<PAGE>
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 (S)240.14a-11(c) or (S)240.14a-12
THERMO POWER CORPORATION
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
THERMO POWER CORPORATION
------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i) (4) and 0-11.
(1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------------------
(4) Date Filed:
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<PAGE>
THERMO POWER CORPORATION
81 Wyman Street, Post Office Box 9046, Waltham, MA 02254-9046
January 21, 1998
Dear Stockholder:
The enclosed Notice calls the 1998 Annual Meeting of the Stockholders of
Thermo Power Corporation. I respectfully request all Stockholders to attend this
meeting, if possible.
Our Annual Report for the fiscal year ended September 27, 1997, 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,
J. TIMOTHY CORCORAN
President and Chief Executive Officer
<PAGE>
THERMO POWER CORPORATION
81 Wyman Street, Post Office Box 9046, Waltham, MA 02254-9046
January 21, 1998
To the Holders of the Common Stock of
THERMO POWER CORPORATION
NOTICE OF ANNUAL MEETING
The 1998 Annual Meeting of the Stockholders of Thermo Power Corporation
(the "Corporation") will be held on Friday, March 13, 1998 at 10:00 a.m. at the
executive offices of Thermo Electron Corporation, 81 Wyman Street, Waltham,
Massachusetts 02254. The purpose of the meeting is to consider and take action
upon the following matters:
1. Election of six directors.
2. 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 receive notice
of and to vote at the meeting is January 14, 1998.
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
<PAGE>
PROXY STATEMENT
The enclosed proxy is solicited by the board of directors of Thermo Power
Corporation (the "Corporation") for use at the 1998 Annual Meeting of the
Stockholders (the "Meeting") to be held on Friday, March 13, 1998 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 January 23, 1998.
VOTING PROCEDURES
The board of directors intends to present to the Meeting the election of
six directors, constituting the entire board of directors.
The representation in person or by proxy of a majority of the outstanding
shares of the common stock of the Corporation, $.10 par value ("Common Stock"),
entitled to vote at the Meeting is necessary to provide a quorum for the
transaction of business at the Meeting. Shares can only be voted if the
Stockholder is present in person or is represented by returning a properly
signed proxy. Each Stockholder's vote is very important. Whether or not you plan
to attend the Meeting in person, please sign and promptly return the enclosed
proxy card, which requires no postage if mailed in the United States. All signed
and returned proxies will be counted towards establishing a quorum for the
Meeting, regardless of how the shares are voted.
Shares represented by proxy will be voted in accordance with your
instructions. You may specify your choice by marking the appropriate box on the
proxy card. If your proxy card is signed and returned without specifying
choices, your shares will be voted for the management nominees for directors 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 in person or
represented by proxy and entitled to vote on the election. Withholding authority
to vote for a nominee for director 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. 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 14, 1998, consisted of
11,936,623 shares of Common Stock. Only Stockholders of record at the close of
business on January 14, 1998, are entitled to vote at the Meeting. Each share is
entitled to one vote.
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-- 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 majority owned subsidiary, ThermoLyte
Corporation, and of its parent corporation, Thermo Electron Corporation ("Thermo
Electron"), a provider of diversified products and services for the biomedical,
instrument and environmental markets, is reported under the caption "Stock
Ownership." All of the nominees are currently directors of the Corporation.
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
Marshall J. Armstrong Mr. Armstrong, 62, has been a director of the
Corporation since December 1990. He also served
as the Corporation's chairman from December 1990
to December 1996, its chief executive officer from
April 1991 to October 1996, and its president from
November 1992 to April 1995. Mr. Armstrong has
been senior vice president, government affairs, of
Thermo Electron since March 1997 and was a vice
president of Thermo Electron from 1986 until his
promotion. He is also a director of SatCon
Technology Corporation and Thermo Sentron Inc.
- --------------------------------------------------------------------------------
J. Timothy Corcoran Mr. Corcoran, 51, has been a director of the
Corporation since October 1996, when he was also
named the Corporation's chief executive officer.
He also serves as the Corporation's president, a
position he has held since April 1995. From
November 1992 to April 1995, Mr. Corcoran was a
vice president of the Corporation, and he has been
president of the Corporation's FES Division since
June 1990. Mr. Corcoran has also served as the
chairman and chief executive officer of the
Corporation's majority owned subsidiary,
ThermoLyte Corporation, since December 1996 and
February 1995, respectively.
- --------------------------------------------------------------------------------
Peter O. Crisp Mr. Crisp, 65, has been a director of the
Corporation since 1985. Mr. Crisp was a general
partner of Venrock Associates, a venture capital
investment firm, for over five years until his
retirement in September 1997. Mr. Crisp is also a
director of American Superconductor Corporation,
Evans & Sutherland Computer Corporation,
Thermedics Inc., Thermo Electron, ThermoTrex
Corporation and United States Trust Corporation.
