LANDAUER, INC.
2 SCIENCE ROAD, GLENWOOD, ILLINOIS 60425-1586
TELEPHONE (708) 755-7000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Notice is hereby given that the annual meeting of the
stockholders of Landauer, Inc., a Delaware corporation, will be
held at the Hyatt Regency O'Hare Hotel, 9300 West Bryn Mawr
Avenue, Rosemont, Illinois, at 4:00 p.m., local time, on
Wednesday, January 29, 1997 for the following purposes:
1. To elect three directors to hold office for a term of three
years each and two directors to hold office for a term of two
years each.
2. To vote on the proposal to approve the selection of Arthur
Andersen LLP as the auditors of the Company for the fiscal year
ending September 30, 1997.
3. To vote on the proposal to approve the 1997 Non-Employee
Directors Stock Option Plan.
4. To transact such other business as may properly come before
the meeting.
Only stockholders of record at the close of business on
December 12, 1996 are entitled to notice of and to vote at
the meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING.
THEREFORE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE
SIGN AND DATE YOUR PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU
ATTEND THE MEETING AND VOTE IN PERSON, YOUR PROXY WILL NOT BE
USED.
JAMES M. O'CONNELL
Vice President, Treasurer, Secretary
and Chief Financial Officer
Dated December 30, 1996
PROXY STATEMENT
APPROXIMATE DATE OF MAILING: DECEMBER 30, 1996
INFORMATION CONCERNING THE PROXY SOLICITATION
The enclosed proxy is solicited by and on behalf of the
Board of Directors of Landauer, Inc. (the "Company") for use at
the annual meeting of stockholders of the Company to be held on
Wednesday, January 29, 1997 at 4:00 p.m., local time, at the
Hyatt Regency O'Hare Hotel, 9300 West Bryn Mawr Avenue, Rosemont,
Illinois, or any adjournments or postponements thereof. It is
subject to revocation at any time prior to the exercise thereof
by giving written notice to the Secretary of the Company, by
submission of a later dated proxy or by voting in person at the
meeting. The costs of solicitation, including the preparation,
assembly and mailing of proxy statements, notices and proxies,
will be paid by the Company. Such solicitation will be made by
mail and in addition may be made by the officers and employees of
the Company personally or by telephone or telegram. Forms of
proxies and proxy material may also be distributed, at the
expense of the Company, through brokers, custodians and other
similar parties to the beneficial owners of the Common Stock.
The Company has retained American Stock Transfer Company, 40 Wall
Street, New York, New York.
On December 12, 1996, the Company had outstanding 8,477,285
shares of Common Stock, $.10 par value, which is its only class
of voting stock, held of record by approximately 600 holders.
Only stockholders of record at the close of business on December
12, 1996 will be entitled to receive notice of and to vote at the
meeting. With respect to all matters which will come before the
meeting, each stockholder may cast one vote for each share
registered in his name on the record date. A stockholder may,
with regard to the election of directors (i) vote for the
election of all named director nominees, (ii) withhold authority
to vote for all named director nominees or (iii) vote for the
election of all named director nominees other than any nominee
with respect to whom the stockholder withholds authority to vote
by so indicating in the appropriate space on the proxy. A
stockholder may, with respect to the proposal to approve the
selection of Arthur Andersen LLP as auditors or the proposal to
approve the 1997 Non-Employee Directors Stock Option (the "1997
Directors Plan") (i) vote FOR such proposal, (ii) vote AGAINST
such proposal or (iii) ABSTAIN from voting on such proposal. The
shares represented by every proxy received will be voted, and
where a choice has been specified, the shares will be voted in
accordance with the specification so made. If no choice has been
specified on the proxy, the shares will be voted FOR the election
of the five nominees as directors, FOR approval of Arthur
Andersen LLP as auditors and FOR the approval of the 1997
Directors Plan. The proxy also gives authority to the proxies to
vote the shares in their discretion on any other matter presented
at the meeting. If a proxy indicates that all or a portion of
the shares represented by such proxy are not being voted with
respect to a particular proposal, such non-voted shares will not
be considered present and entitled to vote on such proposal,
although such shares may be considered present and entitled to
vote on other proposals and will count for the purpose of
determining the presence of a quorum. An abstention with respect
to the proposal to approve the selection of Arthur Andersen LLP
as auditors has the effect of a vote against such proposal.
