<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [_]
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
MICROTOUCH SYSTEMS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] 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:
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(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):
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
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[LOGO]
Dear Fellow Shareholder:
You are cordially invited to attend the MicroTouch Annual Meeting of
Shareholders (the "Annual Meeting") to be held at 10:00 a.m. on Thursday, June
24, 1999 at the offices of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.,
One Financial Center, Boston, Massachusetts 02111.
You will be asked at the meeting to elect two directors, to ratify the selection
of Arthur Andersen LLP as MicroTouch's independent auditors for 1999 and to
transact such other business as may properly come before the meeting or any
adjournment thereof.
As set forth in the accompanying Proxy Statement, which you are urged to read,
your Board of Directors recommends that you vote "FOR" the proposals.
At the Annual Meeting management will be available for a discussion period to
answer your questions, and we welcome your comments. Representatives from Arthur
Andersen will also be available to answer questions.
The Board of Directors appreciates and encourages shareholder participation in
MicroTouch's affairs. Whether or not you plan to attend the Annual Meeting, it
is important that your shares be represented. Accordingly, we request that you
sign, date and mail the enclosed proxy in the envelope provided at your earliest
convenience.
Thank you for your cooperation.
Very truly yours,
/s/ D. Westervelt Davis
D. Westervelt Davis
President, Chief Executive Officer and
Director
<PAGE>
[LOGO]
NOTICE OF April 30, 1999
ANNUAL MEETING
OF SHAREHOLDERS To the Shareholders:
The Annual Meeting of Shareholders of MicroTouch
Systems, Inc. will be held on June 24, 1999 at the offices of
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., One
Financial Center, Boston Massachusetts, at 10:00 a.m., for
the following purposes:
(1) To elect two Class I directors.
(2) To approve Arthur Andersen LLP as independent
auditors of the Corporation for fiscal 1999.
(3) To transact such other business as may properly
come before the meeting or any adjournment thereof.
Shareholders of record at the close of business on April 27,
1999 are entitled to vote at the meeting.
/s/ Diane Burak
Diane Burak
Clerk
<PAGE>
MicroTouch Systems, Inc.
300 Griffin Park
Methuen, Massachusetts 01844
Telephone (978) 659-9000
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 24, 1999.
The accompanying proxy is solicited by the Board of Directors, and all the
expenses of the solicitation will be borne by the Corporation. No costs of
solicitation have been incurred to date. The solicitation will be by mail, and
may also be made personally and by telephone by a presently indeterminable
number of officers and employees of the Corporation or by an independent
organization on behalf of the Corporation.
The annual report to shareholders was sent to shareholders with this proxy
statement and accompanying proxy on or about April 30, 1999.
VOTING
The Corporation has only one class of shares outstanding. The Board of
Directors has fixed the close of business on April 27, 1999 as the record date
for determination of shareholders entitled to notice of and to vote at the
Annual Meeting of Shareholders on June 24, 1999 (the "Annual Meeting"). As of
March 19, 1999 there were outstanding 7,149,451 shares of common stock of $0.01
par value per share (the "Common Stock"), each such share being entitled to one
vote. At any time prior to the Annual Meeting, a shareholder may revoke his or
her proxy by filing a proxy bearing a later date with the Clerk of the
Corporation. If a shareholder attends the Annual Meeting, such shareholder may
revoke his or her proxy at that time and vote in person. Proxies will be voted
as directed by the shareholder. Unless otherwise directed, proxies will be
voted for the election of the nominees for Class I director listed below and for
the approval of Arthur Andersen LLP ("Arthur Andersen") as the independent
auditors of the Corporation. A majority in interest of all stock issued,
outstanding and entitled to vote at the Annual Meeting, represented at the
Annual Meeting, in person or by proxy, constitutes a quorum for the transaction
of business. Signed but unmarked proxies will be counted as favorable votes;
pursuant to Massachusetts law, broker non-votes and proxies marked as
abstentions will be counted as shares present for the purpose of determining the
presence of a quorum but broker non-votes will not be counted as votes properly
cast and will not affect the outcome of the voting. Proxies marked as
abstentions will be counted as votes properly cast and, accordingly, will have
the effect of a negative vote. The favorable vote of a plurality of the shares
represented at the meeting is required for the election of the directors. The
favorable vote of a majority of the shares represented at the meeting is
required for the ratification of Arthur Andersen.