- --------------------------------------------------------------------------------
John N. Hatsopoulos Mr. Hatsopoulos, 63, has been a director of the
Corporation since 1990, its chief financial
officer since 1988, and a senior vice president
since 1997. From 1989 until 1997, he also served
as a vice president of the Corporation. Mr.
Hatsopoulos has been the president of Thermo
Electron since January 1997, and its chief
financial officer since 1988. Prior to being
named president of Thermo Electron, Mr.
Hatsopoulos served as an executive vice president,
a position he had held since 1986. Mr. Hatsopoulos
is also a director of LOIS/USA Inc., Thermo
Electron, Thermedics Inc., Thermedics Detection
Inc., Thermo Ecotek Corporation, Thermo Fibertek
Inc., Thermo Instrument Systems Inc., Thermo
TerraTech Inc. and Thermo Vision Corporation.
- --------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
Donald E. Noble Mr. Noble, 82, 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.,
Thermo Sentron Inc. and Thermo TerraTech Inc.
- --------------------------------------------------------------------------------
Arvin H. Smith Mr. Smith, 68, has been a director and chairman of
the board of the Corporation since December 1996.
Mr. Smith has been an executive vice president of
Thermo Electron since 1991 and was a senior vice
president of that company from 1986 to 1991. He
is also the chairman of the board of Thermo
Instrument Systems Inc., a majority owned
subsidiary of Thermo Electron, and was its chief
executive officer and president from 1986 to
January 1998 and March 1997, respectively. Mr.
Smith is also a director of Metrika Systems
Corporation, Thermo BioAnalysis Corporation,
Thermo Instrument Systems Inc., Thermo Optek
Corporation, ThermoQuest Corporation,
ThermoSpectra Corporation and Thermo Vision
Corporation.
- --------------------------------------------------------------------------------
</TABLE>
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. Crisp (Chairman) and Mr. Noble. 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. Noble (Chairman) and Mr. Crisp. The human resources
committee reviews the performance of senior members of management, recommends
executive compensation and administers the Corporation's stock option and other
stock-based compensation plans. The Corporation does not have a nominating
committee of the board of directors. The board of directors met five times, the
audit committee met twice and the human resources committee met four times
during fiscal 1997. 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
Cash Compensation
Directors who are not employees of the Corporation, of Thermo Electron or
of any other companies affiliated with Thermo Electron (also referred to as
"outside directors") receive an annual retainer of $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. Payment of outside directors' fees is made quarterly.
Mr. Armstrong, Mr. Corcoran, Mr. J. Hatsopoulos and Mr. Smith 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.
Deferred Compensation Plan for Directors
Under the Deferred Compensation Plan for Directors (the "Deferred
Compensation Plan"), a director has the right to defer receipt of his cash fees
until he ceases to serve as a director, dies or retires from his principal
occupation. In the event of a change in control or proposed change in control of
the Corporation that is not approved by the board of directors, deferred amounts
become payable immediately. Either of the following is deemed to be a change of
control: (a) the acquisition, without the prior approval of the board of
directors, director or indirectly, by any person of 50% or more of the
outstanding Common Stock or 25% or more of the outstanding common stock of
Thermo Electron; or (b) the failure of the persons serving on the board of
directors immediately prior to any contested election of directors or any
exchange offer or tender offer for the Common Stock or the common stock of
Thermo Electron to constitute a majority of the board of directors at any time
within two years following any such event. Amounts deferred pursuant to the
Deferred Compensation Plan are valued at the end of each quarter as units of the
Corporation's Common Stock. When payable, amounts deferred may be disbursed
solely in shares of Common Stock accumulated under the Deferred Compensation
Plan. A total of 50,000 shares of Common Stock
3
<PAGE>
have been reserved for issuance under the Deferred Compensation Plan. As of
November 28, 1997, deferred units equal to 25,657.75 shares of Common Stock were
accumulated under the Deferred Compensation Plan.
Directors Stock Option Plan
The Corporation's directors stock option plan (the "Directors Plan")
provides for the grant of stock options to purchase shares of Common Stock to
outside directors as additional compensation for their service as directors.
Under the Directors Plan, outside directors are automatically granted options to
purchase 1,000 shares of the Common Stock annually. In addition, the Directors
Plan provides for the automatic grant every five years of options to purchase
1,500 shares of the common stock of a majority-owned subsidiary of the
Corporation that is "spun out" to outside investors.
Pursuant to the Directors Plan, outside directors receive an annual grant
of options to purchase 1,000 shares of Common Stock at the close of business on
the date of each Annual Meeting of the Stockholders of the Corporation. Options
evidencing annual grants may be exercised at any time from and after the
six-month anniversary of the grant date of the option and prior to the
expiration of the option on the third anniversary of the grant date. Shares
acquired upon exercise of the options 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 at the close of business on the date of the first Annual Meeting of the
Stockholders next following the subsidiary's spinout, which is the first to
occur of either an initial public offering of the subsidiary's common stock or a
sale of such stock to third parties in an arms-length transaction. 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 options 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. The
outside directors were each granted options to purchase 1,500 shares of the
common stock of ThermoLyte Corporation in connection with the spinout of that
entity in March 1995.
