[THERMO POWER LOGO HERE]
February 13, 1996
Dear Stockholder:
The enclosed Notice calls the 1996 Annual Meeting of the
Stockholders of Thermo Power Corporation. I respectfully request all
Stockholders attend this Meeting, if possible.
Our Annual Report for the fiscal year ended September 30, 1995 is
enclosed. I hope you will read it carefully. Feel free to forward any
questions you may have if you are unable to be present at the Meeting.
Enclosed with this letter is a Proxy authorizing three officers
of the Corporation to vote your shares for you if you do not attend
the Meeting. Whether or not you are able to attend the Meeting, I
urge you to complete your Proxy and return it to our transfer agent,
American Stock Transfer and Trust Company, in the enclosed addressed,
postage-paid envelope, as a quorum of the Stockholders must be present
at the Meeting, either in person or by Proxy.
I would appreciate your immediate attention to the mailing of
this Proxy.
Yours very truly,
MARSHALL J. ARMSTRONG
Chairman and Chief Executive Officer
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[THERMO POWER LOGO HERE]
February 13, 1996
To the Holders of the Common Stock of
THERMO POWER CORPORATION
NOTICE OF ANNUAL MEETING
The 1996 Annual Meeting of the Stockholders of Thermo Power
Corporation (the "Corporation") will be held on Monday, March 11,
1996, at 10:00 a.m. at the executive offices of the Corporation, 81
Wyman Street, Waltham, Massachusetts 02254. The purposes of the
Meeting are to consider and take action upon the following matters:
1. Election of six Directors.
2. A proposal recommended by the Board of Directors to increase
the number of shares of the Corporation's common stock
reserved for issuance under the Corporation's Deferred
Compensation Plan for Directors by 25,000 shares.
3. A proposal recommended by the Board of Directors to increase
the number of shares of the common stock of Thermo Electron
Corporation authorized for issuance under the Corporation's
Employees' Stock Purchase Plan by 50,000 shares.
4. 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 January 17, 1996.
The By-laws require that the holders of a majority of the stock
issued and outstanding and entitled to vote be present or represented
by Proxy at the Meeting in order to constitute a quorum for the
transaction of business. It is important that your stock be
represented at the Meeting regardless of the number of shares you may
hold. Whether or not you are able to be present in person, please sign
and return promptly the enclosed Proxy in the accompanying envelope,
which requires no postage if mailed in the United States.
This Notice, the Proxy and Proxy Statement enclosed herewith are
sent to you by order of the Board of Directors.
SANDRA L. LAMBERT
Clerk
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PROXY STATEMENT
The enclosed Proxy is solicited by the Board of Directors of
Thermo Power Corporation (the "Corporation") for use at the 1996
Annual Meeting of the Stockholders (the "Meeting") to be held on
Monday, March 11, 1996, at 10:00 a.m. at the executive offices of the
Corporation, 81 Wyman Street, Waltham, Massachusetts, 02254, and any
adjournment thereof. The mailing address of the executive offices of
the Corporation is 81 Wyman Street, P.O. Box 9046, Waltham,
Massachusetts 02254-9046. This Proxy Statement and the enclosed Proxy
were first furnished to Stockholders of the Corporation on or about
February 15, 1996.
VOTING PROCEDURES
The Board of Directors intends to present to the Meeting the
election of six Directors, constituting the entire Board of Directors,
as well as two other matters: a proposal to increase the number of
shares of the common stock of the Corporation, $.10 par value ("Common
Stock"), reserved for issuance under the Corporation's Deferred
Compensation Plan for Directors by 25,000 shares and a proposal to
increase the number of shares of the common stock of Thermo Electron
Corporation ("Thermo Electron") authorized for issuance under the
Corporation's Employees' Stock Purchase Plan by 50,000 shares.
The representation in person or by proxy of a majority of the
outstanding shares of Common Stock entitled to vote at the Meeting is
necessary to provide a quorum for the transaction of business at the
Meeting. Shares can only be voted if the Stockholder is present in
person or is represented by returning a properly signed proxy. Each
Stockholder's vote is very important. Whether or not you plan to
attend the Meeting in person, please sign and promptly return the
enclosed proxy card, which requires no postage if mailed in the United
States. All signed and returned proxies will be counted towards
establishing a quorum for the Meeting, regardless of how the shares
are voted.
Shares represented by proxy will be voted in accordance with your
instructions. You may specify your choice by marking the appropriate
box on the proxy card. If your proxy card is signed and returned
without specifying choices, your shares will be voted for the
management nominees for Directors, for the management proposals, and
as the individuals named as proxy holders on the proxy deem advisable
on all other matters as may properly come before the Meeting.
In order to be elected a Director, a nominee must receive the
affirmative vote of a majority of the shares of Common Stock present
and entitled to vote on the election. For all other matters to be
voted upon at the Meeting, including the proposals to increase the
number of shares of Common Stock authorized for issuance under the
Deferred Compensation Plan for Directors and the number of shares of
Thermo Electron common stock authorized for issuance under the
Employees' Stock Purchase Plan, the affirmative vote of a majority of
shares present in person or represented by proxy, and entitled to vote
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on the matter, is necessary for approval. Withholding authority to
vote for a nominee for Director or an instruction to abstain from
voting on a proposal will be treated as shares present and entitled to
vote and, for purposes of determining the outcome of the vote, will
have the same effect as a vote against the nominee or a proposal.
With respect to the election of Directors and the increases of stock
available under the Deferred Compensation Plan for Directors and the
Employees' Stock Purchase Plan, 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 Clerk 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 January
17, 1996, consisted of 12,453,844 shares of Common Stock. Only
Stockholders of record at the close of business on January 17, 1996,
are entitled to vote at the Meeting. Each share is entitled to one
vote.
-- PROPOSAL 1--
ELECTION OF DIRECTORS
Six Directors are to be elected at the Meeting, each to hold
office until his successor is chosen and qualified or until his
earlier resignation, death or removal.
Nominees for Directors
Set forth below are the names of the persons nominated as
Directors, their ages, their offices in the Corporation, if any, their
principal occupation or employment for the past five years, the length
of their tenure as Directors and the names of other public companies
in which such persons hold directorships. Information regarding their
beneficial ownership of the Corporation's Common Stock and of the
common stock of its parent corporation, Thermo Electron, is reported
under the caption "Stock Ownership." All of the nominees are currently
Directors of the Corporation. Dr. George N. Hatsopoulos, currently a
Director of the Corporation, is not standing for reelection.
