Thermo Electron common stock outstanding as of March 1, 1997, 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 3.4% of the
Thermo Electron common stock outstanding as of March 1, 1997.
(4) Shares of the common stock of Thermo BioAnalysis
Corporation, a majority-owned subsidiary of the Corporation
("Thermo BioAnalysis"), beneficially owned by Col. Borman, Dr.
Chapman, Dr. G. Hatsopoulos, Mr. J. Hatsopoulos, Mr. Helm, Mr.
Howe, Mr. Lewis, Mr. Smith, Mr. Vintiadis and all directors and
executive officers as a group include 1,500, 30,000, 15,000,
15,000, 15,000, 50,000, 50,000, 20,000, 1,500 and 201,000 shares,
respectively, that such person or group has the right to acquire
within 60 days of March 1, 1997, through the exercise of stock
options. No director or executive officer beneficially owned
more than 1% of the common stock of Thermo BioAnalysis
outstanding as of March 1, 1997; all directors and executive
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officers as a group beneficially owned 2.6% of such common stock
outstanding as of such date.
(5) Shares of the common stock of Thermo Optek Corporation, a
majority-owned subsidiary of the Corporation ("Thermo Optek"),
beneficially owned by Dr. Chapman, Dr. G. Hatsopoulos, Mr. J.
Hatsopoulos, Mr. Helm, Mr. Howe, Mr. Lewis, Mr. Smith and all
directors and executive officers as a group include 15,000,
90,000, 90,000, 15,000, 15,000, 225,000, 90,000 and 546,000
shares, respectively, that such person or group has the right to
acquire within 60 days of March 1, 1997, through the exercise of
stock options. Shares beneficially owned by Mr. Lewis include
2,500 shares owned by his spouse and 2,000 shares owned by his
sons. No director or executive officer beneficially owned more
than 1% of the common stock of Thermo Optek outstanding as of
March 1, 1997; and directors and executive officers as a group
beneficially owned 1.3% of such common stock outstanding as of
such date.
(6) Shares of the common stock of ThermoQuest Corporation, a
majority-owned subsidiary of the Corporation ("ThermoQuest"),
beneficially owned by Col. Borman, Dr. Chapman, Dr. G.
Hatsopoulos, Mr. J. Hatsopoulos, Mr. Helm, Mr. Howe, Mr. Lewis,
Mr. Smith, Mr. Vintiadis and all directors and executive officers
as a group include 1,500, 225,000, 90,000, 90,000, 10,000,
90,000, 50,000, 90,000, 1,500 and 654,000 shares, respectively,
that such person or group has the right to acquire within 60 days
of March 1, 1997, through the exercise of stock options. No
director or executive officer beneficially owned more than 1% of
the common stock of ThermoQuest outstanding as of March 1, 1997;
all directors and executive officers as a group beneficially
owned 1.4% of such common stock outstanding as of such date.
(7) Shares of the common stock of ThermoSpectra Corporation, a
majority-owned subsidiary of the Corporation ("ThermoSpectra"),
beneficially owned by Col. Borman, Dr. Chapman, Dr. G.
Hatsopoulos, Mr. J. Hatsopoulos, Mr. Helm, Mr. Howe, Mr. Lewis,
Mr. Smith, Mr. Vintiadis and all directors and executive officers
as a group include 1,500, 4,000, 20,000, 20,000, 4,000, 4,000,
50,000, 20,000, 1,500 and 130,000 shares, respectively, that such
person or group has the right to acquire within 60 days of March
1, 1997, through the exercise of stock options. No director or
executive officer beneficially owned more than 1% of the common
stock of ThermoSpectra outstanding as of March 1, 1997; all
Directors and executive officers as a group beneficially owned
1.1% of such common stock outstanding as of such date.
(8) The directors and executive officers of the Corporation did
not individually or as a group beneficially own more than 1%
of the common stock of Metrika Systems Corporation, a
majority-owned subsidiary of the Corporation, as of March 1,
1997.
12
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<PAGE>
(9) Includes 8,269,344 shares of Common Stock that Thermo
Electron has the right to acquire within 60 days of March 1,
1997, through the conversion of certain convertible notes of the
Corporation held by Thermo Electron. Thermo Electron beneficially
owned approximately 83% of the Common Stock outstanding as of
March 1, 1997. Thermo Electron's address is 81 Wyman Street,
Waltham, Massachusetts 02254-9046.
Section 16(a) Beneficial Ownership Reporting Compliance
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 1996, except
in the following instance. Thermo Electron filed six Forms 4
late, by periods ranging from seven days to two and a half
months, reporting 48 transactions consisting of 42 open market
purchases and six transactions involving the exercise of employee
stock options.
EXECUTIVE COMPENSATION
NOTE: The shares reported below, in all cases, have been adjusted
as applicable to reflect a three-for-two stock split of the
common stock of Thermo Electron distributed in June 1996 in the
form of a 50% stock dividend.
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.