1
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PROPOSAL I - NOMINATION AND ELECTION OF DIRECTORS
The Corporation's Board of Directors is divided into three classes. The Board
is currently comprised of two Class I directors, one Class II director and two
Class III directors. At each Annual Meeting of Shareholders, a class of
directors is elected for a three-year term to succeed the directors of the same
class whose terms are then expiring. The terms of the current Class I
directors, Class II director and Class III directors, respectively, will expire
upon the election and qualification of directors at the Annual Meeting of
Shareholders held in 1999, 2000 and 2001.
Pursuant to the provisions of the By-Laws of the Corporation, two Class I
directors are to be elected at the Annual Meeting. The nominees for Class I
members of the Board of Directors are D. Westervelt Davis and Frank Manning, who
both currently serve as Class I directors. A person elected as director to a
specific class will serve until the expiration of such director's three-year
term, and in each case until the particular director's successor has been
elected and qualified. The board recommends a vote FOR the nominees.
If for any reason either nominee should not be a candidate for election at the
time of the Annual Meeting, the proxies may be voted, in the discretion of those
named as proxies, for a substitute nominee or nominees.
Following are summaries of the background and business experience and
descriptions of the principal occupations of the Directors and the nominees for
re-election to the Board of Directors.
James D. Logan Age: 46
- --------------------
Mr. Logan founded MicroTouch in 1983. He has served as Chairman of the Board
(Class III Director) since April 1992. In April 1996, he stepped down as
President and Chief Executive Officer, roles he had held since 1983 and 1992,
respectively, to pursue other business interests. He continues to serve as
Chairman of the Board. Mr. Logan received an M.B.A. from the Amos Tuck School of
Business Administration at Dartmouth College, where he was an Edward Tuck
Scholar, and a B.A. from Hamilton College.
D. Westervelt Davis Age: 51 (Nominee for re-election as a Class I Director)
- -------------------------
Since April 1996, Mr. Davis has served as President and Chief Executive Officer
of the Corporation and has been a director of the Corporation since 1991.
Previously, Mr. Davis was the President of Lasertron, a Division of Oak
Industries, a manufacturer of semiconductor components for fiber optic
communications, from November 1994 to March 1996. From April 1992 to November
1994 Mr. Davis was a principal with Rand Griffin, a strategy consulting firm.
Mr. Davis received an M.B.A. from the Harvard Graduate School of Business
Administration and a B.S.E. from Princeton University.
Edward J. Stewart, III Age: 53
- ----------------------------
Mr. Stewart has been a director of the Corporation (Class II) since 1983. Mr.
Stewart has been General Partner of Kestrel Venture Management, a venture
capital firm, and its predecessor, and a series of affiliated venture capital
partnerships since September 1983. Mr. Stewart is a director of nine privately
held companies. Mr. Stewart received an M.B.A. from the Harvard Graduate School
of Business Administration and a B.S. from Yale University.
2
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Frank Manning Age: 50 (Nominee for re-election as a Class I Director)
- -------------------
Mr. Manning has been a director of the Corporation since 1993. He is President,
Chief Executive Officer and Chairman of the Board of Zoom Telephonics, Inc., a
publicly held manufacturer of computer modems and other data communication
products which he co-founded in 1977. In 1998 Mr. Manning became director of the
Massachusetts Technology Development Corporation, which invests in seed and
early-stage technology companies in Massachusetts. Mr. Manning received his
B.S., M.S., and Ph.D. in Electrical Engineering from the Massachusetts Institute
of Technology, where he was a National Science Foundation fellow.
Peter Brumme Age: 49
- ------------------
Mr. Brumme has been a director of the Corporation (Class III) since 1998. Since
January 1997 Mr. Brumme has been the Chief Operating Officer of SilverStream
Software, Inc. From March 1993 to January 1997 Mr. Brumme was the Chief
Operating Officer of Watermark Software, Inc., a privately held provider of
Windows-based imaging software. Mr. Brumme received a Master of Science from
Cornell University and a B.S. in Applied Mathematics from MIT.