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Marshall J. Armstrong Mr. Armstrong, 60, has been a Director and
Chairman of the Board of the Corporation si
December 1990 and Chief Executive Officer s
April 1991. He also served as the
Corporation's President from November 1992
April 1995. He has been a Vice President o
Thermo Electron since 1986. He is also a
Director of SatCon Technology Corporation a
Thermo Instrument Systems Inc.
Peter O. Crisp Mr. Crisp, 63, has been a Director of the
Corporation since 1985. Mr. Crisp has
been a General Partner of Venrock
Associates, a venture capital investment
firm, for more than five years. Mr. Crisp
is also a Director of American
Superconductor Corporation, Apple Computer,
Inc., Evans & Sutherland Computer
Corporation, Long Island Lighting Company,
Thermedics Inc., Thermo Electron,
ThermoTrex Corporation and United States
Trust Corporation.
John N. Hatsopoulos Mr. Hatsopoulos, 61, has been a Director of
the Corporation since 1990 and its Vice
President and Chief Financial Officer since
1988. Mr. Hatsopoulos has been the Chief
Financial Officer of Thermo Electron since
1988 and an Executive Vice President of
Thermo Electron since 1986. Mr. Hatsopoulos
is also a director of Lehman Brothers
Funds, Inc., Thermedics Inc., Thermo Ecotek
Corporation, Thermo Fibertek Inc., Thermo
Instrument Systems Inc., Thermo TerraTech
Inc. and ThermoTrex Corporation. Mr. John
N. Hatsopoulos is the brother of Dr. George
N. Hatsopoulos, currently a Director of the
Corporation.
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Robert C. Howard Mr. Howard, 65, has been a Director of the
Corporation since its inception. Mr. Howard
has been an Executive Vice President of
Thermo Electron since 1986. He is also a
Director of Thermedics Inc., Thermo
Cardiosystems Inc., Thermo Ecotek
Corporation, Thermo Instruments Systems
Inc., ThermoLase Corporation and ThermoTrex
Corporation.
Donald E. Noble Mr. Noble, 81, has been a Director of the
Corporation since 1990. For more than 20
years, from 1959 to 1980, Mr. Noble served
as the chief executive officer of
Rubbermaid Incorporated, first with the
title of president and then as Chairman of
the Board. Mr. Noble is also a Director of
Thermo Electron, Thermo Fibertek Inc. and
Thermo TerraTech Inc.
Paul E. Tsongas Mr. Tsongas, 54, has been a Director of the
Corporation since 1987. Mr. Tsongas is a
partner in the law firm of Foley, Hoag &
Eliot, Boston, Massachusetts. From 1988 to
1991, Mr. Tsongas was Chairman of the
Massachusetts Board of Regents of Higher
Education. From 1979 to 1985, he was a U.S.
Senator from Massachusetts. He is also a
Director of Boston Edison Corporation, Wang
Laboratories Inc., Thermo Fibertek Inc. and
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, each consisting solely of outside
Directors. The present members of the Audit Committee are Mr. Noble
(Chairman) and Mr. Crisp. The Audit Committee reviews the scope of
the audit with the Corporation's independent public accountants and
meets with them for the purpose of reviewing the results of the audit
subsequent to its completion. The present members of the Human
Resources Committee are Mr. Crisp (Chairman), Mr. Noble and Mr.
Tsongas. The Human Resources Committee reviews the performance of
senior members of management, recommends executive compensation and
administers the Corporation's stock option and other stock plans. The
Corporation does not have a nominating committee of the Board of
Directors. The Board of Directors met five times, the Audit Committee
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met twice and the Human Resources Committee met four times during
fiscal 1995. Each Director attended at least 75% of all meetings of
the Board of Directors and Committees on which he served held during
the fiscal year.
Compensation of Directors
Effective January 1, 1995, 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 $4,000 and a fee of $1,000 per day for attending
regular meetings of the Board of Directors and $500 per day for
participating in meetings of the Board of Directors held by means of
conference telephone and for participating in certain meetings of
committees of the Board of Directors. Prior to January 1, 1995, the
annual retainer paid to outside Directors was $2,000. Payment of
outside Directors' fees is made quarterly. Mr. Armstrong, Mr. J.
Hatsopoulos and Mr. Howard are all employees of Thermo Electron 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 meetings.
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.
Amounts so deferred 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 25,000 shares of Common Stock
have been reserved for issuance under the Deferred Compensation Plan.
As of January 1, 1996, deferred units equal to 21,175.73 shares of
Common Stock were accumulated under the Deferred Compensation Plan.
The Board of Directors has recommended that the Stockholders approve
an increase of 25,000 shares in the number of shares reserved for
issuance under the Deferred Compensation Plan. See "Proposal 2 --
Proposal to Increase the Number of Shares Reserved for Issuance Under
the Deferred Compensation Plan for Directors."
In 1991, the Corporation adopted a directors stock option plan
(the "Directors Plan"), which was amended in 1995. The Directors Plan
provides for the grant of stock options to purchase shares of Common
Stock to outside Directors as additional compensation for their
service as Directors. 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.
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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
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 would be subject to repurchase by the
Corporation at the exercise price if the recipient ceased 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 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 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. 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 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 another 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 ThermoLyte
Corporation at an exercise price of $10.00 per share on March 14,
1995, the date of last year's Annual Meeting of Stockholders.
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. An aggregate of 25,000 shares
of Common Stock has been reserved for issuance under the Directors
Plan.
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STOCK OWNERSHIP
The following table sets forth the beneficial ownership of Common
Stock, as well as the common stock of Thermo Electron and ThermoLyte
Corporation, a majority-owned subsidiary of the Corporation, as of
January 1, 1996, 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.
<TABLE>
<CAPTION>
Name (1) Thermo Power Thermo ThermoLyte
Corporation Electron Corporation
(2) Corporation
(3)
<S> <C> <C> <C>
Thermo Electron Corporation (5) 7,853,606 N/A
Marshall J. Armstrong 169,540 118,147 2,
J. Timothy Corcoran 138,564 47,148
Peter O. Crisp 32,151 64,434
George N. Hatsopoulos 54,282 2,328,408
John N. Hatsopoulos 45,953 366,725
Robert C. Howard 68,281 134,593 2,
Chester G. Janssens 89,324 47,831
Donald E. Noble 18,485 12,387 1,
Ravinder K. Sakhuja 66,531 113,829
Paul E. Tsongas 22,216 0 1,
All Directors and current
executive 722,697 3,348,697 7,
officers as a group (11 persons)
</TABLE>
(1) Except as reflected in the footnotes to this table, shares of
Common Stock of the Corporation and of the common stock of Thermo
Electron and ThermoLyte Corporation beneficially owned consist of
shares owned by the indicated person, and all share ownership
includes sole voting and investment power.