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 immediately preceding and including the date
of grant, or, if the shares are not then traded, at the last price per share
paid by third parties in an arms-length transaction prior to the option grant.
As of November 28, 1997, options to purchase 16,800 shares of Common Stock had
been granted and were outstanding under the Directors Plan, options to purchase
5,800 shares of Common Stock had lapsed, no options had been exercised, and
options to purchase 8,200 shares of Common Stock were reserved and available for
grant.
Stock Ownership Policies for Directors
During fiscal 1996, the human resources committee of the board of directors
(the "Committee") established a stock holding policy for directors. The stock
holding policy requires each director to hold a minimum of 1,000 shares of
Common Stock. Directors are requested to achieve this ownership level by the
1998 Annual Meeting of the Stockholders. Directors who are also executive
officers of the Corporation are required to comply with a separate stock holding
policy established by the Committee in fiscal 1996, which is described in the
Committee Report on Executive Compensation - Stock Ownership Policies.
In addition, the Committee adopted a policy requiring directors to hold a
certain number of shares of the Corporation's Common Stock acquired upon the
exercise of stock options. Under this policy, directors are required to hold
shares of Common Stock equal to one-half of their net option exercises over a
period of five years. The net option exercise is determined by calculating the
number of shares acquired upon exercise of a stock option, after
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<PAGE>
deducting the number of shares that could have been traded to exercise the
option and the number of shares that could have been surrendered to satisfy tax
withholding obligations attributable to the exercise of the option. This policy
is also applicable to executive officers and is described in the Committee
Report on Executive Compensation - Stock Ownership Policies.
STOCK OWNERSHIP
The following table sets forth the beneficial ownership of Common Stock, as
well as the common stock of Thermo Electron and ThermoLyte Corporation
("ThermoLyte"), a majority-owned subsidiary of the Corporation, as of November
28, 1997, with respect to (i) each person who was known by the Corporation to
own beneficially more than 5% of the outstanding shares of Common Stock, (ii)
each director, (iii) each executive officer named in the summary compensation
table under the heading "Executive Compensation" and (iv) all directors and
executive officers as a group.
While certain directors and executive officers of the Corporation are also
directors and executive officers of Thermo Electron or its subsidiaries other
than the Corporation, all such persons disclaim beneficial ownership of the
shares of Common Stock beneficially owned by Thermo Electron.
<TABLE>
<CAPTION>
Thermo Power Thermo Electron ThermoLyte
Name (1) Corporation (2) Corporation (3) Corporation (4)
-------- --------------- --------------- ---------------
<S> <C> <C> <C>
Thermo Electron Corporation (5) 8,132,506 N/A N/A
Marshall J. Armstrong 168,540 147,654 2,500
J. Timothy Corcoran 161,031 68,339 0
Peter O. Crisp 36,012 100,478 0
John N. Hatsopoulos 60,753 671,006 0
Donald E. Noble 22,379 56,450 1,000
Arvin H. Smith 7,969 519,038 0
All directors and current executive
officers as a group (7 persons) 472,054 1,698,561 3,500
</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 or by that person for the benefit of minor children, and
all share ownership includes sole voting and investment power.
(2) Shares of the Common Stock beneficially owned by each director and
executive officer and by all directors and executive officers as a group
exclude 8,130,206 shares beneficially owned by Thermo Electron. Shares
beneficially owned by Mr. Armstrong, Mr. Corcoran, Mr. Crisp, Mr. J.
Hatsopoulos, Mr. Noble and all directors and executive officers as a group
include 165,000, 135,500, 7,600, 40,000, 8,200 and 365,300 shares,
respectively, that such person or group has the right to acquire within 60
days of November 28, 1997, through the exercise of stock options. Shares
beneficially owned by Mr. Crisp, Mr. Noble and all directors and executive
officers as a group include 10,319, 6,754 and 17,073 full shares,
respectively, that had been allocated through November 28, 1997, 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. Shares beneficially
owned by Mr. Hatsopoulos include 1,000 shares owned by Mr. Hatsopoulos'
spouse. No director or executive officer beneficially owned more than 1% of
the Common Stock outstanding as of November 28, 1997, other than Mr.
Armstrong, who beneficially owned 1.4%, and Mr. Corcoran, who beneficially
owned 1.3%, of the Common Stock outstanding as of such date; all directors
and executive officers as a group beneficially owned 3.8% of the Common
Stock outstanding as of such date.
(3) Shares beneficially owned by Mr. Armstrong, Mr. Corcoran, Mr. Crisp, Mr. J.