Six meetings of the Board of Directors were held during 1998. The Board has
three committees: Compensation, which met once during 1998; Audit, which met
four times during 1998; and Nominating, which did not meet in 1998. The
Nominating Committee was established in November, 1998. Each incumbent director
had an attendance record of 100% at meetings, including meetings of committees
on which he served.
The Audit Committee, which currently consists of Messrs. Stewart and Manning,
nominates the Corporation's independent auditing firm, reviews the scope of the
audit and approves in advance reviews by the independent auditors, their
activities and recommendations regarding internal control, and meets with the
independent auditors and management, each of whom had direct and open access to
the Audit Committee.
The Compensation Committee, which currently consists of Messrs. Brumme and
Stewart, determines the compensation of officers other than employee directors
(as to whom the Committee makes recommendations to the Board of Directors which
then determines their compensation). See "Compensation Committee Report to
Shareholders" below.
The Nominating Committee, which currently consists of Messrs. Manning and Logan,
nominates persons to serve as members of the Corporation's Board of Directors,
recommends directors to serve on the various Board Committees and recommends a
successor to the chief executive officer whenever a vacancy occurs for any
reason. The Nominating Committee does not consider for nomination to the Board
of Directors candidates suggested by the stockholders.
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For serving the Corporation as directors, directors receive a fee of $750 for
each board or committee meeting attended. Additionally, upon election to the
Board of Directors, each new non-employee director shall receive options to
purchase 10,000 shares of Common Stock. Immediately following the Annual
Shareholders' Meeting each year, each non-employee director shall automatically
receive options to purchase 5,000 shares of Common Stock. The options have a
term of 5 years and are priced at the last sale price of the Corporation's
Common Stock for the day previous to the date of the grant.
Compensation Committee Interlocks and Insider Participation
Messrs. Brumme and Stewart, each an outside director, are the members of the
Corporation's Compensation Committee. In 1997 Mr. Brumme served as a consultant
to the Corporation. Neither member of the Compensation Committee has at any
time been an officer or employee of the Corporation or any of its subsidiaries.
No executive officer of the Corporation served as a member of the compensation
committee or board of directors of any other entity which has an executive
officer serving as a member of the Corporation's Board of Directors or
Compensation Committee.
SECURITY OWNERSHIP
Except as set forth below, no person or group, to the knowledge of the
Corporation, owns five percent or more of the Common Stock.
The following table sets forth information as of March 19, 1999 with respect to
the amount of Common Stock held by each director, Named Executive Officer, (as
defined below), holder of 5% or more of the Corporation's Common Stock and all
directors and executive officers as a group (in each case, the beneficial owner
of the shares shown has sole voting and sole investment power):
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<TABLE>
<CAPTION>
Percentage of
-------------
Name Common Shares Beneficially Total Common
- ---- -------------------------- ------------
Owned Shares Owned
----- ------------
<S> <C> <C>
Lord, Abbett & Co. 638,747 8.9%
767 Fifth Avenue
New York, NY 10153
State of Wisconsin Investment Board 550,000 7.7%
P.O. Box 7842
Madison, WI 53707
Dimensional Fund Advisors Inc. 549,500 7.7%
1299 Ocean Avenue
Santa Monica, CA 90401
Schroder Capital Management Inc. 360,440 5.0%
787 Seventh Avenue
New York, NY 01109
James D. Logan (1) 270,589 3.8%
Peter Brumme (2) 2,000 ----
D. Westervelt Davis (3) 177,000 2.4%
Frank Manning (4) 24,166 0.3%
Edward J. Stewart, III (5) 36,166 0.5%
Joel M. Blenner (6) 42,872 0.6%
Janet M. Muto (7) 27,000 0.4%
Robert J. Senior (8) 53,775 0.7%
Randall Smith (9) 32,250 0.4%
Directors and Executive Officers as a group
13 individuals (includes options to acquire 860,319 11.2%
507,863 shares which vest prior to 5/19/99)
</TABLE>
(1) Consists of 230,589 shares owned directly by Mr. Logan and options to
acquire 40,000 shares which vest prior to 5/19/99.
(2) Consists of options to acquire 2,000 shares which vest prior to 5/19/99.