(2) Shares beneficially owned by Mr. Armstrong, Mr. Corcoran, Mr.
Crisp, Dr. G. Hatsopoulos, Mr. J. Hatsopoulos, Mr. Howard, Mr.
Janssens, Mr. Noble, Dr. Sakhuja, Mr. Tsongas and all Directors
and executive officers as a group include 165,000, 135,500,
5,600, 40,000, 40,000, 40,000, 81,650, 6,200, 20,000, 4,800 and
547,750 shares, respectively, that such person or group has the
right to acquire within 60 days of January 1, 1996 through the
exercise of stock options. Shares beneficially owned by Mr.
Crisp, Mr. Noble, Mr. Tsongas and all Directors and executive
officers as a group include 8,458, 4,860, 7,856 and 21,174 full
shares, respectively, that had been allocated through January 1,
1996, to their respective accounts maintained under the
Corporation's Deferred Compensation Plan for Directors. Shares
beneficially owned by Mr. Armstrong include 1,120 shares held by
Mr. Armstrong's spouse and 1,000 shares held by Mr. Armstrong's
son. Shares beneficially owned by Dr. G. Hatsopoulos include 114
shares held by Dr. G. Hatsopoulos' spouse. Shares beneficially
owned by Mr. J. Hatsopoulos include 2,600 shares each held by Mr.
J. Hatsopoulos as custodian for the benefit of two of his
children. Shares beneficially owned by Mr. Tsongas include 2,078
shares each held by Mr. Tsongas as custodian for two of his minor
daughters. No Director or executive officer beneficially owned
more than 1% of the Common Stock outstanding as of January 1,
1996, other than Mr. Armstrong, who beneficially owned 1.3%, and
Mr. Corcoran, who beneficially owned 1.1%, of the Common Stock
outstanding as of such date; all Directors and executive officers
as a group beneficially owned 5.5% of the Common Stock
outstanding as of such date.
(3) The shares of common stock of Thermo Electron shown in the table
reflect a three-for-two split of such stock effected in May 1995.
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Shares beneficially owned by Mr. Armstrong, Mr. Corcoran, Mr.
Crisp, Dr. G. Hatsopoulos, Mr. J. Hatsopoulos, Mr. Howard, Mr.
Janssens, Mr. Noble, Dr. Sakhuja and all Directors and executive
officers as a group include 71,350, 45,548, 5,250, 1,102,200,
297,880, 40,185, 17,099, 5,250, 48,150 and 1,698,037 shares,
respectively, that such person or group has the right to acquire
within 60 days of January 1, 1996 through the exercise of stock
options. Shares of the common stock of Thermo Electron
beneficially owned by Mr. Armstrong, Dr. G. Hatsopoulos, Mr. J.
Hatsopoulos, Mr. Howard, Mr. Janssens, Dr. Sakhuja and all
Directors and executive officers as a group include 1,600, 1,481,
1,225, 1,963, 890, 889 and 8,867 full shares, respectively,
allocated to their respective accounts maintained pursuant to
Thermo Electron's Employee Stock Ownership Plan. Shares of the
common stock of Thermo Electron beneficially owned by Mr. Crisp,
Mr. Noble and all Directors and executive officers as a group
include 29,421, 4,860 and 34,281 full shares, respectively,
allocated through January 1, 1996 to their respective accounts
maintained pursuant to Thermo Electron's deferred compensation
plan for directors. Shares beneficially owned by Dr. G.
Hatsopoulos include 59,734 shares held by Dr. G. Hatsopoulos'
spouse, 112,500 shares held by a QTIP trust for the benefit of
Dr. G. Hatsopoulos' spouse and 26,625 shares held by a family
trust of which Dr. G. Hatsopoulos' spouse is trustee. Shares
beneficially owned by Mr. J. Hatsopoulos include 435 shares each
held by a family trust for two of Mr. J. Hatsopoulos' children.
As of January 1, 1996, no director or executive officer
beneficially owned more than 1% of Thermo Electron common stock
outstanding as of such date other than Dr. G. Hatsopoulos, who
beneficially owned 2.6% of such stock; all directors and
executive officers as a group beneficially owned approximately
3.6% of the Thermo Electron common stock outstanding as of
January 1, 1996.
(4) Shares beneficially owned by Mr. Crisp do not include 100,000
shares owned in the aggregate by entities affiliated with Venrock
Associates, of which Mr. Crisp is both a general and limited
partner and for which Mr. Crisp disclaims beneficial ownership.
Shares beneficially owned by Mr. Tsongas include 1,000 shares
owned by Mr. Tsongas' spouse. No Director or executive officer
beneficially owned more than 1% of the Common Stock outstanding
of ThermoLyte as of January 1, 1996; all Directors and executive
officers as a group beneficially owned less than 1% of the
outstanding common stock as of such date.
(5) Thermo Electron owned 63.1% of the Common Stock outstanding as of
January 1, 1996. Thermo Electron's address is 81 Wyman Street,
Waltham, Massachusetts 02254-9046. As of January 1, 1996, Thermo
Electron had the power to elect all of the members of the
Corporation's Board of Directors.
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Disclosure of Certain Late Filings
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's Directors and executive officers and beneficial owners
of more than 10% of the Common Stock, such as Thermo Electron, to file
with 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 fiscal 1995, except in the following instances. A Form 4 for
January 1995 filed on behalf of Thermo Electron was amended five days
after the original filing to include the acquisition of 50,200 shares
on the last day of the month, which were omitted from the original
filing. In addition, the Form 5 filings for fiscal 1995 of Mr. Donald
E. Noble and Mr. Peter O. Crisp, Directors of the Corporation, were
amended four days after the original filings to include the quarterly
acquisition of phantom stock units on July 1, 1995 pursuant to the
Corporation's deferred compensation plan for Directors, which had been
erroneously omitted from the original filings.
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EXECUTIVE COMPENSATION
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 three other most highly
compensated executive officers for the last three fiscal years (the
"named executive officers"). No other executive officer of the
Corporation met the definition of "highly compensated" within the
meaning of the Securities and Exchange Commission's executive
compensation disclosure rules.
The Corporation is required to appoint certain executive officers
and full-time employees of Thermo Electron as executive officers of
the Corporation, in accordance with the Thermo Electron Corporate
Charter. The compensation for these executive officers is determined
and paid entirely by Thermo Electron. The time and effort devoted by
these individuals to the Corporation's affairs is provided to the
Corporation under the Corporate Services Agreement between the
Corporation and Thermo Electron. Accordingly, the compensation for
these individuals is not reported in the following table.