Hatsopoulos, Mr. Noble, Mr. Smith and all directors and executive officers
as a group include 88,824, 62,974, 10,375, 565,435,
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<PAGE>
10,375, 228,411 and 1,061,531 shares, respectively, that such person or
group has the right to acquire within 60 days of November 28, 1997, through
the exercise of stock options. Shares of the common stock of Thermo
Electron beneficially owned by Mr. Armstrong, Mr. J. Hatsopoulos, Mr. Smith
and all directors and executive officers as a group include 2,598, 2,036,
1,717 and 7,777 full shares, respectively, allocated to their respective
accounts maintained pursuant to Thermo Electron's employee stock ownership
plan, of which the trustees, who have investment power over its assets,
were, as of November 28, 1997, executive officers of Thermo Electron.
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 45,459, 42,660 and 88,119 full shares, respectively, allocated
through November 28, 1997 to their respective accounts maintained pursuant
to Thermo Electron's deferred compensation plan for directors. As of
November 28, 1997, no director or executive officer beneficially owned more
than 1% of Thermo Electron common stock outstanding as of such date; all
directors and executive officers as a group beneficially owned
approximately 1.1% of the Thermo Electron common stock outstanding as of
November 28, 1997.
(4) No director or executive officer beneficially owned more than 1% of the
common stock of ThermoLyte outstanding as of November 28, 1997; all
directors and executive officers as a group beneficially owned less than 1%
of the common stock outstanding as of such date.
(5) Thermo Electron owned 68.3% of the Common Stock outstanding as of November
28, 1997. Thermo Electron's address is 81 Wyman Street, Waltham,
Massachusetts 02254-9046. As of November 28, 1997, Thermo Electron had the
power to elect all of the members of the Corporation's board of directors.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors and executive officers and beneficial owners of more
than 10% of the Common Stock, such as Thermo Electron, to file with 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 1997, except in the following instances. The
Form 3 for Mr. Arvin H. Smith, a director of the Corporation, was filed 18 days
late. Thermo Electron filed six Forms 4 late, by periods ranging from four days
to one month, reporting a total of eight transactions, including four open
market purchases of shares of Common Stock and four transactions associated with
the grant and exercise of options to purchase Common Stock granted to employees
under its stock option program.
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 (the "named executive officer") for the last three fiscal
years. 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.
6
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<TABLE>
<CAPTION>
Summary Compensation Table
- -------------------------------------------------------------------------------------------------------------
Long Term
Compensation
------------
Annual Compensation Securities Underlying
Name and Fiscal ------------------- Options (No. of Shares All Other
Principal Position Year Salary Bonus and Company) (3) Compensation (4)
------------------ ---- ------ ----- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
J. Timothy Corcoran (5) 1997 $168,003 $70,000 (2) 800 (TMO) $10,720 (6)
President and Chief 1996 $159,010 $52,000 600 (TMO) $6,750
Executive Officer 2,000 (TBA)
2,000 (TFG)
40,000 (TLT)
6,000 (TOC)
6,000 (TMQ)
2,000 (TSR)
4,000 (TXM)
1995 $145,507 $85,000 15,000 (THP) $6,750
45,600 (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.
(2) The bonus amount represents the bonus paid for performance during the
calendar year in which the Corporation's fiscal year-end occurred. As
bonuses have not yet been determined for calendar 1997, the bonus
amount shown for fiscal 1997 is an estimate.
(3) In addition to receiving options to purchase Common Stock of the
Corporation (designated in the table as THP), and the Corporation's
majority owned subsidiary ThermoLyte Corporation (designated in the
table as TLT), the named executive officer has been granted options to
purchase common stock of Thermo Electron and certain of its other
subsidiaries as part of Thermo Electron's stock option program in his
capacity as an officer of the Corporation. Options have been granted
during the last three fiscal years to the named executive officer in
the following Thermo Electron companies: Thermo Electron (designated in
the table as TMO), Thermo BioAnalysis Corporation (designated in the
table as TBA), Thermo Fibergen Inc. (designated in the table as TFG),
Thermo Optek Corporation (designated in the table as TOC), ThermoQuest
Corporation (designated in the table as TMQ), Thermo Sentron Inc.
(designated in the table as TSR) and Trex Medical Corporation
(designated in the table as TXM).
(4) Represents the amount of matching contributions made by the
individual's employer on behalf of the named executive officer
participating in the Thermo Electron 401(k) plan.
(5) Mr. Corcoran was appointed president of the Corporation effective April
1, 1995 and its chief executive officer effective as of October 1,
1996. Prior to April 1995, he served as a vice president of the
Corporation.
(6) In addition to a $7,125 matching contribution referred to in footnote
(3), this amount includes $3,595 of compensation attributable to an
interest-free loan provided to Mr. Corcoran pursuant to the
Corporation's Stock Holding Assistance Plan. See "Relationship with
Affiliates - Stock Holding Assistance Plan."