(3) Consists of 12,000 shares owned directly by Mr. Davis and options to
acquire 165,000 shares which vest prior to 5/19/99.
(4) Consists of options to acquire 24,166 shares which vest prior to 5/19/99.
(5) Consists of 27,000 shares owned directly by Mr. Stewart and options to
acquire 9,166 shares which vest prior to 5/19/99. Mr. Stewart disclaims
beneficial ownership of an additional 9,000 shares owned by family members.
(6) Consists of 2,870 shares owned directly by Mr. Blenner and options to
acquire 40,002 shares which vest prior to 5/19/99.
(7) Consists of options to acquire 27,000 shares which vest prior to 5/19/99.
(8) Consists of 10,025 shares owned directly by Mr. Senior and options to
acquire 43,750 shares which vest prior to 5/19/99.
(9) Consists of options to acquire 32,250 shares which vest prior to 5/19/99.
5
<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE'S REPORT TO SHAREHOLDERS
The executive compensation program for the Corporation is administered by the
Compensation Committee of the Board of Directors (the "Committee") which is
composed of the individuals listed below, who are outside, non-employee
directors of the Corporation with responsibility for all compensation matters
for the Corporation's senior management other than employee directors, as to
whom the Committee makes recommendations to the Board of Directors, which then
determines their compensation.
The program has been designed to enable the Corporation to attract, motivate and
retain senior management by providing a competitive total compensation package
based on performance. It provides for competitive base salaries, which reflect
individual performance; annual variable performance incentive opportunities,
which are payable in cash for the achievement of performance goals established
by the Committee; and long-term, stock-based incentive opportunities, which
strengthen the mutuality of interests between senior management and the
Corporation's shareholders. The annual performance incentive opportunities and
long-term incentive opportunities established by the Committee are intended to
be competitive with competitor incentive compensation opportunities based on
surveys conducted by independent compensation consulting firms.
In designing and administering the individual elements of the executive
compensation program, the Committee strives to balance short and long-term
incentive objectives and to employ prudent judgment in establishing performance
criteria, evaluating performance and determining actual incentive payments.
Following is a discussion of each of the elements of the executive compensation
program along with a description of the decisions and actions taken by the
Committee with regard to 1998 compensation and specific discussion of the
decisions regarding the Chief Executive Officer's ("CEO's") compensation.
Annual Compensation
Annual total cash compensation for senior management consists of base salary and
the annual variable performance incentive earned under the Corporation's Key
Executive Bonus Plan. Total annual cash compensation varies each year based on
achievement of Corporation performance goals established by the Committee under
the annual incentive plan and changes in base salary.
Payment of the annual variable performance incentive award for the Executive
Officers appearing in the tabular disclosure which follows is based on
achievement of various goals, both financial and strategic. For 1998, the
Committee determined that bonus awards would be calculated as percentages of
base salary, and based upon the achievement of an operating income target for
the Executive Officers, except the CEO, whose award is discussed separately
below, and the Vice-President - Sales, whose award is also based on a sales
level target. To the extent that these targets were exceeded, bonus awards
would increase commensurately. Having
6
<PAGE>
determined that management exceeded the operating income target and the sales
target, the Committee then set the bonus payment accordingly. The bonuses
awarded are listed in the Summary Compensation Table which follows.
Long-Term Compensation
The long-term incentive program for senior management consists of awards granted
under the 1992 Equity Incentive Plan (the "Plan"), which is administered by the
Compensation Committee. The Plan provides for awards of stock options, stock
appreciation rights, restricted stock and performance shares. To date, only
stock options have been granted under the Plan. During 1998, in recognition of
the completed objectives noted above, the following stock option grants were
awarded to the four most highly compensated officers of the Corporation, other
than the CEO: 1) to Joel M. Blenner, Vice President - Sales, 7,000 shares; 2) to
Robert J. Senior, Vice President and General Manager - European Operations,
23,000 shares; 3) to Randall Smith, President - Business Products Division,
13,000 shares; and 4) to Janet Muto, Vice-President Marketing, 8,000 shares.