BENEFICIAL OWNERSHIP OF CERTAIN VOTING SECURITIES
The following table provides information as of December 12,
1996 concerning beneficial ownership of Common Stock by each
person known by the Company to own beneficially more than 5% of
the outstanding shares of Common Stock, each director, each
director nominee, each executive officer of the Company named
under the caption "Executive Compensation" and all directors and
executive officers of the Company as a group. Unless otherwise
noted, the listed persons have sole voting and dispositive powers
with respect to shares held in their names, subject to community
property laws if applicable.
<TABLE>
<CAPTION>
Amount
Beneficially Percent
Name of Beneficial Owner Owned of Class
------------------------ ------------ --------
<S> <C> <C>
T. Rowe Price Associates 722,500 (1) 8.5%
Dr. Marvin G. Schorr 628,556 7.4%
The Gabelli Group, Inc. 499,000 (2) 5.9%
Putnam Investments, Inc. 438,700 (3) 5.2%
Dr. Gary D. Eppen 275 *
Thomas M. Fulton 282,000 (4) 3.3%
Paul B. Rosenberg 84,610 (5) 1.0%
Herbert Roth, Jr. 9,000 *
Michael D. Winfield 350 *
Brent A. Latta 60,000 (6) *
James M. O'Connell 44,000 (7) *
Dr. R. Craig Yoder 44,428 (8) *
All directors and executive
officers as a group (9 persons) 1,153,219 13.0%
-------------------
</TABLE>
*Less than one percent.
(1) Includes 650,000 shares owned by the T. Rowe Price Small Cap
Value Fund, Inc. Price Associates expressly disclaims that it is
the beneficial owner of such securities. The address of this
stockholder is 100 East Pratt Street, Baltimore, MD 21201.
(2) As reported in Amendment No. 8 to Statement on Schedule 13D
filed with the Securities and Exchange Commission on November 3,
1993. The address of this stockholder is One Corporate Center,
Rye, NY 10580.
(3) As reported in Amendment No. 2 to Statement on Schedule 13G
filed with the Securities and Exchange Commission on January 15,
1996. This ownership by certain Putnam investment managers
(together with their parent corporations, Putnam Investments,
Inc. and Marsh & McLennan Companies, Inc.) is considered
"beneficial ownership" of the Company's voting common stock,
which shares were acquired for investment purposes by such
investment managers for certain of their advisory clients. The
address of this stockholder is One Post Office Square, Boston, MA
02109.
(4) Includes 152,720 shares subject to options exercisable
within 60 days following the record date for the annual meeting.
(5) Includes 20,000 shares owned by Mr. Rosenberg's wife to
which he disclaims beneficial ownership.
(6) Includes 60,000 shares subject to options exercisable within
60 days following the record date for the annual meeting.
(7) Includes 40,000 shares subject to options exercisable within
60 days following the record date for the annual meeting.
(8) Includes 39,000 shares subject to options exercisable within
60 days following the record date for the annual meeting.
ELECTION OF DIRECTORS
Members of the Company's Board of Directors are divided into
three classes serving staggered three-year terms. The terms of
three of the Company's six current directors (Thomas M. Fulton,
Paul B. Rosenberg, and Herbert Roth Jr.) expire at the annual
meeting. They are the Company's nominees for re-election to a
three-year term by the stockholders at the annual meeting. The
Company has also nominated Robert J. Cronin and Richard R. Risk
for election to a two-year term by the stockholders at the annual
meeting. Mr. Cronin and Mr. Risk have not previously served as
directors of the Company. These nominees will fill the vacancies
created as a result of the retirement of Richard H. Leet and C.