13
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<PAGE>
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term
Compensation
Securities
Underlying
Name and Fiscal Annual Options (No. of
Compensation Shares All Other
Principal Position Year Salary Bonus and Company (1) Compensation
(2)
<S> <C> <C> <C> <C> <C>
Arvin H. Smith (3) 1996 $135,000 $130,000 20,000 (TBA) $6,750
Chairman and 90,000 (TOC)
Chief Executive 90,000 (TMQ)
Officer
1995 $131,000 $128,100 -- $6,750
1994 $102,000 $112,200 20,000 (THS) $6,750
Earl R. Lewis (4) 1996 $180,000 $160,000 42,500 (TBA) $11,550 (5)
President and 2,000 (TFG)
Chief Operating 2,000 (TLT)
Officer 225,000 (TOC)
2,000 (TSR)
50,000 (TMQ)
40,000 (TXM)
1995 $145,000 $90,000 150 (TMO) $6,750
7,500 (TBA)
5,000 (TLZ)
1994 $140,000 $100,000 67,500 (TMO) $6,750
1
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<PAGE>
50,000 (THS)
Denis A. Helm 1996 $150,000 $86,400 3,900 (TMO) $6,681
Senior Vice 15,000 (TBA)
President 15,000 (TOC)
10,000 (TMQ)
1995 $142,000 $81,000 4,350 (TMO) $6,750
1994 $140,000 $90,000 49,950 (TMO) $6,750
4,000 (THS)
Richard W. K. 1996 $170,000 $125,000 150 (TMO) $7,021 (6)
Chapman
30,000 (TBA)
Vice President
2,000 (TFG)
2,000 (TLT)
15,000 (TOC)
225,000 (TMQ)
2,000 (TSR)
4,000 (TXM)
1995 $159,500 $95,000 150 (TMO) $6,749
5,000 (TLZ)
1994 $155,000 $100,000 28,125 (THI) $7,750
45,112 (TMO)
4,000 (THS)
Barry S. Howe 1996 $145,000 $70,000 1,500 (TMO) $8,076 (7)
Vice President 50,000 (TBA)
2,000 (TFG)
2,000 (TLT)
15,000 (TOC)
90,000 (TMQ)
2
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<PAGE>
2,000 (TSR)
4,000 (TXM)
1995 $134,000 $65,000 1,650 (TMO) $7,517
5,000 (TLZ)
1994 $130,000 $45,000 23,625 (TMO) $3,750
4,000 (THS)
</TABLE>
(1) In addition to grants of options to purchase Common Stock of
the Corporation (designated in the table as THI), executive
officers of the Corporation have been granted options to purchase
common stock of Thermo Electron and certain of its other
subsidiaries as part of Thermo Electron's stock option program.
Options have been granted during the last three fiscal years to
the chief executive officer and the other named executive
officers in the following Thermo Electron companies: Thermo
Electron Corporation (designated in the table as TMO), Thermo
BioAnalysis (designated in the table as TBA) Thermo Fibergen Inc.
(designated in the table as TFG), ThermoLase Corporation
(designated in the table as TLZ), ThermoLyte Corporation
(designated in the table as TLT), Thermo Optek Corporation
(designated in the table as TOC), ThermoQuest Corporation
(designated in the table as TMQ), Thermo Sentron Inc. (designated
in the table as TSR), ThermoSpectra (designated in the table as
THS) and Trex Medical Corporation (designated in the table as
TXM).
(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 Dr. Chapman, the 401(k)
plan maintained by Finnigan Corporation, a subsidiary of the
Corporation.
(3) Mr. Smith has been executive vice president of Thermo
Electron, as well as the president and chief executive officer of
the Corporation, for the last three fiscal years. A portion of
Mr. Smith's annual cash compensation (salary and bonus) has been
allocated and paid by Thermo Electron in each of the last three
fiscal years as compensation for the services provided to Thermo
Electron based on the time he devoted to his responsibilities as
an executive vice president of Thermo Electron. The annual cash
compensation (salary and bonus) reported in the table for Mr.
Smith represents the amount paid by the Corporation and all other
sources solely for Mr. Smith's services as chief executive
officer of the Corporation. For 1996, 1995 and 1994, 50%, 50% and
40%, respectively, of Mr. Smith's annual compensation (salary and
bonus) was allocated to the Corporation for his service as the
Corporation's chief executive officer. In addition, Mr. Smith
has been granted options to purchase common stock of Thermo
Electron and certain of its subsidiaries other than the
Corporation and its majority-owned subsidiaries, from time to
time by Thermo Electron or such other subsidiaries. These options
are not reported in this table 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.
14
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<PAGE>
(4) Mr. Lewis was promoted to president and chief operating
officer of the Corporation in March 1997. From January 1996 to
March 1997, he was executive vice president and chief operating
officer of the Corporation. Prior to January 1996, he served as
a senior vice president of the Corporation.
(5) In addition to the matching contribution referred to in
footnote (2), such amount includes $4,800, which represents the
amount of compensation attributable to an interest-free loan
provided to Mr. Lewis pursuant to the stock holding assistance
plan of Thermo Optek. See "Relationship with Affiliates - Stock
Holding Assistance Plans."