7
<PAGE>
Stock Options Granted During Fiscal 1997
The following table sets forth information concerning individual grants
of stock options made by the Corporation and the other Thermo Electron companies
during fiscal 1997 to the named executive officer in his capacity as an officer
of the Corporation. It has not been the Corporation's policy in the past to
grant stock appreciation rights, and no such rights were granted during fiscal
1997.
<TABLE>
<CAPTION>
Option Grants in Fiscal 1997
- ---------------------------------------------------------------------------------------------------------
Potential Realizable
Value at Assumed
Percent of Annual Rates of Stock
Total Options Price Appreciation for
Number of Securities Granted to Exercise Option Term (2)
Underlying Options Employees in Price Per Expiration ---------------
Name Granted (1) Fiscal Year Share Date 5% 10%
---- ----------- ----------- ----- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
J. Timothy Corcoran 800 (TMO) 0.06% (3) $34.20 06/03/00 $4,312 $9,056
</TABLE>
(1) As part of Thermo Electron's stock option program, an option has been
granted during fiscal 1997 to the named executive officer to purchase
the common stock of Thermo Electron (designated in the table as TMO).
The option granted during the fiscal year is immediately exercisable as
of the end of the fiscal year. 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 another
Thermo Electron company. The granting corporation may exercise its
repurchase rights within six months after the termination of the
optionee's employment. The option granted to Mr. Corcoran in fiscal
1997 has a three-year term and the repurchase rights lapse in their
entirety on the second anniversary of the grant date. The granting
corporation may permit the holder of the option to exercise the option
and to satisfy tax withholding obligations by surrendering shares equal
in fair market value to the exercise price or withholding obligation.
(2) The amounts shown in this table represent hypothetical gains that could
be achieved for the option if exercised at the end of the option term.
These gains are based on assumed rates of stock appreciation of 5% and
10%, compounded annually from the date the option was granted to its
expiration date. The gains shown are net of the option exercise price,
but do not include deductions for taxes or other expenses associated
with the exercise. Actual gains, if any, on stock option exercises will
depend on the future performance of the common stock of the granting
corporation, the optionee's continued employment through the option
period and the date on which the options are exercised.
(3) This option was granted under a stock option plan maintained by Thermo
Electron and, accordingly, is reported as a percentage of total options
granted to employees of Thermo Electron and its subsidiaries.
Stock Options Exercised During Fiscal 1997 and Fiscal Year-End Values
The following table reports certain information regarding stock option
exercises during fiscal 1997 and outstanding stock options to purchase shares of
the Thermo Electron companies held at the end of fiscal 1997 by the named
officer. No stock appreciation rights were exercised or were outstanding during
fiscal 1997.
8
<PAGE>
<TABLE>
<CAPTION>
Aggregated Option Exercises In Fiscal 1997 And Fiscal 1997 Year-End Option Values
- ---------------------------------------------------------------------------------------------------------------
Number of
Unexercised
Options at Fiscal Value of
Shares Year-End Unexercised
Acquired on Value (Exercisable/ In-the-Money
Name Company Exercise Realized (1) Unexercisable) (2) Options
---- ------- -------- ------------ ------------------ -------
<S> <C> <C> <C> <C> <C>
J. Timothy Corcoran Thermo Power -- -- 135,500 /0 $25,000 /--
Thermo Electron (3) -- -- 62,974 /0 $1,223,619 /--
Thermo BioAnalysis -- -- 2,000 /0 $13,750 /--
Thermo Fibergen -- -- 2,000 /0 $0 /--
ThermoLyte -- -- 0 /40,000 -- /$0 (4)
Thermo Optek -- -- 6,000 /0 $40,128 /--
ThermoQuest -- -- 6,000 /0 $36,750 /--
Thermo Sentron -- -- 2,000 /0 $250 /--
Trex Medical -- -- 4,000 /0 $16,000 /--
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Amounts shown in this column do not necessarily represent actual value
realized from the sale of the shares acquired upon exercise of the option
because in many cases the shares are not sold on exercise but continue to
be held by the executive officer exercising the option. The amounts shown
represent the difference between the option exercise price and the market
price on the date of exercise, which is the amount that would have been
realized if the shares had been sold immediately upon exercise.
(2) All of the options reported outstanding at the end of the fiscal year were
immediately exercisable as of fiscal year-end, except the options to
purchase shares of the common stock of the Corporation's majority owned
subsidiary, ThermoLyte Corporation, which are not exercisable until the
earlier of (i) 90 days after the effective date of the registration of that
company's common stock under Section 12 of the Securities Exchange Act of
1934 and (ii) nine years after the grant date. In all cases, the shares
acquired upon exercise of the options reported in the table are subject to
repurchase by the granting corporation at the exercise price if the
optionee ceases to be employed by such corporation or any other Thermo
Electron company. The granting corporation may exercise its repurchase
rights within six months after the termination of the optionee's
employment. For companies whose shares are not publicly traded, the
repurchase rights lapse in their entirety on the ninth anniversary of the
grant date. For publicly traded companies, the repurchase rights generally
lapse ratably over a five- to ten-year period, depending on the option
term, which may vary from seven to twelve years, provided that the optionee
continues to be employed by the Corporation or another Thermo Electron
company. Certain options granted as a part of Thermo Electron's stock
option program have three-year terms and the repurchase rights lapse in
their entirety on the second anniversary of the grant date.