Vincent Vappi from the class of directors whose term expires at
the 1996 annual meeting of stockholders. The Company s by-laws
provide that nominations for directorships by stockholders may be
made only pursuant to written notice received at the Company s
principal office not less than 50 nor more than 75 days prior to
the meeting. No such nominations have been received for the 1997
annual meeting. Directors are elected by a plurality of the
votes present in person or represented by proxy at the meeting
and entitled to vote on the election of directors. Thus,
assuming a quorum is present, the five persons receiving the
greatest number of votes will be elected to serve as directors.
Accordingly, withholding authority to vote for a director and
non-votes with respect to the election of directors will not
affect the outcome of the election of directors. Mr. Roth has
advised the Company that, if elected, he plans to retire during
October, 1998, in accordance with Company policy. If a nominee
should become unavailable for election, the persons voting the
accompanying proxy may in their discretion vote for a substitute.
The Board of Directors recommends a vote FOR election of the
named nominees as directors of the Company.
The following table contains certain information as to the
five nominees for election at the annual meeting and each other
person whose term of office as a director will continue after the
meeting. The nominees for election at the meeting are indicated
by an asterisk.
<TABLE>
<CAPTION>
Has Been a
Expira- Director of
tion Business Experience Company or its
Date of During Past Predecessor
Current Five Years Tech/Ops, Inc.
Name Term and Other Directorships Since
----- ------ ------------------------------- --------------
<S> <C> <C> <C>
*Robert J. Cronin N/A Since November, 1992, President, N/A
Age - 51 Chief Executive Officer and
Director of Wallace Computer
Services; previously President
and COO. Mr. Cronin joined
Wallace Computer Services in
1967, initially holding various
sales management positions.
Wallace Computer Services is a
provider of information manage-
ment products, services and solutions.
Dr. Gary D. Eppen(1)(2) 1998 Professor of Industrial Administra- 1992
Age - 60 tion since 1970 (1989 - 1994 also
Director of The Executive Program),
Graduate School of Business, The
University of Chicago. Dr. Eppen is
also a director of The Hub Group Inc.,
Lombard, Illinois, an intermodal
transportation marketing company.
*Thomas M. Fulton 1997 President and Chief Executive Officer 1988
Age - 63 of the Company since January 1988;
previously General Manager of the
personnel dosimetry division of
Tech/Ops, Inc., the Company's
predecessor. Mr. Fulton is a Director
of Great Lakes Chemical Corporation,
a diversified producer of chemicals.
*Richard R. Risk N/A President and Chief Executive Officer N/A
Age - 50 of Advocate Health Care since 1995;
previously Mr. Risk served as President
and CEO of EHS Health Care (which merged
into Advocate Health Care), a company
specializing in health care management.
*Paul B. Rosenberg(1)(2) 1997 Until January 1991, Treasurer of the 1988
Age - 64 Company. Previously Vice-President --
Finance and Administration and Treasurer
of Tech/Ops, Inc., the Company's
predecessor. Mr. Rosenberg is President
and Chief Executive Officer of Tech/Ops
Corporation, Boston, Mass., a consulting
firm, and is a director of Panatech
Research & Development Corporation,
Albuquerque, New Mexico, a diversified
manufacturing and service company and
Tech/Ops Sevcon, Inc., Boston, Mass., a
manufacturer of electronic controllers.
*Herbert Roth, Jr.(1)(2)(3) 1997 Since June 1985, Chief Executive 1971
Age - 68 Officer of LFE Corporation, Waltham,
Mass., manufacturer of equipment
and systems for traffic and
industrial process control. Mr. Roth
is a director of Boston Edison
Company, Boston, Mass., a public
utility; Tech/Ops Sevcon, Inc.,
Boston, Mass., a manufacturer of
electronic controllers; Phoenix Life
Insurance Company; Phoenix Total Return
Fund, Inc., a mutual fund; and Mark IV
Industries, Inc., a diversified
manufacturing concern; and a trustee
of Phoenix Series Fund, Phoenix
Multi-Portfolio Fund and Big Edge
Services Fund, all mutual funds.