(6) In addition to the matching contribution referred to in
footnote (2), such amount includes $4,334, which represents the
amount of compensation attributable to interest-free loans
provided to Dr. Chapman pursuant to the stock holding assistance
plans of Thermo BioAnalysis and ThermoQuest. See "Relationship
with Affiliates - Stock Holding Assistance Plans."
(7) In addition to the matching contribution referred to in
footnote (2), such amount includes $1,444, which represents the
amount of compensation attributable to an interest-free loan
provided to Mr. Howe pursuant to the stock holding assistance
plan of Thermo BioAnalysis. See "Relationship with Affiliates -
Stock Holding Assistance Plans."
15
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<PAGE>
Stock Options Granted During Fiscal 1996
The following table sets forth information concerning
individual grants of stock options made during fiscal 1996 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 1996.
<TABLE>
<CAPTION>
Option Grants in Fiscal 1996
Potential Realizable
Percent Value at Assumed
of
Total Annual Rates of
Options Stock
Number of Granted Exercise Price Appreciation
Securities to for
Underlying Employees Price Expira- Option Term (2)
Options in Per tion
Name Granted (1) Fiscal Share Date 5% 10%
Year
<S> <C> <C> <C> <C> <C> <C>
Arvin H. Smith 20,000 (TBA) 2.4%(5) $10.00 01/31/08 $159,200 $427,600
(3)
90,000 (TOC) 2.9%(5) $12.00 04/11/08 $859,500 $2,309,400
90,000 (TMQ) 3.2%(5) $13.00 01/10/08 $931,500 $2,502,000
Earl R. Lewis (4) 42,500 (TBA) 5.2%(5) $12.00 06/21/08 $405,875 $1,090,550
2,000 (TFG) 0.4%(5) $10.00 09/12/08 $15,920 $42,760
2,000 (TLT) 0.6%(5) $10.00 03/11/08 $15,920 $42,760
225,000 (TOC) 7.2%(5) $12.00 04/11/08 $2,148,750 $5,773,500
50,000 (TMQ) 1.8%(5) $13.00 02/08/08 $517,500 $1,390,000
2,000 (TSR) 0.4%(5) $14.00 03/11/08 $22,280 $59,880
40,000 (TXM) 1.9%(5) $11.00 03/26/08 $350,000 $940,800
Denis A. Helm 3,900 (TMO) 0.3%(5) $42.79 05/22/99 $26,286 $55,224
15,000 (TBA) 1.8%(5) $10.00 01/31/08 $119,400 $320,700
15,000 (TOC) 0.5%(5) $12.00 04/11/08 $143,250 $384,900
10,000 (TMQ) 0.4%(5) $13.00 02/08/08 $103,500 $278,000
1
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<PAGE>
Richard W. K. 150 (TMO) 0.01%(5) $42.79 05/22/99 $1,011 $2,124
Chapman
30,000 (TBA) 3.7%(5) $10.00 01/31/08 $238,800 $641,400
2,000 (TFG) 0.4%(5) $10.00 09/12/08 $15,920 $42,760
2,000 (TLT) 0.6%(5) $10.00 03/11/08 $15,920 $42,760
15,000 (TOC) 0.5%(5) $12.00 04/11/08 $143,250 $384,900
225,000 (TMQ) 7.9%(5) $13.00 01/10/08 $2,328,750 $6,255,000
2,000 (TSR) 0.4%(5) $14.00 03/11/08 $22,280 $59,880
4,000 (TXM) 0.2%(5) $11.00 03/11/08 $35,000 $94,080
Barry S. Howe 1,500 (TMO) 0.1%(5) $42.79 05/22/99 $10,110 $21,240
50,000 (TBA) 6.1%(5) $10.00 01/31/08 $398,000 $1,069,000
2,000 (TFG) 0.4%(5) $10.00 09/12/08 $15,920 $42,760
2,000 (TLT) 0.6%(5) $10.00 03/11/08 $15,920 $42,760
15,000 (TOC) 0.5%(5) $12.00 04/11/08 $143,250 $384,900
90,000 (TMQ) 3.2%(5) $13.00 01/10/08 $931,500 $2,502,000
2,000 (TSR) 0.4%(5) $14.00 03/11/08 $22,280 $59,880
4,000 (TXM) 0.2%(5) $11.00 03/11/08 $35,000 $94,080
</TABLE>
(1) All of the options granted during the fiscal year are
immediately exercisable as of the end of the fiscal year, except
options to purchase the common stock of ThermoLyte Corporation,
which are not exercisable until the earlier of (i) 90 days after
the effective date of the registration of that company's common
stock under Section 12 of the Securities Exchange Act of 1934
(the "Exchange Act") and (ii) nine years from the grant date. In
all cases, 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 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. Certain options granted as a part of Thermo
Electron's stock option program have three-year terms, and the
repurchase rights lapse in their entirety on the second
anniversary of the grant date. 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 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 amounts shown on this table represent hypothetical gains
that could be achieved for the respective options if exercised at
the end of the option term. These gains are based on assumed
rates of stock appreciation of 5% and 10% compounded annually
from the date the respective options were granted to their
expiration date. The gains shown are net of the option exercise
price, but do not include deductions for taxes or other expenses
associated with the exercise. Actual gains, if any, on stock
option exercises will depend on the future performance of the
common stock of the granting corporation, the optionee's
continued employment through the option period and the date on
which the options are exercised.