Chief Executive Officer's Compensation
Mr. Davis' base salary was determined by comparing salaries of executives of
similar companies based on the Company's internal benchmarking survey
activities. Mr. Davis also participates in the Key Executive Bonus Plan and the
1992 Equity Incentive Plan, as discussed above. However, Mr. Davis' award is
also tied to long-range performance targets for the Corporation as well as the
current year operating income target. Having determined that sufficient
progress had been made towards these long-range performance targets in 1998, the
Committee awarded Mr. Davis a bonus payment of $100,000 and a stock option grant
of 50,000 shares.
The Compensation and Stock Option tables which follow in this proxy statement,
and accompanying narrative and footnotes, reflect the decisions covered by the
above discussion.
By the Compensation Committee,
Peter Brumme
Edward J. Stewart III
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The following table shows, for the fiscal years indicated, the annual
compensation paid by the Corporation, together with long-term and other
compensation, for the Chief Executive Officer and the next four most highly
compensated executive officers in 1998 (the "Named Executive Officers") of the
Corporation.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
------------------- Awards
------
Securities
Underlying
Year Salary Bonus (1) Options
---- ------ -------- -------
<S> <C> <C> <C> <C>
D. Westervelt Davis 1998 $207,692 $100,000 50,000
President, Chief Executive Officer 1997 $200,000 -0- 50,000
and Director (2) 1996 $142,308 $ 85,125 200,000
Robert J. Senior 1998 $154,340 $116,170 23,000
Vice President & General Manager 1997 $152,137 $107,941 8,000
- European Operations 1996 $129,049 $ 48,507 4,000
Joel M. Blenner 1998 $210,458 $ 25,000 7,000
Vice President - Sales (3) 1997 $146,969 $ 88,562 9,000
1996 $115,385 $ 55,925 45,000
Randall Smith 1998 $155,769 $ 60,000 13,000
President - Business Products 1997 $143,110 -0- -0-
Division (4) 1996 $ 8,654 $ 6,890 -0-
Janet Muto 1998 $163,558 $ 57,500 8,000
Vice President - Marketing (5) 1997 $107,221 $ 65,000 -0-
</TABLE>
_______________________
(1) Reflects amounts awarded for performance in the respective fiscal year,
even though the compensation may not have actually been paid until a later
date.
(2) Mr. Davis became President and Chief Executive Officer in April, 1996. He
continues to serve as a Director (Class I) of the Corporation.
(3) Mr. Blenner became Vice President - Sales in March, 1996.
(4) Mr. Smith became President Business Products Division in March, 1997.
Between November, 1996 and February, 1997 Mr. Smith served as Vice-
President Marketing.
(5) Ms. Muto became Vice-President Marketing in April, 1997.
8
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EXECUTIVE OFFICERS
The current executive officers of the Corporation who are not also directors are
listed below. Each such person's term of office extends until the meeting of the
Board of Directors following the Annual Meeting and until his or her successor
is elected and qualified.
Mr. Robert Senior (Age: 44) has been Vice President and General Manager -
European Operations since January 1995. Before that, he was Vice President -
Sales from March 1993 until December 1994. He was General Manager of the
Company's U.K. subsidiary from January 1991 until March 1993. Mr. Senior
received a B.Ed. in Physics from Exeter University.
Mr. Joel Blenner (Age: 55) has been Vice President - Sales since March 1996.
Previously he was Senior Vice President - Sales for Digital Products
Corporation, a privately held manufacturer of print servers. Prior to that, he
was Vice President - Sales at Network Communications Corporation, a privately
held manufacturer of network management equipment and Vice President - Sales at
Corporate Software, Inc., a public company selling software and providing
related services. Mr. Blenner holds a BA degree in Psychology from Southern
Connecticut State University.
Mr. Randall Smith (Age: 47) has been President of the Business Products Division
since March 1997. Previously he was Vice President of Marketing from November
1996 to February 1997. From 1995 to 1996 Mr. Smith was an independent
consultant. From 1985 through 1994 Mr. Smith held various positions at
PictureTel Corporation including Vice President - Group Video-Conferencing
System, Vice President - Corporate Development, Vice President US Sales, Vice
President, Marketing. Mr. Smith received a MBA in Marketing & Finance from
Northwestern University and a BS in Management from Purdue University.
Ms. Janet Muto (Age: 42) has been Vice President - Marketing since April 1997.