Dr. Marvin G. Schorr(3) 1998 Chairman of the Company's Board of 1951
Age - 71 Directors since January 1988.
Previously Chairman of the Board of
Directors and President of Tech/Ops,
Inc., the Company's predecessor.
Dr. Schorr is Chairman of the
Board of Directors of Tech/Ops
Corporation, Boston, Mass., a
consulting firm, and Chairman of the
Board of Directors of Tech/Ops Sevcon,
Inc., Boston, Mass., a manufacturer of
electronic controllers. He is Chairman
of the Board of Directors of Helix Tech-
nology Corporation, Waltham, Mass.,
manufacturer of cryogenic equipment.
Michael D. Winfield(1)(2) 1998 Since February 1992, President and 1994
Age - 57 Chief Executive Officer (prior to
that date since 1983, a Vice President)
of UOP, a general partnership of
Allied-Signal, Inc. and Union Carbide
Corporation, engaged in the licensing
of technologies to the oil refining
and petrochemical industries.
-----------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
(3) Member of the Nominating Committee.
The Board of Directors has an Audit Committee, a Compensation Committee,
and a Nominating Committee. The Audit Committee reviews the results and scope
of the audit and other services provided by the Company's independent public
accountants and recommends the appointment of independent public accountants to
the Board of Directors. The Compensation Committee approves all executive
compensation and has responsibility for granting stock options to eligible
members of management and administering the Company's stock option and
incentive plans. The Nominating Committee selects nominees for the Board of
Directors. The Nominating Committee will consider nominees that have been
properly and timely recommended by stockholders. See "Proposals of and
Nominations by Security Holders for 1998 Annual Meeting." The membership of
each committee consists of non-employee directors. During the fiscal year
ended September 30, 1996, the Audit Committee met twice and the Compensation
Committee met twice.
During the fiscal year ended September 30, 1996, the Board of Directors
held a total of five meetings. During such year, no director attended fewer
than 75 percent of the aggregate of the total number of meetings of the Board
of Directors and the total number of meetings held by all committees of the
Board on which such director served.
Mr. Roth, the Chairman of the Audit Committee, Mr. C. Vincent Vappi, the
Chairman of the Compensation Committee (who retired as a director of the
Company in December 1996), and Dr. Richard Leet, the Chairman of the Nominating
Committee (who retired as a director of the Company in September 1996), were
paid $21,000 each in fiscal 1996 for their services as directors. The other
directors (except Mr. Fulton) were paid $20,000 each. The Company maintains a
Directors Retirement Plan under which a director the sum of whose age and full
years of service as a director of the Company and its predecessor Tech/Ops,
Inc., on the date of his retirement as a director, is not less than 70 is
entitled to receive annually a cash retirement benefit. This benefit is equal
to a percentage of the annual base directors fee in effect at the date of his
retirement determined by multiplying the number of his full years of service as
a director by 2, but not exceeding 50%. The director s spouse is entitled
after his death, if she survives him, to receive for her life an annual benefit
equal to one-half of that amount. The Company plans to terminate the Plan
effective with the approval of the 1997 Directors Plan by shareholders at the
annual meeting. Benefits accrued under the retirement plan will be frozen and
will be payable to directors upon their retirement at age 70. As of September
30, 1996, the aggregate liability for these benefits amounted to $354,000,
which has been accrued in the financial statements.
EXECUTIVE COMPENSATION
The following summary compensation table sets forth the compensation for
services to the Company for the last three fiscal years of the Company's
executive officers.