16
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<PAGE>
(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 and its majority-owned subsidiaries.
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.
(4) Mr. Lewis has served as a vice president of Thermo Electron
since September 1996 and from time to time may be granted options
to purchase common stock of Thermo Electron after his
appointment. These options are not reported in the table as they
were granted as compensation for service to Thermo Electron in a
capacity other than his capacity as an executive officer of the
Corporation.
(5) These options were granted under stock option plans
maintained by Thermo Electron companies other than the
Corporation and accordingly are reported as a percentage of total
options granted to employees of Thermo Electron and its
subsidiaries.
Stock Options Exercised During Fiscal 1996 and Fiscal Year-End
Option Values
The following table reports certain information regarding
stock option exercises during fiscal 1996 and outstanding stock
options held at the end of fiscal 1996 by the Corporation's chief
executive officer and the other named executive officers. No
stock appreciation rights were exercised or were outstanding
during fiscal 1996.
<TABLE>
<CAPTION>
Aggregated Option Exercises In Fiscal 1996 And
Fiscal 1996 Year-End Option Values
Number of
Unexercised
Options at
Shares Fiscal Value of
Acquired Year-End Unexercised
on Value (Exercisable/ In-the-Money
Name Company Exercise Realized Unexercisable) Options
(1)
<S> <C> <C> <C> <C> <C>
Arvin H. Smith Thermo -- -- 234,375/0 $3,795,703 /--
(2) Instrument
Systems
Thermo -- -- 20,000/0 $62,500 /--
BioAnalysis
Thermo Optek -- -- 90,000/0 $0 /--
ThermoQuest -- -- 90,000/0 $0 /--
ThermoSpectra -- -- 20,000/0 $37,500 /--
Earl R. Lewis Thermo -- -- 112,500/0 $1,821,938 /--
(5) Instrument
Systems
Thermo Electron 28,685 $688,261 126,937/0(4) $2,491,528 /--
Thermo -- -- 50,000/0 $71,251 /--
BioAnalysis
Thermo Fibergen -- -- 2,000/0 $1,500 /--
Thermo Fibertek 1,350 $15,525 1,350/0 $8,100 /--
1
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ThermoLase -- -- 5,000/0 $0 /--
ThermoLyte -- -- 0/2,000 -- /$0(3)
Thermo Optek -- -- 225,000/0 $0 /--
ThermoQuest -- -- 50,000/0 $0 /--
Thermo Sentron -- -- 2,000/0 $0 /--
ThermoSpectra -- -- 50,000/0 $93,750 /--
Thermo Trex 420 $16,191 --/-- -- /--
Trex Medical -- -- 40,000/0 $65,000 /--
Denis A. Helm Thermo -- -- 112,500/0 $1,821,938 /--
Instrument
Systems
Thermo Electron 8,774 $262,275 106,347/0(4) $2,000,898 /--
Thermo -- -- 15,000/0 $46,875 /--
BioAnalysis
Thermo Ecotek -- -- 6,000/0 $70,500 /--
Thermo Fibertek -- -- 6,750/0 $40,500 /--
Thermo Optek -- -- 15,000/0 $0 /--
ThermoQuest -- -- 10,000/0 $0 /--
ThermoSpectra -- -- 4,000/0 $7,500 /--
Thermo Trex -- -- 2,100/0 $50,768 /--
Richard W. K. Thermo -- -- 121,287/0 $2,096,512 /--
Chapman Instrument
Systems
Thermo Electron -- -- 80,284/0(4) $1,556,517 /--
Thermo -- -- 30,000/0 $93,750 /--
BioAnalysis
Thermo Fibergen -- -- 2,000/0 $1,500 /--
Thermo Fibertek -- -- 6,750/0 $40,500 /--
ThermoLase -- -- 5,000/0 $0 /--
ThermoLyte -- -- 0/2,000 --/ /$0(3)
2
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<PAGE>
Thermo Optek -- -- 15,000/0 $0 /--
ThermoQuest -- -- 225,000/0 $0 /--
Thermo Sentron -- -- 2,000/0 $0 /--
ThermoSpectra -- -- 4,000/0 $7,500 /--
Thermo Trex -- -- 270/0 $6,528 /--
Trex Medical -- -- 4,000/0 $6,500 /--
Barry S. Howe Thermo -- -- 89,062/0 $1,561,042 /--
Instrument
Systems
Thermo Electron -- -- 73,287/0(4) $1,428,259 /--
Thermedics -- -- 4,000/0 $9,100 /--
Thermo -- -- 50,000/0 $156,250 /--
BioAnalysis
Thermo Ecotek 5,250 $48,127 6,000/0 $61,500 /--
Thermo Fibergen -- -- 2,000/0 $1,500 /--
Thermo Fibertek -- -- 15,750/0 $64,890 /--
ThermoLase -- -- 5,000/0 $0 /--
ThermoLyte -- -- 0/2,000 -- /$0(3)
Thermo Optek -- -- 15,000/0 $0 /--
Thermo Power -- -- 4,000/0 $0 /--
ThermoQuest -- -- 90,000/0 $0 /--
Thermo Sentron -- -- 2,000/0 $0 /--
ThermoSpectra -- -- 4,000/0 $7,500 /--
Thermo TerraTech -- -- 4,000/0 $3,880 /--
Thermo Trex 1,350 $55,755 4,000/0 $51,700 /--
Trex Medical -- -- 4,000/0 $6,500 /--
3
</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 ThermoLyte
Corporation, which are not exercisable until the earlier of (i)
90 days after the effective date of the registration of that
company's common stock under Section 12 of the Exchange Act and
(ii) nine years after the grant date. In all cases, 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
17
PAGE
<PAGE>
vary from seven to twelve years, provided that the optionee
continues to be employed by the Corporation or another Thermo
Electron company. Certain options granted as a part of Thermo
Electron's stock option program have three-year terms, and the
repurchase rights lapse in their entirety on the second
anniversary of the grant date. 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 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) As an executive officer of Thermo Electron, Mr. Smith also
holds other unexercised options to purchase common stock of
Thermo Electron and certain of its subsidiaries other than the
Corporation and its majority-owned 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.