Previously she was Worldwide Marketing Director of Hewlett Packard's $2 billion
Workstation Division. Prior roles at Hewlett Packard included Worldwide Sales
and Support Manager, Workstations Systems Division; Commercial Market
Development Manager, Entry Systems Division; Workstation Systems Group and
District Sales Manager. Ms. Muto earned an MBA in Marketing and Management
from Babson College and a BA in Political Science from Trinity College.
Mr. Bernie Geaghan (Age: 51) has been Vice President - Research and Development
since May 1995. Before that he was Vice President - Engineering from March 1990
to April 1995. Mr. Geaghan received a B.S. in Electrical Engineering from the
University of Maine.
Mr. Geoffrey Clear (Age: 49) has been Vice President - Finance & Administration,
Chief Financial Officer and Treasurer of the Company since February 1992. Mr.
Clear is a Certified Public Accountant and a member of the Financial Executives
Institute. Mr. Clear received an M.B.A. from the Amos Tuck School of Business
Administration at Dartmouth College, where he was an Edward Tuck Scholar, and a
B.A. from Dartmouth College.
9
<PAGE>
Mr. Jeffrey Shaw (Age: 52) has been Vice President - Quality and Operations
since January 1997. Previously he was Vice President - Operations for ACT
Manufacturing, Inc., a contract manufacturing company. Prior to that, he was
Vice President - Operations at Xyplex, Inc., and PictureTel Corporation, as well
as Vice President of Global Support Operations at Octocom Systems. Mr. Shaw
holds a MS in Metallurgy and Materials from Lehigh University and a BS in
Electrical Engineering from Worcester Polytechnic Institute.
Mr. Robert Becker (Age: 39) has been Vice President Engineering since July
1998. Previously he was Vice President Engineering at PictureTel Corporation
where he was responsible for the videoconferencing company's Client Products and
Peripherals. Earlier positions at PictureTel included Engineering Group Products
Director and several Program Management positions. Mr. Becker has 10 patents to
his credit for work in computer architectures. Mr. Becker received a BS degree
in Computer Science from the University of Connecticut and a BA degree in
Liberal Arts from Fairfield University.
There are no family relationships between any of the Corporation's directors,
executive officers or people nominated to become directors or executive officers
of the Corporation.
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<PAGE>
The following table contains information concerning the grant of stock options
to Named Executive Officers during the last fiscal year.
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
-----------------------------------------------------------------------------------
Number of Percentage of
Securities Total Options
Underlying Granted to Market Price
Options Employees in Exercise as of Expiration Grant Date
Name Granted (1) 1998 Price Grant Date Date Present Value (2)
- ---- ---------- ---- ----- ---------- ---- -----------------
<S> <C> <C> <C> <C> <C> <C>
D. Westervelt Davis 50,000 11.1% $15.50 $15.50 3/5/05 $425,000
Robert J. Senior 23,000 5.1% $15.50 $15.50 3/5/05 $167,000
Joel M. Blenner 7,000 1.5% $15.50 $15.50 3/5/05 $51,000
Randall Smith 5,000 1.1% $15.50 $15.50 3/5/05 $33,000
8,000 1.8% $14.63 $14.63 11/13/03 $51,000
Janet Muto 8,000 1.8% $15.50 $15.50 3/5/05 $58,000
</TABLE>
(1) Options granted become exercisable in variable installments over 3 years.
(2) Based on the Black-Scholes option pricing model adapted for use in valuing
stock options. The actual value, if any, that an executive may realize will
depend on the excess of the stock price over the exercise price on the date
the option is exercised and there is no assurance the value realized by an
executive will be at or near the value estimated by the Black-Scholes model.
The estimated values under that model are based on arbitrary assumptions as to
variables such as interest rates (a weighted average of 5.7%) and stock price
volatility (.66). Amounts indicated are not intended to be a forecast of
possible future appreciation, if any, in the price of the Corporation's Common
Stock.
11
<PAGE>
The following table sets forth information with respect to the Named Executive
Officers concerning option exercises during the last fiscal year and unexercised
options held as of the end of the last fiscal year.