Summary Compensation Table
<TABLE>
Summary Compensation Table
<CAPTION>
Annual Compensation Long Term
(1) Compensation
Securities
Nameand Principal Position Underlying Options
(No. of Shares and
Fiscal Company)
Year Salary Bonus (2)
<S> <C> <C> <C> <C> <C> <C
Marshall J. Armstrong (4) 1995 $163,000 $100,000 --
Chief Executive Officer 1994 $154,500 $126,000 125,000 (THP)
1993 $145,750 $105,000 --
J. Timothy Corcoran (5) 1995 $145,507 $83,000 15,000 (THP)
President 30,400 (TMO)
1994 $129,000 $75,000 80,500 (THP)
3,900 (TMO)
1993 $102,263 $65,000 40,000 (THP)
11,248 (TMO)
Chester G. Janssens 1995 $145,125 $15,000 12,000 (THP)
Vice President; 2,400 (TMO)
President, Crusader 1994 $140,000 $35,000 29,650 (THP)
Engines Division 4,125 (TMO)
1993 $113,438 $20,000 2,700 (TMO)
Ravinder K. Sakhuja (6) 1995 $145,125 $40,000 4,200 (TMO)
Vice President; 1994 $140,250 $45,000 20,000 (THP)
President, 5,700 (TMO)
Tecogen Division 1993 $138,000 $30,000 5,625 (TMO)
</TABLE>
(1) Annual compensation for executive officers generally is reviewed
and determined on a calendar-year basis, even though the
Corporation's fiscal year ends in September. The salary data
presented here has been adjusted to reflect salary paid during
the Corporation's fiscal year, while the bonus represents the
bonus paid for performance during the calendar year in which the
Corporation's fiscal year-end occurred. Bonuses have not yet
been determined for calendar 1995; therefore, the bonus amounts
shown for fiscal 1995 are estimates.
(2) Mr. Armstrong has served as a vice president of Thermo Electron
since 1986 and has been granted options to purchase common stock
of Thermo Electron and its subsidiaries other than the
Corporation from time to time by Thermo Electron or its other
subsidiaries. These options are not reported here as they were
granted as compensation for service to other Thermo Electron
companies in capacities other than his capacity as the chief
executive officer of the Corporation. Options granted by the
Corporation are designated in the table as "THP." During the past
three fiscal years, Mr. Corcoran, Mr. Janssens and Dr. Sakhuja
have been granted options to purchase common stock of Thermo
Electron Corporation (designated in the table as "TMO") as part
of Thermo Electron's stock option program.
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(3) Represents the amount of matching contributions made by the
individual's employer on behalf of executive officers
participating in the Thermo Electron 401(k) plan.
(4) Mr. Armstrong is a vice president and full-time employee of
Thermo Electron, but he devotes such time to the affairs of the
Corporation as the Corporation's needs reasonably require. The
annual cash compensation and other total compensation reported in
the table for Mr. Armstrong has been determined and paid by
Thermo Electron. The Corporation is allocated a percentage of Mr.
Armstrong's annual cash compensation (salary and bonus) for the
time he devotes to the affairs of the Corporation, which is
reviewed and approved by the Human Resources Committee of the
Board of Directors of the Corporation. For fiscal 1995, 1994 and
1993, the Corporation was allocated approximately 60%, 60% and
40%, respectively, of Mr. Armstrong's annual cash compensation.
(5) Mr. Corcoran was appointed president of the Corporation effective
April 1, 1995. Prior to that date, he served as a vice president
of the Corporation.
(6) On December 8, 1995, Dr. Sakhuja resigned his responsibilities as
a vice president of the Corporation. He continues to be employed
on a half-time basis by the Corporation and its parent
corporation, Thermo Electron. Dr. Sakhuja will be paid
approximately $73,250 per year under this arrangement, with the
Corporation responsible for the payment of 25% of this amount.
Stock Options Granted During Fiscal 1995
The following table sets forth information concerning individual
grants of stock options made by the Corporation and the other Thermo
Electron companies during fiscal 1995 to the 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
1995.
Mr. Armstrong has been granted options to purchase common stock
of Thermo Electron and certain of its subsidiaries from time to time
as compensation for service to other Thermo Electron companies in
capacities other than in his capacity as chief executive officer of
the Corporation. Accordingly, options granted by Thermo Electron
companies other than the Corporation and its subsidiaries have not
been reported in the table.
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Option Grants In Fiscal 1995
<TABLE>
Option Grants In Fiscal 1995
<CAPTION>
Percent of Potenti
Total Value
Number of Options Annual
Securities Granted to Exercise Price Ap
Underlying OptionsEmployees inPrice Per Expiration Opt
Name Granted (1) Fiscal Year Share Date
<S> <C> <C> <C> <C> <C> <C> <C> 5%
J. Timothy Corcoran 15,000 (THP) 6.4% $8.95 12/15/06 $106,
30,000 (TMO) 2.0% (2) $30.07 11/28/06 $717,
400 (TMO) 0.03% (2) $37.27 05/23/98 $2,3
Chester G. Janssens 12,000 (THP) 5.2% $8.95 12/15/01 $43,6
2,400 (TMO) 0.2% (2) $37.27 05/23/98 $14,0
Ravinder K. Sakhuja 4,200 (TMO) 0.3% (2) $37.27 05/23/98 $24,6
</TABLE>
(1) All of the options granted during the fiscal year are immediately
exercisable at the date of grant. However, the shares acquired
upon exercise are subject to repurchase by the granting
corporation at the exercise price if the optionee ceases to be
employed by the 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. 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. The granting corporation may
permit the holders of such options to exercise options and to
satisfy tax withholding obligations by surrendering shares equal
in fair market value to the exercise price or withholding
obligation.
(2) These options were granted under stock option plans maintained by
Thermo Electron and accordingly are reported as a percentage of
total options granted to employees of Thermo Electron and its
public subsidiaries.
Stock Options Exercised During Fiscal 1995 and Fiscal Year-End Values
The following table reports certain information regarding stock
option exercises during fiscal 1995 and outstanding stock options of
the Thermo Electron companies held at the end of fiscal 1995 by the
named executive officers. No stock appreciation rights were exercised
or were outstanding during fiscal 1995.