(3) No public market existed for the shares underlying these
options as of December 28, 1996. Accordingly, no value in excess
of exercise price has been attributed to these options.
(4) Options to purchase 67,500, 45,000, 45,000 and 22,500 shares
of the common stock of Thermo Electron granted to Mr. Lewis, Mr.
Helm, 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.
(5) Mr. Lewis has served as a vice president of Thermo Electron
since September 1996 and from time to time may be granted options
to purchase common stock of Thermo Electron after his
appointment. These options are not reported in the table as they
were granted as compensation for service to Thermo Electron in a
capacity other than his capacity as an executive officer of the
Corporation.
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
18
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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 28, 1996, Mr. Smith and Mr.
Helm would have received approximately $313,000 (with respect to
the first year in which benefits would be paid) and $235,000,
respectively.
19
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<PAGE>
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 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 500
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
20
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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 1996 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 zero 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 and contributions to shareholder value,
and earnings growth, and are measures of corporate and divisional
performance that are evaluated using graphs developed by Thermo
Electron intended to reward performance that is perceived as
above average and to penalize performance that is perceived as
below average. The measures of operating returns used in the
Committee's determinations in calendar 1996 measured return on
net assets, growth in income, and return on sales, and the
Committee's determinations also included a subjective 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. The relative weighting of the operating measures and
the subjective evaluation varies among the executives, depending
on their roles and responsibilities within the organization.
The bonuses for named executive officers approved by the
Committee with respect to fiscal 1996 performance in each
instance exceeded the median potential bonus.
Stock Option Program
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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.
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 net awards
to purchase shares of Common Stock to all employees over a
five-year period below 12% 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. The
Committee considers total compensation of executives, actual and
anticipated contributions of each executive (which includes a
subjective assessment by the Committee of the value of the
executive's future potential within the organization), as well as
the value of previously awarded options as described above in
determining option awards. The option awards made to the named
executive officers in 1996 with respect to the common stock of
the Corporation's parent, Thermo Electron and certain
majority-owned subsidiaries of Thermo Electron, were determined
by the human resources committee of the board of directors of the
granting company using a similar analysis.
Stock Ownership Policies
During 1996, the Committee established a stock holding
policy for executive officers of the Corporation. The stock
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holding policy specifies an appropriate level of ownership of the
Corporation's Common Stock as a multiple of the officer's
compensation. For the chief executive officer, the multiple is
one times his base salary and reference bonus for the calendar
year. For all other officers, the multiple is one times the
officer's base salary. The Committee deemed it appropriate to
permit officers to achieve these ownership levels over a
three-year period.
In order to assist officers in complying with the policy,
the Committee also adopted a stock holding assistance plan under
which the Corporation is authorized to make interest-free loans
to officers to enable them to purchase shares of the Common Stock
in the open market. The loans are required to be repaid upon the
earlier of demand or the fifth anniversary of the date of the
loan, unless otherwise authorized by the Committee. No loans
were outstanding under this plan in 1996.
The Committee also adopted a policy requiring its executive
officers to hold shares of the Corporation's Common Stock
acquired upon the exercise of stock options granted by the
Corporation. Under this policy, executive officers are required
to hold one-half of their net option exercises over a period of
five years. The net option exercise is determined by calculating
the number of shares acquired upon exercise of a stock option,
after deducting the number of shares that could have been traded
to exercise the option and the number of shares that could have
been surrendered to satisfy tax withholding obligations
attributable to the exercise of the options.
Similar stock holding policies and stock holding assistance
plans have been adopted by each of the Corporation's publicly
traded, majority-owned subsidiaries. Certain executive officers
of the Corporation who are chief executive officers of these
subsidiaries are required to comply with these stock holding
policies in lieu of the Corporation's stock holding policy. See
"Relationship with Affiliates - Stock Holding Assistance Plans."
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" or is otherwise exempt under
Section 162(m). The annual 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).
1996 CEO Compensation
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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
company. 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. 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 March 1996, the Committee conducted its review of Mr.