(3) Options to purchase 45,000 shares of the common stock of Thermo Electron
granted to Mr. Corcoran are subject to 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.
(4) No public market existed for the shares as of November 28, 1997.
Accordingly, no value in excess of the exercise price has been attributed
to those options.
9
<PAGE>
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Executive Compensation
All decisions on compensation for the Corporation's executive officers are
made by the human resources committee of the board of directors (the
"Committee"). In reviewing and establishing total cash compensation and stock-
based compensation for executives, the Committee follows guidelines established
by the human resources committee of the board of directors of its parent
corporation, Thermo Electron. The executive compensation program presently
consists of annual base salary ("salary"), short-term incentives in the form of
annual cash bonuses, and long-term incentives in the form of stock options.
The Committee believes that the total 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 total compensation
for its executives is assessed by comparing it to market data provided by its
compensation consultant and by participating in annual executive compensation
surveys, primarily "Project 777," an executive compensation survey prepared by
Management Compensation Services, a division of Hewitt Associates. The majority
of firms represented in the Project 777 survey are included in the Standard &
Poor's Index, but do not necessarily correspond to the companies included in the
Corporation's peer group index, the Dow Jones Industrial Diversified Industry
Group Index.
Principles of internal equity are also central to the Committee's
compensation policies. Total compensation considered for the Corporation's
officers, whether cash or stock-based incentives, is also evaluated by comparing
it to total 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 the elements of the total compensation
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 other named executive officers will approach the mid-point
of competitive data. The salary increase in calendar 1997 for the chief
executive officer generally reflects this practice of gradual increases and
moderation.
10
<PAGE>
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 which are designed to
measure profitability and contributions to shareholder value, and are measures
of corporate and divisional performance that are evaluated using graphs
developed by Thermo Electron intended to reward performance that is perceived as
above average and to penalize performance that is perceived as below average.
The measures of operating returns used in the Committee's determinations in
calendar 1997 included return on net assets, growth in income, and return on
sales, and the Committee's determinations also included a subjective evaluation
of the contributions of each executive that are not captured by operating
measures but are considered important to the creation of long-term value for the
Stockholders. These measures of achievements are not financial targets that are
met, not met or exceeded. The relative weighting of the operating measures and
subjective evaluation varies depending on the executive's role and
responsibilities within the organization.
Stock Option Program
The primary goal of the Corporation is to excel in the creation of long-
term value for the Stockholders. The principal incentive tool used to achieve
this goal is the periodic award to key employees of options to purchase common
stock of the Corporation and other Thermo Electron companies.
The Committee and management believe that awards of stock options to
purchase the shares of both the Corporation and other companies within the
Thermo Electron group of companies accomplish many objectives. The grant of
options to key employees encourages equity ownership in the Corporation, and
closely aligns management's interests to the interests of all the Stockholders.
The emphasis on stock options also results in management's compensation being
closely linked to stock performance. In addition, because they are subject to
vesting periods of varying durations and to forfeiture if the employee leaves
the Corporation prematurely, stock options are an incentive for key employees to
remain with the Corporation long-term. The Committee believes stock option
awards in 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 modified Black-Scholes option-pricing model.) Awards are
reviewed annually in conjunction with the annual review of cash compensation and
additional awards are made periodically as deemed appropriate. 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.
11
<PAGE>
Stock Ownership Policies
During fiscal 1996, the Committee established a stock holding policy for
executive officers of the Corporation. The stock holding policy specifies an
appropriate level of ownership of the Corporation's Common Stock as a multiple
of the officer's compensation. For the chief executive officer, the multiple is
one times his base salary and reference bonus for the calendar year. For all
other executive officers, the multiple is one times the officer's base salary.
The Committee deemed it appropriate to permit officers to achieve these
ownership levels over a three-year period.
In order to assist executive officers in complying with the policy, the
Committee also adopted a stock holding assistance plan under which the
Corporation is authorized to make interest-free loans to officers to enable them
to purchase shares of the Common Stock in the open market. The loans are
required to be repaid upon the earlier of demand or the fifth anniversary of the
date of the loan, unless otherwise authorized by the Committee. During 1997, Mr.
Corcoran, the Corporation's chief executive officer, received loans in the
aggregate principal amount of $118,756.25 under this program. See "Relationship
with Affiliates - Stock Holding Assistance Plan."