<TABLE>
<CAPTION>
Aggregated Option Exercises in the Last Fiscal Year and Fiscal Year-End Option Values
- -------------------------------------------------------------------------------------
Number of Securities
Shares Underlying Unexercised Value of Unexercised
Acquired Value Options Held at In-the Money Options at
on Exercise Realized December 31, 1998 December 31, 1998 (1)
----------- -------- -------------------------------- -------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
D. Westervelt Davis -0- -0- 120,000 202,500 $161,000 $0
Robert J. Senior -0- -0- 35,000 32,000 $202,000 $0
Joel M. Blenner -0- -0- 24,751 36,249 $ 0 $0
Randall Smith -0- -0- 29,750 45,250 $ 0 $0
Janet Muto -0- -0- 12,500 45,500 $ 0 $0
</TABLE>
(1) Based on the difference between the closing price of the Corporation's
Common Stock as reported on the Nasdaq Stock Market as of 12/31/98 ($13.13)
and the exercise price of the respective options. Dollar values rounded to
the nearest thousand.
12
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Comparative Stock Performance
The comparative stock performance graph below compares the cumulative
shareholder return on the Common Stock of the Corporation for the period from
January 1, 1994 through the fiscal year ended December 31, 1998 with the
cumulative total return for (i) the NASDAQ Market Value Index for the NASDAQ
Stock Market (the "NASDAQ Market Index"), and (ii) a group consisting of
publicly-traded U.S. companies in the Corporation's industry (based on Standard
Industrial Classification Code Number 3577, "Computer Peripheral Equipment")
(the "Peer Group Index") for the same period, assuming the investment of $100 in
the Corporation's Common Stock, the NASDAQ Market Index and the Peer Group Index
on January 1, 1994 and reinvestment of all dividends. Measurement points are on
January 1, 1994 and the last trading day of the Corporation's fiscal years ended
December 31, 1994, 1995, 1996, 1997 and 1998. On November 1, 1994 the
Corporation's stock was split two-for-one.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG MICROTOUCH SYSTEMS, COMPUTER PERIPHERAL EQUIP. NEC,
AND NASDAQ MARKET INDEX
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
Measurement Period MICROTOUCH COMPUTER PER. NASDAQ MARKET
(Fiscal Year Covered) SYSTEMS EQUIP. NEC INDEX
- --------------------- ---------- ------------ -------------
<S> <C> <C> <C>
Measurement Pt- 12/31/93 $100.00 $100.00 $100.00
FYE 12/30/1994 $654.55 $115.09 $104.99
FYE 12/29/1995 $176.36 $183.72 $136.18
FYE 12/31/1996 $349.09 $229.94 $169.23
FYE 12/31/1997 $229.09 $234.18 $207.00
FYE 12/31/1998 $190.91 $460.37 $291.96
</TABLE>
13
<PAGE>
PROPOSAL II - APPROVAL OF INDEPENDENT AUDITORS
Subject to the ratification by the shareholders at the Annual Meeting, the Board
of Directors of the Corporation, on recommendation of the Audit Committee, has
appointed the firm of Arthur Andersen LLP, certified public accountants, as the
independent auditors to audit the financial statements of the Corporation for
the current fiscal year. The Board may appoint a new accounting firm at any time
if it believes that such a change would be in the best interests of the
Corporation and its shareholders.
Arthur Andersen LLP has been the Corporation's auditors for the last seven
years. Representatives of Arthur Andersen LLP will be present at the Annual
Meeting with the opportunity to respond to appropriate questions and to make a
statement if they desire to do so.
The Board of Directors recommends a vote FOR ratifying the selection of Arthur
Andersen LLP as independent auditors of the Corporation for 1999.
"SECTION 16(a) BENEFICAL OWNERSHIP REPORTING COMPLIANCE"
The Corporation's executive officers and directors are required, under Section
16(a) of the Securities Exchange Act of 1934, as amended, to file reports of
ownership and changes in ownership of securities of the Corporation with the
Securities and Exchange Commission. Copies of those reports must also be
furnished to the Corporation.
Based solely on a review of (i) Forms 5 relating to the fiscal year ended
December 31, 1998, and amendments thereto, furnished to the Corporation, and
(ii) written representations that no Form 5 was required, the Corporation
believes that, during 1998, the executive officers and directors of the
Corporation complied with all applicable Section 16(a) filing requirements,
except that Randall Smith's timely filed Form 5 reporting 1998 stock option
grants, inadvertently omitted one grant. The Form 5 was subsequently amended.