Smith's proposed salary for 1997 and bonus for 1996 performance.
The Committee concurred in the bonus recommendation made by the
Thermo Electron committee and agreed to an allocation of 50% of
Mr. Smith's total cash compensation for 1996 to the Corporation,
based on his relative responsibilities at the Corporation and
Thermo Electron.
Awards to Mr. Smith of options to purchase shares of the
Corporation's Common Stock are reviewed and determined
periodically by the Committee using criteria similar to that used
for the other executive officers of the Corporation. No awards
to purchase shares of the Corporation's Common Stock were made to
Mr. Smith in fiscal 1996. In 1996, Mr. Smith was awarded options
to purchase shares of the common stock of the following
majority-owned subsidiaries of the Corporation: Thermo
BioAnalysis Corporation, Thermo Optek Corporation and ThermoQuest
Corporation. These option awards were awarded in connection with
Mr. Smith's position as a director of these companies and were
determined in a manner consistent with awards to other officers,
as described above.
Col. Frank Borman (Chairman)
Mr. Polyvios C. Vintiadis
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
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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 "Peer Group").
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Comparison of 1991-1996 Total Return Among Thermo Instrument
Systems Inc., the American Stock Exchange Market Value Index, and
the Corporation's Peer Group.
GRAPH APPEARS HERE
The total return for the Corporation's Common Stock (THI), the
American Stock Exchange Market Value Index (AMEX), and the 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. The Corporation's Common Stock is traded
on the American Stock Exchange 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 such other majority-owned 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
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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 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 establishes certain internal
policies and procedures applicable to members of the Thermo
Group. 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. In addition, Thermo Electron may
terminate a subsidiary's participation in the Charter in the
event the subsidiary ceases to be controlled by Thermo Electron
or ceases to comply with the Charter or the policies 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, employee benefit
administration, tax advice and preparation of tax returns,
centralized cash management and financial and other services to
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the Corporation. The Corporation was assessed an annual fee equal
to 1.0% of the Corporation's revenues for these services for
calendar 1996. The fee is reviewed annually and may be changed
by mutual agreement of the Corporation and Thermo Electron.
During fiscal 1996, Thermo Electron assessed the Corporation
$12.1 million 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 fair
to the Corporation. For 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.
The Corporation has entered into a Tax Allocation Agreement
with Thermo Electron (the "Tax Allocation Agreement"). Under the
Tax Allocation Agreement, in years in which the Corporation has
taxable income it will pay Thermo Electron amounts comparable to
the taxes it would have paid if it had filed its own separate
company tax returns. In 1996, the Corporation paid Thermo
Electron $18,600,000 under the Tax Allocation Agreement.
From time to time the Corporation may transact business with
other companies in the Thermo Group. In fiscal 1996, these
transactions included the following.
The Corporation engages the Tecomet division of Thermo
Electron for metal fabrication services. During 1996, the
Corporation paid approximately $1,304,000 for such services.
A subsidiary of the Corporation has an arrangement with
ThermoTrex Corporation ("ThermoTrex"), a publicly traded,
majority-owned subsidiary of Thermo Electron, whereby ThermoTrex
provides certain research and development services to the
Corporation, and the Corporation purchases flat screen x-ray
sensitive detectors pursuant to purchase orders. In 1996, the
Corporation paid ThermoTrex $97,689 for such products and
services. In 1996, the Corporation purchased other products from
Thermo Electron and its wholly- and majority-owned subsidiaries
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in the ordinary course of business for an aggregate of
approximately $864,000.
On December 16, 1996, Metrika Systems Corporation
("Metrika"), a subsidiary of the Corporation, completed a private
placement of its common stock primarily to outside investors.
Mr. Denis A. Helm, a senior vice president of the Corporation,
purchased 2,000 shares of the common stock of Metrika in such
private placement at a purchase price of $7.50 per share, the
same price paid by unaffiliated investors.
As of December 28, 1996, the Corporation had outstanding
$140,000,000 of indebtedness to Thermo Electron, represented by a
3 /% Senior Convertible Note due 2000. As of December 28, 1996,
the Corporation's Thermo Optek Corporation ("Thermo Optek") and
ThermoQuest Corporation ("ThermoQuest") subsidiaries each had
$10,000,000 of outstanding indebtedness to Thermo Electron
pursuant to Thermo Optek's 5% Convertible Subordinated Debentures
due 2000 and ThermoQuest's 5% Convertible Subordinated
Debentures, due 2000.
In connection with the 1996 acquisition of Kevex
Instruments and Kevex X-ray, ThermoSpectra Corporation
("ThermoSpectra"), a subsidiary of the Corporation, borrowed
$15,000,000 from Thermo Electron pursuant to a promissory note
due August 1998. In connection with the acquisition of Park
Scientific Instruments ThermoSpectra in March 1997, ThermoSpectra
borrowed $10,000,000 from Thermo Electron pursuant to a
promissory note due March 1999. These notes bear interest at the
90-day Commercial Paper Composite Rate plus 25 basis points, set
at the beginning of each quarter. The interest rate for the
notes outstanding in 1996 was 5.77%.