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AGGREGATED OPTION EXERCISES IN FISCAL 1995 AND FISCAL 1995 YEAR-END
OPTION VALUES
<TABLE>
Aggregated Option Exercises In Fiscal 1995 And Fiscal 1995 Year
Option Values
<CAPTION>
No. of Unexer
Shares Options at Fi
Acquired Value Year-end
Name Company on Realized (Exercisabl
Exercise Unexercisable
<S> <C> <C> <C> <C>
Marshall J. Armstrong (2) Thermo Power -- -- 165,000 /0<
J. Timothy Corcoran Thermo Power -- -- 135,500/0
Thermo Electron -- -- 45,548/0
Chester G. Janssens Thermo Power -- -- 81,650/0(
Thermo Ecotek -- -- 3,000/0
Thermo Electron 7,649 $158,077 17,099/0
Thermo Fibertek -- -- 3,000/0
ThermoTrex -- -- 900/0
Ravinder K. Sakhuja Thermo Power -- -- 20,000/0
Thermo Ecotek -- -- 3,500/0
Thermo Electron 6,975 $144,619 48,150/0
Thermo Fibertek -- -- 3,000/0
ThermoTrex -- -- 2,700/0
</TABLE>
(1) The shares of common stock shown in the table have been adjusted
to reflect the following stock splits: (i) a three-for-two split
effected by Thermo Electron in May 1995 and (ii) a three-for-two
split effected by Thermo Fibertek Inc. in September 1995. All of
the options reported outstanding at the end of the fiscal year
were immediately exercisable as of fiscal year-end. 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. 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.
(2) As an executive officer of Thermo Electron, Mr. Armstrong also
holds unexercised options to purchase common stock of Thermo
Electron and its subsidiaries other than the Corporation and
ThermoLyte. 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) Options to purchase 30,000 shares of the common stock of Thermo
Electron granted to Mr. Corcoran are subject the same terms
described in footnote (1), except that the repurchase rights of
Thermo Electron 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 Thermo Electron shall
be deemed to have lapsed ratably over a five-year period
commencing with the fifth anniversary of the grant date.
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<PAGE>
Severance Agreements
In 1988, Thermo Electron entered into severance agreements with
several of its key employees, including key employees of the
Corporation and other majority-owned subsidiaries. These agreements
provide severance benefits if there is a change of control of Thermo
Electron that is not approved by the Board of Directors of Thermo
Electron and the employee's employment with Thermo Electron or the
majority-owned subsidiary is terminated, for whatever reason, within
one year thereafter. For purposes of the agreement, 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. Each
of the recipients of these agreements would receive a lump-sum benefit
at the time of a qualifying severance (as defined below) 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 qualifying severance. A
qualifying severance exists (i) if 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 September 30, 1995, Mr. Armstrong and Dr. Sakhuja
would have received approximately $300,000 and $190,000, respectively.
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Executive Compensation
All decisions on compensation for the Corporation's executive
officers are made by the Human Resources Committee of the Board of
Directors (the "Committee"). In reviewing and establishing total cash
compensation and stock-based compensation for executives, the
Committee follows guidelines established by the Human Resources
Committee of the Board of Directors of its parent corporation, Thermo
Electron. The executive compensation program presently consists of
annual base salary ("salary"), short-term incentives in the form of
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<PAGE>
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 Index, but do not necessarily correspond to the
companies included in the peer group index, the Dow Jones Industrial
Diversified Industry Group Index.
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.
Because the compensation practices of the Corporation are guided
by the policies of its parent corporation, cash compensation reviews
are conducted on a calendar-year basis in order to coincide with the
compensation reviews conducted by the human resources committee of
Thermo Electron. Thermo Electron operates on a fiscal year that ends
on the Saturday nearest December 31.
The process for determining each of these elements for the
Corporation's officers is outlined below.
Base Salary
Base salaries are intended to approximate the mid-point of
competitive salaries for similar organizations of comparable size and
complexity to the Corporation. Executive salaries are adjusted
gradually over time and only as necessary to meet this objective.
Increases in base salary may be moderated by other considerations,
such as geographic or regional market data, industry trends or
internal fairness within the Corporation and Thermo Electron. It is
the Committee's intention that over time the base salaries for the
chief executive officer and the other named executive officers will
approach the mid-point of competitive data. The salary increases in
calendar 1995 for the chief executive officer and the other named
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<PAGE>
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, contributions to shareholder value, and
earnings growth, and are measures of corporate and divisional
performance that are evaluated using graphs developed by Thermo
Electron designed to reward performance that is perceived as above
average and to penalize performance that is perceived as below
average. The measures of operating returns used in the Committee's
determinations in fiscal 1995 measured return on net assets, growth in
income, and growth in earnings per share, and the Committee's
determination also involved an evaluation of the contributions of each
executive that are not captured by operating measures but are
considered important to the creation of long-term value for the
Stockholders. These measures of achievements are not financial
targets that are met, not met or exceeded. The relative weighting of
these achievements vary depending on the executive's role and
responsibilities within the organization.
The estimated bonuses for named executive officers approved by
the Committee with respect to calendar 1995 performance in each
instance exceeded the median potential bonus.
Stock Option Program
The primary goal of the Corporation is to excel in the creation
of long-term value for the Stockholders. The principal incentive tool
used to achieve this goal is the periodic award to key employees of
options to purchase common stock of the Corporation and other Thermo
Electron companies.
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
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<PAGE>
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 its parent corporation, Thermo
Electron, its subsidiary, ThermoLyte, 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 Black-Scholes
option-pricing model.) As a guideline, the Committee strives to
maintain the aggregate amount of awards to all employees over a
five-year period below 10% of the Corporation's outstanding common
stock, although other factors such as unusual transactions and
acquisitions and standards for awards of comparably situated companies
may affect the number of awards granted.
Awards are not made annually in conjunction with the annual
review of cash compensation, but are made periodically. 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 with respect to the common stock of the
Corporation's parent, Thermo Electron, were determined by the human
resources committee of the board of directors of that company using a
similar analysis.
CEO Compensation
The salary and bonus of Mr. Armstrong is established using the
same criteria as for the salaries and bonuses for the Corporation's
other executive officers. However, the cash compensation for Mr.
Armstrong is reviewed and established by the human resources committee
of the board of directors of Thermo Electron, due to Mr. Armstrong's
position and responsibilities as a vice president of that company.
The Corporation's Committee reviews the total annual cash compensation
of Mr. Armstrong determined by the Thermo Electron committee and
agrees to an allocation of such annual cash compensation to the
Corporation, taking into account Mr. Armstrong's relative
responsibilities at the Corporation and Thermo Electron. The
Committee agreed to an allocation of approximately 60% of Mr.
Armstrong's calendar 1995 cash compensation to the Corporation.