The Committee also adopted a policy requiring its executive officers to
hold a certain number of shares of the Corporation's Common Stock acquired upon
the exercise of stock options granted by the Corporation. Under this policy,
executive officers are required to hold shares of Common Stock equal to one-half
of their net option exercises over a period of five years. The net option
exercise is determined by calculating the number of shares acquired upon
exercise of a stock option, after deducting the number of shares that could have
been traded to exercise the option and the number of shares that could have been
surrendered to satisfy tax withholding obligations attributable to the exercise
of the option.
Policy on Deductibility of Compensation
The Committee has also considered the application of Section 162(m) of the
Internal Revenue Code to the Corporation's compensation practices. Section
162(m) limits the tax deduction available to public companies for annual
compensation paid to senior executives in excess of $1 million unless the
compensation qualifies as "performance based" or is otherwise exempt from
Section 162(m). 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).
1997 CEO Compensation
The salary and bonus of Mr. J. Timothy Corcoran are established using the
same criteria as described above for all officers. In determining Mr. Corcoran's
cash compensation as reported, the Committee considered as part of its
subjective evaluation, among other factors, progress in achieving the
Corporation's strategic growth objectives, including the completion of the
acquisition of Peek plc, a traffic control company.
Awards to Mr. Corcoran of options to purchase shares of the Corporation's
Common Stock are reviewed annually and granted periodically as deemed
appropriate by the Committee using criteria similar to those described above for
all officers of the Corporation. No options to purchase shares of the
Corporation's Common Stock were awarded to Mr. Corcoran in fiscal 1997. In
addition to any stock option awards by the Committee, Mr. Corcoran may receive
awards to purchase shares of the common stock of Thermo Electron or its other
majority-owned subsidiaries from time to time as part of Thermo Electron's stock
option program due to his position as chief executive officer of a majority-
owned subsidiary of Thermo Electron. These awards are determined using an
analysis similar to that used by the Committee as described above under "Stock
Option Program." No options to purchase stock were awarded to Mr. Corcoran under
this program in fiscal 1997. The award to purchase shares of the common stock of
Thermo Electron granted to Mr. Corcoran in fiscal 1997 was made by the Thermo
Electron
12
<PAGE>
human resources committee under a program which awards options to certain
eligible employees annually based on the number of shares of the common stock of
Thermo Electron held by the employee, as an incentive to buy and hold Thermo
Electron stock.
Mr. Donald E. Noble (Chairman)
Mr. Peter O. Crisp
13
<PAGE>
COMPARATIVE PERFORMANCE GRAPH
The Securities and Exchange Commission requires that the Corporation
include in this proxy statement a line-graph presentation comparing cumulative,
five-year shareholder returns for the Corporation's Common Stock with a broad-
based market index and either a nationally recognized industry standard or an
index of peer companies selected by the Corporation. The Corporation has
compared its performance with the American Stock Exchange Market Value Index and
the Dow Jones Industrial Diversified Industry Group Index.
Comparison of 1992-1997 Total Return Among Thermo Power Corporation,
the American Stock Exchange Market Value Index and the
Dow Jones Industrial Diversified Industry Group Index
from September 26, 1992 to September 26, 1997
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
09/26/92 10/01/93 09/30/94 09/30/95 09/28/96 09/26/97
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
THP 100 134 120 208 125 113
----------------------------------------------------------------------------
AMEX 100 122 121 144 150 182
----------------------------------------------------------------------------
DJIDD 100 147 108 178 226 310
----------------------------------------------------------------------------
</TABLE>
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. The
Corporation's Common Stock is traded on the American Stock Exchange under the
ticker symbol "THP".
14
<PAGE>
RELATIONSHIP WITH AFFILIATES
The Thermo Electron Corporate Charter
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 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. In
addition, 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.
15
<PAGE>
Corporate Services Agreement
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% of the Corporation's total
revenues for these services in calendar 1996 and 1997. The annual fee will be
reduced to 0.8% of the Corporation's total revenues in calendar 1998. The fee is
reviewed annually and may be changed by mutual agreement of the Corporation and
Thermo Electron. During fiscal 1997, Thermo Electron assessed the Corporation
$1,210,000 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 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.
Miscellaneous
From time to time, the Corporation may transact business with other
companies in the Thermo Group. During fiscal 1997 these transactions included
the following.
During fiscal 1997, FES International Limited, a wholly owned subsidiary of
Thermo Electron, purchased a total of $423,000 of refrigeration systems from
FES, a division of the Corporation.
As of September 27, 1997, $17,994,000 of the Corporation's cash equivalents
were invested in a repurchase agreement with Thermo Electron. Under this
agreement, the Corporation in effect lends excess cash to Thermo Electron, which
Thermo Electron collateralizes with investments principally consisting of
corporate notes, U.S. government 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. The repurchase
agreement earns a rate based on the 90-day Commercial Paper Composite Rate plus
25 basis points, set at the beginning of each quarter.