CERTAIN TRANSACTIONS
On September 25, 1997, Mr. Peter Brumme, a Class III Director of the
Corporation, received an option to purchase 5,000 shares of Common Stock as
consideration for consulting services. The option exercise price was $26.50 per
share and the option vests in its entirety on September 25, 2003.
14
<PAGE>
OTHER MATTERS
Management does not know of any matters to be presented at the Annual Meeting
other than the matters described in this Proxy Statement. If, however, other
business is properly presented to the meeting, the proxy holders named in the
accompanying form of Proxy will vote the Proxy in accordance with their best
judgment. To be considered for inclusion in the proxy statement related to the
Annual Meeting of Stockholders to be held in 2000, Stockholder proposals must be
received no later than January 15, 2000. To be considered for presentation at
the Annual Meeting, although not included in the proxy statement, proposals must
be received no later than March 16, 2000. All Stockholder proposals should be
marked for the attention of Chief Financial Officer, MicroTouch Systems, Inc.,
300 Griffin Brook Park, Methuen, MA 01844.
D. Westervelt Davis
15
<PAGE>
IMPORTANT Whether you own one share or many, you are urged to sign
and return promptly the enclosed proxy in the postage paid
envelope provided.
16
<PAGE>
SKU # MTSI-PS-99
<PAGE>
Dear Shareholder:
Please take note of the important information enclosed with this Proxy.
There are a number of issues related to the operation of the Corporation
that require your immediate attention.
Your vote counts, and you are strongly encouraged to exercise your right to
vote your shares.
Please mark the boxes on the proxy card to indicate how your shares will be
voted. Then sign the card, detach it and return your proxy in the enclosed
postage- paid envelope.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
MicroTouch Systems, Inc.
<PAGE>
Proxy
MicroTouch Systems, Inc.
(the "Corporation")
The undersigned, revoking previous proxies relating to the shares subject
hereto, hereby acknowledges receipt of the Notice and Proxy Statement dated
April 30, 1999 in connection with the Corporation's 1999 Annual Meeting of
Shareholders to be held at 10:00 a.m. on June 24, 1999 at the offices of Mintz
Levin, Cohn, Ferris, Glovsky, and Popeo P.C. One Financial Center, Boston,
Massachusetts and hereby appoints Geoffrey P. Clear and John Collins, and each
of them (with full power to act alone), the attorneys and proxies of the
undersigned, with power of substitution to each, to vote all shares of the
Common Stock of the Corporation which the undersigned is entitled to vote at
said Annual Meeting of Shareholders, and at any adjournment thereof, with all
the powers the undersigned would have if personally present. Without limiting
the general authorization hereby given, said proxies are, and each of them is,
instructed to vote or act as follows on the proposals set forth in said Proxy
Statement. In addition, in their discretion, the proxies are authorized to vote
upon such other matters as may properly come before said Annual Meeting. Signed
but unmarked proxies will be voted in favor of each proposal.
Election of two Class I Directors (or, if one or both of the nominees are
not available for election, the shares represented hereby will be voted for
such substitutes as the Board of Directors may designate).
Nominees:
D. Westervelt Davis
Frank Manning
See Reverse
Side
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE>
[X] Please mark
votes as in
this example
This Proxy, when executed, will be voted in the manner directed herein. If
no direction is made, this Proxy will be voted FOR the election of the
nominees for Class 1 Director and FOR Proposal 2.
The Board of Directors recommends a vote FOR Proposals 1 and 2.
1. Election of Directors
(See reverse)
FOR WITHHELD
[_] [_]
[_]
--------------------------------------
For the nominees except as noted above
2. Ratification of Independent
Auditors (Arthur Andersen LLP)
FOR AGAINST ABSTAIN
[_] [_] [_]
MARK HERE FOR
ADDRESS CHANGE [_]
AND NOTE AT LEFT
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF THE CORPORATION.
Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator officer trustee, or
guardian, please give full title as such.
<TABLE>
<S> <C> <C> <C>
Signature:__________________ Date:__________ Signature:__________________ Date:__________
</TABLE>