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
17
PAGE
<PAGE>
public companies for annual compensation paid to senior executives in
excess of $1 million unless the compensation qualifies as "performance
based." The annual cash compensation paid to individual executives
does not approach the $1 million threshold, and it is believed that
the stock incentive plans of the Corporation qualify as "performance
based." Therefore, the Committee does not believe any further actions
necessary in order to comply with Section 162 (m). From time to time,
the Committee will reexamine the Corporation's compensation practices
and the effect of Section 162(m).
Mr. Peter O. Crisp (Chairman)
Mr. Donald E. Noble
Mr. Paul E. Tsongas
18
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COMPARATIVE PERFORMANCE GRAPH
The Securities and Exchange Commission requires that the
Corporation include in this Proxy Statement a line-graph presentation
comparing cumulative, five-year shareholder returns for the
Corporation's Common Stock with a broad-based market index and either
a nationally recognized industry standard or an index of peer
companies selected by the Corporation. The Corporation has compared
its performance with the American Stock Exchange Market Value Index
and the Dow Jones Industrial Diversified Industry Group Index.
Comparison of 1990-1995 Total Return Among Thermo Power Corporation,
the American Stock Exchange Market Value Index and the
Dow Jones Industrial Diversified Industry Group Index.
[GRAPH APPEARS HERE]
9/28/90 9/27/91 9/26/92 10/1/93 9/30/94 9/30/95
THP 100 106 91 122 109 189
AMEX 100 121 123 150 149 177
DJIDD 100 124 136 199 147 242
The total return for the Corporation's Common Stock (THP), the
American Stock Exchange Market Value Index (AMEX) and the Dow Jones
Industrial Diversified Industry Group Index (DJIDD) assumes the
reinvestment of dividends, although dividends have not been declared
on the Corporation's Common Stock. The American Stock Exchange Market
Value Index tracks the aggregate performance of equity securities of
companies listed on the American Stock Exchange ("AMEX"). The
Corporation's Common Stock is traded on the AMEX under the ticker
symbol "THP."
19
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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. The Corporation has created
ThermoLyte Corporation ("ThermoLyte") as a majority-owned subsidiary.
From time to time, Thermo Electron and its subsidiaries will create
other majority-owned subsidiaries as part of its spinout strategy.
(The Corporation and the other Thermo Electron subsidiaries are
hereinafter referred to as the "Thermo Subsidiaries.")
Thermo Electron and each of the Thermo Subsidiaries recognize
that the benefits and support that derive from their affiliation are
essential elements of their individual performance. Accordingly,
Thermo Electron and each of the Thermo Subsidiaries has adopted the
Thermo Electron Corporate Charter (the "Charter") to define the
relationships and delineate the nature of such cooperation among
themselves. The purpose of the Charter is to ensure that (1) all of
the companies and their stockholders are treated consistently and
fairly, (2) the scope and nature of the cooperation among the
companies, and each company's responsibilities, are adequately
defined, (3) each company has access to the combined resources and
financial, managerial and technological strengths of the others, and
(4) Thermo Electron and the Thermo Subsidiaries, in the aggregate, are
able to obtain the most favorable terms from outside parties.
To achieve these ends, the Charter identifies the general
principles to be followed by the companies, addresses the role and
responsibilities of the management of each company, provides for the
sharing of group resources by the companies and provides for
centralized administrative, banking and credit services to be
performed by Thermo Electron. The services provided by Thermo Electron
include collecting and managing cash generated by members,
coordinating the access of Thermo Electron and the Thermo Subsidiaries
(the "Thermo Group") to external financing sources, ensuring
compliance with external financial covenants and internal financial
policies, assisting in the formulation of long-range financial
planning and providing other banking and credit services. Pursuant to
the Charter, Thermo Electron may also provide guarantees of debt or
other obligations of the Thermo Subsidiaries or may obtain external
financing at the parent level for the benefit of the Thermo
Subsidiaries. In certain instances, the Thermo Subsidiaries may
provide credit support to, or on behalf of, the consolidated entity or
may obtain financing directly from external financing sources. Under
the Charter, Thermo Electron is responsible for determining that the
Thermo Group remains in compliance with all covenants imposed by
external financing sources, including covenants related to borrowings
of Thermo Electron or other members of the Thermo Group, and for
apportioning such constraints within the Thermo Group. In addition,
Thermo Electron 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
20
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<PAGE>
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 the Corporation. The Corporation was
assessed an annual fee equal to 1.2% and 1.25% of the Corporation's
revenues for these services in calendar 1995 and for the two-year
period beginning calendar 1993, respectively. Beginning January 1,
1996, the fee has been reduced to 1% of the Corporation's revenues.
The fee is reviewed annually and may be changed by mutual agreement of
the Corporation and Thermo Electron. During fiscal 1995, Thermo
Electron assessed the Corporation $1,250,000 in fees under the
Services Agreement. Management believes that the charges under the
Services Agreement are reasonable and that the terms of the Services
Agreement are 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
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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 provides contract administration and other
services and data processing services, respectively, to one
wholly-owned and four majority-owned subsidiaries of Thermo Electron,
which are charged based on actual usage. For these services, the
Corporation charged $209,000 in fiscal 1995 to such subsidiaries.
From time to time, the Corporation may transact business in the
ordinary course with other companies in the Thermo Group. All such
transactions are on terms comparable to those the Corporation would
receive from unaffiliated parties.
As of September 30, 1995, $22,381,000 of the Corporation's cash
equivalents were invested in a repurchase agreement with Thermo
Electron. Under this agreement, the Corporation in effect lends excess
cash to Thermo Electron, which Thermo Electron collateralizes with
investments principally consisting of corporate notes, government and
agency securities, money market funds, certificates of deposit and
other marketable securities, in the amount of at least 103% of such
obligation. The Corporation's funds subject to the repurchase
agreement are readily convertible into cash by the Corporation and
have a maturity of three months or less. The repurchase agreement
earns a rate based on the Commercial Paper Composite Rate plus 25
basis points, set at the beginning of each quarter.
Thermo Electron owned approximately 60.9% of the Corporation's
outstanding Common Stock on January 17, 1996. Thermo Electron intends
for the foreseeable future to maintain at least 50% 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 and any other purchases may be made either on the
open market or directly from the Corporation.
The Corporation leases an office and laboratory facility from
Thermo Electron under an agreement expiring in September 1997. The
rental payments made to Thermo Electron, net of sublease income,
during fiscal 1995 were $170,000.