Summary Compensation Table
</TABLE>
<TABLE>
<CAPTION>
Long-Term
Compensation
Awards
Securities All Other
Name and Fiscal Annual Compensation Underlying Compensa-
Principal Position Year Salary($) Bonus($) Options(#) tion ($)(1)
------------------ ------- -------------------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Thomas M. Fulton 1996 $267,500 $ 75,000 -- $1,150
President & 1995 256,250 100,000 -- 1,150
Chief Executive 1994 243,000 75,000 -- 1,150
Officer
Brent A. Latta 1996 $175,250 $ 43,000 -- $1,150
Vice President- 1995 168,000 65,000 20,000 1,150
Marketing 1994 161,000 34,000 -- 1,150
James M. O'Connell 1996 $138,750 $ 45,000 -- $1,150
Vice President, 1995 133,750 60,000 20,000 1,150
Treasurer, Sec- 1994 129,000 27,000 -- 1,150
retary & Chief
Financial Officer
R. Craig Yoder 1996 $133,750 $ 38,000 -- $1,150
Vice President- 1995 126,250 50,000 20,000 1,150
Operations 1994 113,250 35,000 -- 1,150
</TABLE>
(1) Represents the Company's contribution to its 401(k) plan on
behalf of each of these employees.
OPTIONS GRANTS IN LAST FISCAL YEAR
There were no stock options granted in the year ended
September 30, 1996 to the Company's executive officers.
FISCAL YEAR-END OPTION VALUES
Shown below is information regarding holdings of unexercised
stock options at September 30, 1996 by the Company's executive
officers.
<TABLE>
<CAPTION>
No. of Securities Underlying Value of Unexercised
Unexercised Options Held at In-the-Money Options
September 30, 1996 at September 30, 1996 ($)(1)
---------------------------- ----------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
------------------ ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Thomas M. Fulton 142,850 57,150 $1,750,157 $535,781
Brent A. Latta 55,000 15,000 569,063 50,625
James M. O'Connell 35,000 15,000 130,313 50,625
R. Craig Yoder 34,000 15,000 339,328 50,625
</TABLE>
(1) Aggregate market value on September 30, 1996 less aggregate
exercise price.
None of the four individuals exercised any stock options
during the last fiscal year.
Employment and Compensation Agreements. The Company has
entered into an Employment and Compensation Agreement with Mr.
Fulton providing for his employment in that capacity through
December 31, 1998. Under the Agreement, a non-statutory stock
option to purchase 100,000 shares at a price of $10.50 per share
was granted to Mr. Fulton, which may become exercisable for up to
10,000 shares a year on each December 1 from 1989 through 1998
under a formula reflecting average return on stockholders'
investment and earnings per share over successive three-year
periods. At December 1, 1996 the option had become exercisable
for a total of 52,850 shares. The Agreement also provides that,
in the event of termination of employment under certain
circumstances, within two years following a Change in Control in
the Company (as defined) not approved by the Company's Board of
Directors, by the Company other than for cause, disability or
retirement, or by Mr. Fulton for Good Reason (which includes a
good faith determination by him that due to the Change in Control
he is not or believes he will not be able effectively to
discharge his duties), Mr. Fulton will become entitled to two
years' base salary and average bonuses determined in accordance
with the Agreement, and certain other benefits, subject to a
limitation on total benefits which conforms to the limitation on
their deductibility imposed by the federal tax laws. The
benefits payable to Mr. Fulton under the Agreement if his
employment had terminated as of September 30, 1996 due to a
Change in Control would have had an estimated value of $710,000.
The Company has entered into Employment Agreements with
Messrs. Latta and O'Connell and Dr. Yoder providing for their
employment in their respective capacities indefinitely. The
Agreement provides that, in the event of termination of
employment under certain circumstances by the Company other than
for cause, death, disability or voluntary termination, or by the
executive for Good Reason (which includes a good faith
determination by the executive that he believes that he will not
be able to effectively discharge his duties or where the Company
fails to obtain an assumption in writing of its obligations under
the Agreement by a successor, as defined) the executive will
become entitled to continuation of base salary and average
bonuses determined in accordance with the Agreement for a period
of eighteen months and certain other benefits. The amounts
otherwise payable to the executive will be offset by any
compensation earned by the executive from employment with a new
employer during the eighteen-month period but will not be reduced
below an amount equal to six month's base salary and average
bonuses. The benefits payable to Messrs. Latta and O'Connell and
Dr. Yoder under these Agreements if their employment had been
terminated as of September 30, 1996 would have had an estimated
value of $328,000, $263,000 and $261,000, respectively.