In March 1997 the Corporation borrowed $210,000,000 from
Thermo Electron to fund its acquisition of the shares of Life
Sciences International plc ("Life Sciences") pursuant to the
Corporation's offer for all of the outstanding shares of Life
Sciences. This obligation is evidenced by a promissory note due
March 26, 1999 and bearing interest at a rate equal to the
Commercial Paper Composite Rate plus 25 basis points.
Thermo Electron owned approximately 82% of the Corporation's
outstanding Common Stock on December 28, 1996. 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 or
through conversion of convertible debentures owned by Thermo
Electron. In January 1996, the Corporation adopted a plan for
the sale of its shares to Thermo Electron at the request of
Thermo Electron to allow Thermo Electron to maintain 80%
ownership of the Corporation. The sale of shares pursuant to
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such plan would be made at fair market value and would be subject
to approval of a committee of the Board of Directors formed for
that purpose.
As of December 28, 1996, approximately $459.1 million 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 90-day Commercial Paper Composite Rate plus
25 basis points, set at the beginning of each quarter.
Stock Holding Assistance Plan
In 1996, the Corporation adopted a stock holding policy
which requires its executive officers to acquire and hold a
minimum number of shares of Common Stock. In order to assist the
executive officers in complying with the policy, the Corporation
also adopted a stock holding assistance plan under which it may
make interest-free loans to certain key employees, including its
executive officers, to purchase Common Stock in the open market.
No loans were outstanding under this plan in 1996.
Each of the Corporation's publicly traded, majority-owned
subsidiaries have adopted similar stock holding policies and
stock holding assistance plans, which are applicable to their
executive officers. Certain executive officers of the
Corporation are also the chief executive officers of these
subsidiaries and are required to comply with the subsidiary's
stock holding policies. Mr. Earl R. Lewis, the Corporation's
president and chief operating officer, is also the chief
executive officer of Thermo Optek. Dr. Richard W.K. Chapman, a
vice president of the Corporation, is also the chief executive
officer of ThermoQuest and the chairman of the board of Thermo
BioAnalysis. Mr. Barry S. Howe, a vice president of the
Corporation, is also the chief executive officer of Thermo
BioAnalysis. In 1996, Mr. Lewis received a loan in the principal
amount of $194,029.50 under the Thermo Optek stock holding
assistance plan to purchase 15,000 shares of the common stock of
Thermo Optek. Dr. Chapman received loans in 1996 in the
principal amounts of $210,653.50 and $131,176.30 under the stock
holding assistance plans of ThermoQuest and Thermo BioAnalysis,
respectively, to purchase 15,000 shares of the common stock of
ThermoQuest and 10,000 shares of the common stock of Thermo
BioAnalysis. In 1996, Mr. Howe received a loan in the principal
amount of $164,375.52 under the stock holding assistance plan of
Thermo BioAnalysis to purchase 12,000 shares of Thermo
BioAnalysis. Each of these loans are repayable upon the earlier
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of demand or the fifth anniversary of the date of the loan,
unless otherwise authorized by the human resources committee of
the board of directors of the applicable company.
- PROPOSAL 2 -
PROPOSAL TO EXTEND THE TERM OF THE EMPLOYEES' STOCK PURCHASE PLAN
The Board of Directors has recommended that the Stockholders
approve an amendment to the Corporation's employees' stock
purchase plan (the "Stock Purchase Plan") that would extend the
term of the plan for an additional ten years to November 2, 2005.
The material features of the Stock Purchase Plan are described
below. If the plan amendment is not approved by the Stockholders
at this meeting, the Stock Purchase Plan will be discontinued
effective as of November 1, 1997. The Board of Directors
believes that the Stock Purchase Plan is an important incentive
in attracting and retaining key personnel, in motivating
individuals to contribute significantly to the Corporation's
future growth and success, and in aligning the long-term interest
of these individuals with those of the Corporation's
Stockholders. For these reasons, the Board of Directors has
acted to continue the plan and is recommending the extension to
the Stockholders for approval. The following is a summary of the
terms of the Stock Purchase Plan.
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Summary of the Stock Purchase Plan
Participation; Administration
All full-time employees and part-time employees working at
least 20 hours per week and who have been employed for at least
six months by the Corporation are eligible to participate in the
Stock Purchase Plan, unless they own more than 5% of the Common
Stock of the Corporation. For purposes of determining the term
of employment, employees are credited with years of continued
employment with Thermo Electron or its other subsidiaries
immediately prior to joining the Corporation. Options to
purchase shares of Common Stock of the Corporation may be granted
from time to time at the discretion of the Board of Directors,
which also determines the date upon which such options are
exercisable. At the present time, only employees based in the
United States are eligible to participate in the Stock Purchase
Plan. The number of employees potentially eligible to
participate in the Stock Purchase Plan is approximately 6,870
persons.
Contributions
A participating employee may purchase stock only through
payroll deductions, which may not exceed 10% of the employee's
gross salary or wages during the year. Employees are allowed to
decrease, but not increase the percentage of wages contributed
once during the plan year. An employee may suspend his or her
contributions, but then is not permitted to contribute again for
the remainder of the plan year.