In March 1995, the Corporation's ThermoLyte subsidiary sold
1,845,000 units, each unit consisting of one share of ThermoLyte
common stock, $0.01 par value, and one redemption right at $10.00 per
unit. Venrock Associates, of which Mr. Peter O. Crisp, a Director of
the Corporation, is a general partner, purchased 100,000 units in the
offering. Holders of the common stock purchased in the offering will
have the option to require ThermoLyte to redeem in December 1998 or
1999 any or all of their shares at $10.00 per share. The redemption
rights are guaranteed on a subordinated basis by Thermo Electron. The
Corporation has agreed to reimburse Thermo Electron in the event
Thermo Electron is required to make a payment under the guarantee.
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--PROPOSAL 2--
PROPOSAL TO INCREASE THE NUMBER OF SHARES RESERVED FOR ISSUANCE
UNDER THE DEFERRED COMPENSATION PLAN FOR DIRECTORS
The Board of Directors has recommended that the Stockholders
approve an increase of 25,000 shares in the number of shares reserved
for issuance under the Corporation's Deferred Compensation Plan for
Directors (the "Deferred Compensation Plan"). An aggregate of 25,000
shares is currently reserved for issuance under the Deferred
Compensation Plan. As of January 1, 1996, deferred units equal to
21,175.73 shares of Common Stock had been accumulated under the
Deferred Compensation Plan.
The proposed increase in the number of shares reserved under the
Deferred Compensation Plan is being submitted to the Corporation's
Stockholders for approval so that the quarterly accrual of shares
under the plan will not be construed as a purchase of shares for
purposes of certain limitations on insider trading imposed by the
Securities and Exchange Commission. The proposal, if approved by the
Stockholders, would increase the total number of shares of Common
Stock available for issuance under the Deferred Compensation Plan from
25,000 shares to 50,000 shares.
Summary of the Deferred Compensation Plan
A description of the principal features of the Deferred
Compensation Plan follows.
Participation; Administration
Any Director of the Corporation who is not also an officer of the
Corporation or Thermo Electron may participate in the Deferred
Compensation Plan. No Director may defer any fees pursuant to the
Deferred Compensation Plan which are to be earned after the later to
occur of either (a) the date on which the Director shall retire from
or otherwise cease to engage in his principal occupation or employment
or (b) the date on which he shall cease to be a Director of the
Corporation, or such earlier date as the Board of Directors, with the
Director's consent, may designate (the "deferral termination date").
Mr. Crisp, Mr. Noble and Mr. Tsongas are the only Directors of the
Corporation currently eligible to participate in the Deferred
Compensation Plan.
Contributions
A participating Director may elect to have such percentage as he
shall specify of the fees otherwise payable to him deferred and paid
to him as provided in the Deferred Compensation Plan. See "Election
of Directors -- Compensation of Directors" for a description of the
fees paid to Directors of the Corporation. All fees deferred at the
Director's election are allocated, at the end of each quarter, to a
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deferred compensation account established for each participating
Director.
Conversion of Deferred Fees into Stock Units; Stock Units Subject
to the Deferred Compensation Plan
At the end of each quarter, the amount allocated to a
participating Director's deferred compensation account is converted
into that number of stock units determined by dividing the accumulated
balance in the deferred compensation account by the average closing
price per share of the Common Stock for the ten business days up to
and including the last business day of that quarter. The number of
stock units is rounded to the nearest one-hundredth of a share and is
credited to a separate stock unit account established for each
participating Director, and the aggregate value of such stock units is
charged to such Director's deferred compensation account. Cash and
stock dividends paid on the Common Stock are credited to a
participating Director's deferred compensation account and stock unit
account, respectively, in amounts equal to the cash or stock dividend
which the participating Director would have received had he been the
owner on the record date for the payment of such dividend of the
number of shares of the Common Stock equal to the number of units in
his stock unit account on such date. A maximum number of 25,000
shares of the Common Stock (50,000 shares if the proposal is
approved) may be represented by stock units credited under the
Deferred Compensation Plan, subject to proportionate adjustment in the
event of any stock dividend, stock split or other capital change
affecting the Common Stock.
Distribution of Stock and Cash
Upon the occurrence of a participating Director's deferral
termination date, the Corporation shall distribute to the
participating Director the number of shares of Common Stock and an
amount of cash equal to the number of stock units and amount of cash
in such participating Director's stock unit account and deferred
compensation account, respectively, at the end of the fiscal year in
which the deferral termination date occurs. Such distribution shall
be made in ten annual installments, unless the participating Director
shall have notified the Corporation prior to the deferral termination
date that he desires the distributions to be made over a five-year
period, and the distribution of stock and cash shall commence within
60 days after the close of the fiscal year in which the participating
Director's deferral termination date occurs. Notwithstanding the
foregoing, the Board of Directors may at any time determine, with the
participating Director's consent, to make a distribution of all stock
and cash (or any remaining portions thereof) to which the
participating Director is entitled in a single distribution. All
distributions under the Deferred Compensation Plan must be completed
by September 30, 2021.
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Amendment and Termination
The Deferred Compensation Plan shall terminate, and full
distribution shall promptly be made from all participating Directors'
deferred compensation accounts and stock unit accounts, upon a change
in control of the Corporation. 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 of either
the Corporation or Thermo Electron or (b) the failure of the persons
serving on the Board of Directors immediately prior to any contested
election of directors or any exchange offer or tender offer for the
Common Stock or the common stock of Thermo Electron to constitute a
majority of the Board of Directors at any time within two years
following any such event. In addition, the Board of Directors may at
any time, at its discretion, terminate the Deferred Compensation Plan.
If the Board of Directors terminates the Deferred Compensation Plan,
other than in connection with a change of control, distributions shall
be made according to the schedule described above. The Board of
Directors may amend the Deferred Compensation Plan at any time;
provided, however, that no amendment affecting the cash or credits
already in a participating Director's deferred compensation account or
stock unit account may be made without the consent of the
participating Director.
Federal Income Tax Aspects
Federal income tax is not imposed upon a Director at the time
fees are deferred and stock units allocated to a Director's account
under the Deferred Compensation Plan. A Director who receives a
distribution of Common Stock under the Deferred Compensation Plan will
generally be subject to tax at ordinary income rates on the fair
market value of the Common Stock on the date of distribution. The
capital gain or loss holding period will commence on the date the
Common Stock is distributed to the Director. The Corporation
generally will be entitled to a deduction equal to the amount that is
taxable as ordinary income to the Director.
The closing price per share on the American Stock Exchange of the
Common Stock on February 1, 1996 was $15.125.