Retirement Plan and Supplemental Retirement Plan. Messrs.
Fulton, Latta, and O Connell, and Dr. Yoder participate in the
Company's Retirement Plan, a defined benefit plan under which
benefits are based upon the average of the annual rates of base
salary in effect as of October 1 of each year for the period of
five consecutive years which produces the highest such average
and also based on years of service as set forth below. U.S. tax
law places limitations on the aggregate annual amount payable to
an individual under qualified retirement plans.
Messrs. Fulton, Latta, and O'Connell, and Dr. Yoder
participate in the Company's Supplemental Key Executive
Retirement Plan, under which a participant is entitled to such
payments from the Company during his life after retirement at age
65 as may be necessary, when added to his benefits under other
Company-funded retirement or profit sharing plans, to provide a
minimum annual benefit equal to 50% of his highest five-year
average or final base salary, whichever is greater. Such
payments continue to a participant's wife after his death, but at
a decreased percentage of 25%. Benefits are reduced by 2% (1%
for wives) for each year of service less than 25 years.
The following table sets forth information concerning the
combined annual benefits payable pursuant to the Retirement Plan
on a straight-life annuity basis and the Supplemental Retirement
Plan on a 50% joint-and-survivor basis upon retirement at age 65
for specified compensation levels (assuming continuation of 1996
fiscal year base salary) and years of service classifications.
Benefits under the Retirement Plan and the Supplemental
Retirement Plan are computed solely on the base salary of
participants, exclusive of bonuses, incentive and other
compensation. Benefits under the Retirement Plan are reduced on
account of Social Security entitlement on the basis of the
Internal Revenue Service permitted disparity rules.
<TABLE>
Pension Plan Table
Pension Plan Table
<CAPTION>
Earnings Estimated Combined Annual Pension Based
Earnings Estimated Combined Annual Pension Based
on Which on
on Which on
Combined Years of Service Indicated
Combined Years of Service Indicated
__________________________
Retirement
Retirement
Benefits are 20 years 25 years 30 years 35 years
Benefits are 20 years 25 years 30 years 35 years
____________ ________ ________ ________ ________
Based
Based
_____
<S> <C> <C> <C> <C>
$ 125,000 $ 50,000 $ 62,500 $ 62,500 $ 70,200
150,000 60,000 75,000 75,000 85,500
175,000 70,000 87,500 87,500 87,500
200,000 80,000 100,000 100,000 100,000
225,000 90,000 112,500 112,500 112,500
250,000 100,000 125,000 125,000 125,000
275,000 110,000 137,500 137,500 137,500
300,000 120,000 150,000 150,000 150,000
</TABLE>
Credited years of service at September 30, 1996 were 18 for
Mr. Fulton, nine for Mr. Latta, six for Mr. O'Connell, and 14 for
Dr. Yoder. Credited years of service at age 65 would be 21 for
Mr. Fulton, 21 for Mr. Latta, 22 for Mr. O'Connell and 35 for Dr.
Yoder.
COMPENSATION COMMITTEE REPORT
The Company's compensation program is designed to motivate and
retain employees by encouraging and rewarding performance. The
program is administered by the Compensation Committee of the
Board of Directors (the "Committee"), consisting of five
independent outside directors who are not employees of the
Company. The Committee regularly reviews and approves generally
all compensation and fringe benefit programs of the Company, and
also reviews and determines the base salary, and incentive
compensation of the executive officers named above, as well as
stock option grants to all employees. All compensation actions
taken by the Committee are reported to the full Board of
Directors, who, excluding employee directors, approve the actions
of the Committee. The Committee also reviews and makes
recommendations to the Board on policies and programs for the
development of management personnel, as well as management
structure and organization. The Committee administers the
Company's 1996 Equity Plan (the "Equity Plan") and Incentive
Compensation Plan for Executive Officers (the "Executive Officer
Plan"); each of which was approved by the Compensation Committee,
the Board of Directors and the Company's shareholders.