Terms of Options
The exercise price is fixed on the grant date at the start
of the plan year and is 95% of the fair market value for such
stock on such date. On the exercise date, participants may elect
to use their accumulated payroll deductions to purchase shares at
the exercise price. Participants must agree not to resell the
shares so purchased for a period of six months following the
exercise date. The options are nontransferable, and except in
the case of death of the employee, may not be exercised if the
employee is not still employed by the Corporation at the exercise
date. If an employee dies, his or her beneficiary may withdraw
the accumulated payroll deduction or use such deductions to
purchase shares on the exercise date. A participant may elect to
discontinue participation at any time prior to the exercise date
and to have his or her accumulated payroll deduction refunded
together with interest on such amount as fixed by the Board of
Directors from time to time.
Shares Subject to the Stock Purchase Plan
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The number of shares that are currently available for
issuance under the Stock Purchase Plan is 604,648 shares of the
Corporation's Common Stock, subject to adjustment for stock
splits and similar events. The proceeds received by the
Corporation from the exercise of options granted under the Stock
Purchase Plan will be used for the general purposes of the
Corporation. Shares issued under the Stock Purchase Plan may be
authorized but unissued or shares reacquired by the Corporation
and held in its treasury.
Amendment and Termination
The Stock Purchase Plan shall remain in full force and
effect until suspended or discontinued by the Board of Directors.
The Board of Directors may at any time or times amend or review
the Stock Purchase Plan for any purpose which may be permitted by
law, or may at any time terminate the Stock Purchase Plan,
provided that no amendment that is not approved by the
Stockholders shall be effective if it would cause the Stock
Purchase 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 Stock Purchase Plan may
adversely affect the rights of any recipient of any option
previously granted without such recipient's consent.
Term of the Stock Purchase Plan
The Stock Purchase Plan will expire on November 2, 2005,
provided that the extension of the term of the Stock Purchase
Plan is approved by the Stockholders at this Meeting.
Federal Income Tax Aspects
Federal income tax is not imposed upon an employee in the
year an option is granted or the year the shares are purchased
pursuant to the exercise of the option granted under the Stock
Purchase Plan. Federal income tax generally is imposed upon an
employee when he or she sells or otherwise disposes of the shares
acquired pursuant to the Stock Purchase Plan. When an employee
sells or disposes of the shares, if such sale or disposition
occurs more than two years from the grant date and more than one
year from the exercise date, then Federal income tax assessed at
ordinary rates will be imposed upon the amount by which the fair
market value of the shares on the date of grant or disposition,
whichever is less, exceeds the amount paid for the shares. In
addition, the difference between the amount received by the
employee at the time of sale and the employee's tax basis in the
shares, which is equal to the amount paid on exercise of the
option plus the amount recognized as ordinary income, will be
recognized as a capital gain or loss. The Corporation will not
be allowed a deduction under these circumstances for Federal
income tax purposes. If the employee sells or disposes of the
shares sooner than two years from the grant date or one year from
the exercise date, then the employee's entire gain (the
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difference between the fair market value at disposition and the
amount paid for the shares) will be taxed as ordinary income, and
the Corporation would be entitled to a deduction equal to that
amount.
The closing price per share on the American Stock Exchange
of the Common Stock on April 25, 1997 was $29.375.
Recommendation
The Board of Directors believes that the extension of the
term of the Stock Purchase Plan is important for the Corporation
to attract and retain key employees and to be able to continue to
offer them the opportunity to participate in the ownership and
growth of the Corporation through an employees stock purchase
plan. In addition, the Board of Directors believes the Stock
Purchase Plan is in the best interest of the Corporation and its
Stockholders and recommends that the Stockholders vote FOR the
approval of the extension of the term of the Stock Purchase Plan.
Thermo Electron, which owned of record approximately 82% of the
outstanding voting stock of the Corporation on April 7, 1997, 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 1996. 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 outside 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
1998 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 January 2, 1998.
SOLICITATION STATEMENT
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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, facsimile transmission 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.
Sunnyvale, California
April 29, 1997
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FORM OF PROXY
THERMO INSTRUMENT SYSTEMS INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 2, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints John N. Hatsopoulos,
Jonathan W. Painter and Arvin H. Smith, or any 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, June
2, 1997, at 10:00 a.m. at The Hyatt Regency Hotel, Hilton Head,
South Carolina, and at any adjournment or postponement thereof,
and to vote all shares of common stock of the Company standing in
the name of the undersigned on April 7, 1997, 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.
1. ELECTION OF DIRECTORS OF THE COMPANY (see reverse).
FOR [ ] WITHHELD [ ]
______________________________________
FOR all nominees listed at right, except authority to vote
withheld for the following nominees (if any)
Nominees: Frank Borman, George N. Hatsopoulos, John N.
Hatsopoulos, Arvin H. Smith and Polyvios C. Vintiadis.
FOR AGAINST ABSTAIN
2. Approve management proposal
to extend the [ ] [ ] [ ]
term of the Corporation's
employees' stock
purchase plan to November 2, 2005.
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.
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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 tenants or as community property, both should sign.
AA971210023