Recommendation
The Board of Directors believes that the proposal to increase the
shares of Common Stock available under the Deferred Compensation Plan
is in the best interests of the Corporation and its Stockholders and
recommends that the Stockholders vote FOR the approval of the
increase. Thermo Electron beneficially owned approximately 63% of the
outstanding voting stock of the Corporation on January 1, 1996 and has
indicated its intention to vote for the proposal.
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The affirmative vote of a majority of the Common Stock present
and entitled to vote on this matter is required to approve the
proposal regarding the Deferred Compensation Plan. The Board of
Directors considers the increase in the number of shares available
under the Deferred Compensation Plan to be in the best interests of
the Corporation and its Stockholders and recommends that you vote FOR
the proposed increase. If not otherwise specified, Proxies will be
voted FOR approval of this proposal.
-- PROPOSAL 3 --
PROPOSAL TO INCREASE THE NUMBER OF SHARES RESERVED FOR
ISSUANCE UNDER THE EMPLOYEES' STOCK PURCHASE PLAN
The Board of Directors has recommended that the Stockholders
approve an increase in the number of shares of common stock of the
Corporation's parent company, Thermo Electron, authorized for issuance
under the Corporation's Employees' Stock Purchase Plan (the "Stock
Purchase Plan") by 50,000 shares.
The Board of Directors has approved an increase of 50,000 shares
in the number of shares of the common stock of Thermo Electron
available for issuance under the Stock Purchase Plan, and is
recommending this increase to the Stockholders for their approval.
The purpose of the Stock Purchase Plan is to grant options to purchase
shares of Common Stock of the Corporation and common stock of Thermo
Electron to eligible employees of the Corporation. The shares of the
common stock of Thermo Electron available for issuance under the Stock
Purchase Plan were nearly expended in connection with the Plan's
October 31, 1995 purchase date. The Board of Directors believes that
it is important for the Corporation to be able to offer employees the
opportunity to participate in the ownership and growth of the
Corporation and in its parent corporation, Thermo Electron, through
the Stock Purchase Plan and wishes to continue the operation of the
Plan. Accordingly, the Board of Directors has approved the proposed
increase in the number of shares of the common stock of Thermo
Electron available for issuance under the Plan by 50,000 shares,
subject to Stockholder approval at this Meeting.
Summary of the Stock Purchase Plan
A description of the principal features of the Stock Purchase
Plan follows.
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.
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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 or
Thermo Electron 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. The number of employees potentially eligible
to participate in the Stock Purchase Plan is approximately 500
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 Stock
Purchase Plan year. An employee may suspend contribution, but then is
not permitted to contribute again for the remainder of the Stock
Purchase Plan year.
Terms of Options
The exercise price is fixed on the grant date 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 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
The number of shares that are currently available for issuance
under the Stock Purchase Plan are 110,533 shares of the Corporation's
Common Stock and 14,980 shares of Thermo Electron common stock,
subject to adjustment for stock splits and similar events. The
proceeds received by the Corporation from exercise 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 shares 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
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Purchase Plan for any purpose which may at any time 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 (the "Exchange Act"). No
amendment of the Stock Purchase Plan may adversely affect the rights
of any recipient of any option previously purchased without such
recipient's consent.
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
(which will occur more than two years after the options granted),
Federal income tax assessed at ordinary income 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.
Recommendation
The Board of Directors believes that the proposal to increase the
shares of common stock of Thermo Electron available under the plan is
in the best interests of the Corporation and its Stockholders and
recommends that the Stockholders vote FOR the approval of the
increase. Thermo Electron beneficially owned approximately 63% of the
outstanding voting stock of the Corporation on January 1, 1996 and has
indicated its intention to vote for the proposal.
The affirmative vote of a majority of the Common Stock present
and entitled to vote on this matter is required to approve the
proposal regarding the Stock Purchase Plan. The Board of Directors
considers the increase in the number of shares of Thermo Electron
common stock available under the Stock Purchase Plan to be in the best
interest of the Corporation and its Stockholders and recommends that
you vote FOR approval of the proposal. If not otherwise specified.
Proxies will be voted FOR approval of this proposal.
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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
its inception in 1985. 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 two 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 1997
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 October 16, 1996.
SOLICITATION STATEMENT
The cost of this solicitation of Proxies will be borne by the
Corporation. Solicitation will be made primarily by mail, but regular
employees of the Corporation may solicit Proxies personally, by
telephone or telegram. Brokers, nominees, custodians and fiduciaries
are requested to forward solicitation materials to obtain voting
instructions from beneficial owners of stock registered in their
names, and the Corporation will reimburse such parties for their
reasonable charges and expenses in connection therewith.
Waltham, Massachusetts
February 13, 1996
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FORM OF PROXY
THERMO POWER CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 11, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE
COMPANY.
The undersigned hereby appoints Marshall J. Armstrong, John N.
Hatsopoulos and Jonathan W. Painter, or any one of them acting 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 Power Corporation, a Massachusetts corporation
(the "Company"), to be held on Monday, March 11, 1996, at 10:00 a.m.,
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 January 17, 1996, with all of the powers the undersigned would
possess if personally present at such meeting:
(Continued and to be signed on reverse side.)
Please mark your
[ x ] votes as in this
example.
FOR WITHHELD
1. Election of directors of the Company [ ] [ ]
(See Reverse)
For all nominees listed at right, execept
vote withheld for the following nominees
(if any):
Nominees:
Marshall J. Armstrong
Peter O. Crisp
John N. Hatsopoulos
Robert C. Howard
Donald E. Noble
Paul E. Tsongas
FOR AGAINST ABSTAIN
2. Approve an increase in the common
stock of the Company reserved under [ ] [ ] [ ]
the Deferred Compensation Plan
for Directors by 25,000 shares
3. Approve an increase in the common
stock of the Thermo Electron [ ] [ ] [ ]
Corporation reserved under the
Employee's Stock Purchase Plan
by 50,000 shares.
4. In their discretion on such other matters as may properly come
before the Meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3 AND 4.
Copies of the Notice of Meeting and of the Proxy Statement have
been received by the undersigned.
PLEASE PROMPTLY DATE, SIGN AND RETURN THIS PROXY IN THE ENCLOSED
ENVELOPE.
SIGNATURE(S)_______________________________ DATE_________________
(Note: PLEASE SIGN EXACTLY AS YOUR NAME APPEARS HEREON. EXECUTORS,
ADMINISTRATORS, TRUSTEE, ETC. SHOULD SO INDICATE WHEN SIGNING, GIVING
FULL TITLE AS SUCH. IF SIGNER IS A CORPORATION, EXECUTE IN FULL
CORPORATE NAME BY AUTHORIZED OFFICER. IF MORE PERSONS, ALL SHOULD
SIGN.)