The Corporation leases an office and laboratory facility from Thermo
Electron under an agreement expiring in 2002. The rental payments made to Thermo
Electron during fiscal 1997 were $170,000.
In May 1997, the Corporation sold 420,000 shares of common stock of The
Randers Group Incorporated to Thermo TerraTech Inc., a majority-owned subsidiary
of Thermo Electron, in connection with Thermo TerraTech Inc.'s acquisition of a
controlling interest in The Randers Group Incorporated for proceeds of $262,000,
resulting in a gain of $53,000.
The Corporation provides contract administration and other services and
data processing services to certain companies affiliated with Thermo Electron,
which are charged based on actual usage. For these services, the Corporation
charged $105,000 in fiscal 1997 to such companies.
In November 1997, the Corporation borrowed $160.0 million from Thermo
Electron pursuant to a promissory note due in 1999 in order to finance a portion
of its acquisition of Peek plc ("Peek") for approximately
16
<PAGE>
$166.7 million, including related expenses. Such note bears interest at a rate
equal to the 90-day Commercial Paper Composite Rate as reported by Merrill Lynch
Capital Markets, plus 25 basis points and is adjusted quarterly.
Subsequent to the Corporation's acquisition of Peek, the Corporation
reached an agreement with ONIX Systems Inc., a majority-owned subsidiary of
Thermo Instrument Systems Inc., to sell Peek's Field Data business, effective
November 6, 1997, for $19.1 million. Thermo Instrument Systems Inc. is a
majority-owned subsidiary of Thermo Electron. The Corporation expects to receive
payment from ONIX Systems Inc. for the sale of the business in January 1998. The
components of the sales price for the Field Data business consist of the net
tangible book value of the Field Data business, goodwill, and the estimated tax
liability relating to the sale. The goodwill was determined based upon a
percentage of the Corporation's total goodwill associated with its acquisition
of Peek, based on the aggregate 1997 revenues of the Field Data business
relative to Peek's 1997 consolidated revenues.
Stock Holding Assistance Plan
In 1996, the Corporation adopted a stock holding policy which requires its
executive officers to acquire and hold a minimum number of shares of Common
Stock. In order to assist the executive officers in complying with the policy,
the Corporation also adopted a Stock Holding Assistance Plan under which it may
make interest-free loans to certain key employees, including its executive
officers, to enable such employees to purchase the Common Stock in the open
market. During 1997, Mr. Corcoran received loans in the aggregate principal
amount of $118,756.25 under this plan to purchase 18,000 shares. The loans to
Mr. Corcoran are to be repaid upon the earlier of demand or the fifth
anniversary of the date of the loan, unless otherwise authorized by the
committee.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The board of directors has appointed Arthur Andersen LLP as independent
public accountants for fiscal 1998. 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 1999 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 September 25, 1998.
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 by 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
January 21, 1998
17
<PAGE>
FORM OF PROXY
THERMO POWER CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MARCH 13, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints J. Timothy Corcoran, John N. Hatsopoulos
and Melissa F. Riordan, or any one of them in the absence of the others, as
attorneys and proxies of the undersigned, with full power of substitution, for
and in the name of the undersigned, to represent the undersigned at the Annual
Meeting of the Stockholders of Thermo Power Corporation, a Massachusetts
corporation (the "Company"), to be held on Friday, March 13, 1998, at 10:00 a.m.
at the executive offices of Thermo Electron Corporation, 81 Wyman Street,
Waltham, Massachusetts 02254, 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 14, 1998, with all of the powers the undersigned
would possess if personally present at such meeting.
(IMPORTANT - TO BE SIGNED AND DATED ON THE REVERSE SIDE.)
Please mark your
[ x ] votes as in this
example.
1. ELECTION OF DIRECTORS OF THE COMPANY (see reverse).
FOR [ ] WITHHELD [ ]
- ---------------------------------------
FOR all nominees listed at right, except authority to vote withheld for the
following nominees (if any)
- ---------------------------------------
<PAGE>
Nominees: Marshall J. Armstrong, J. Timothy Corcoran, Peter O. Crisp, John N.
Hatsopoulos, Donald E. Noble and Arvin H. Smith.
2. In their discretion on such other matters as may properly come before the
Meeting.
The shares represented by this Proxy will be voted "FOR" the nominees set forth
herein if no instruction to the contrary is indicated or if no instruction is
given.
Copies of the Notice of Meeting and of the Proxy Statement have been received
by the undersigned.
SIGNATURE(S)
---------------------------------------
DATE
----------------------
Note: This proxy should be dated, signed by the shareholder(s) exactly as his
or her name appears hereon, and returned promptly in the enclosed envelope.
Persons signing in a fiduciary capacity should so indicate. If shares are held
by joint tenants or as community property, both should sign.