The Company believes that stock options are an important
incentive to motivate executive officers and other key employees
for improved long-term performance of the Company. The Company
considers stock ownership, options currently held and options
previously granted when granting options although there are no
specific levels of ownership for such grants.
The Company believes that the combination of salary and
incentive compensation is the best tool for compensating its
executive officers and senior managers to promote uniform
excellence, long-term commitment and team performance.
Management salaries are determined as a result of individual
performance, level of responsibility and experience. The Company
reviews these salaries annually and measures them against
compensation data obtained from published compensation surveys
and surveys that the Committee makes of a group of peer
companies. The peer companies are generally of about the same
size as the Company and are in technical, rather than consumer or
distribution fields. The peer companies may include some of the
companies included in the AMEX High Tech Sub-Index used in the
Performance Graph. The Company believes that its competitors for
executive talent are not necessarily companies which engage in
the same business as the Company and, therefore, the companies
used for comparative compensation purposes differ from the
companies included in the AMEX High Tech Sub-Index.
The Executive Officer Plan covers executive officers of the
Company who are elected by the Board of Directors to such offices
and establishes incentive pools which are related to aggregate
executive officer base salary and performance of the Company
relative to (i) budgeted operating income ("Operating Income
Pool"), (ii) growth in earnings per share ("EPS Pool"), and (iii)
the AMEX Market Value Index ("Stockholder Return Pool"). The
target percentages of aggregate executive officer base salary for
the Operating Income, EPS, and Stockholder Return Pools are 15%,
7.5%, and 7.5%, respectively. The actual size of each pool
varies as a result of actual performance compared with the
performance measure for each pool.
Operating Income Pool. At 100% actual-to-budget operating
income, the Operating Income Pool is 15% of aggregate executive
officer base salary; at 80% actual-to-budget, the pool is 7.5% of
base salary; and at 120% actual-to-budget, the pool is 25.5% of
base salary. If actual-to-budget is less than 60%, the Operating
Income Pool is zero.
EPS Pool. At average three-year growth in earnings per share
of 10%, the EPS Pool is 7.5% of aggregate executive officer base
salary; at average growth in earnings per share of 8%, the pool
is 3.75% of base salary; and at average growth in earnings per
share of 12% the pool is 12.75% of base salary. If average
growth in earnings per share is 6% or lower, the EPS Pool is
zero.
Stockholder Return Pool. Where the three-year total return to
stockholders is equal to or exceeds the total return of the AMEX
Market Value Index, the Stockholder Return Pool is 7.5% of
aggregate executive officer base salary. In all other cases, the
Stockholder Return Pool is zero.
One-half of the Operating Income Pool is awarded to executive
officers, as a percentage of their base salaries, if the
actual-to-budget operating income is at least 90%. One-half of
the EPS Pool is awarded to executive officers, as a percentage of
their base salaries, if the average growth in earnings per share
is at least 9%. One-half of the Stockholder Return Pool is
awarded to executive officers, as a percentage of their base
salaries, if the total return to stockholders of the Company
exceeds the total return of the AMEX Market Value Index. With
respect to the balance of each of the pools, The Compensation
Committee has the discretion to award to any participant an
amount relating to each of the Operating Income Pool, EPS Pool,
and/or the Stockholder Return Pool ranging in value from zero to
one-half of the award such participant would otherwise receive.
Any amounts not so awarded may, at the discretion of the
Committee, be reallocated to any other participant based upon the
Committee's evaluation of the participant's individual
performance relative to written objectives and other factors.
If the actual-to-budget operating income is at least 60%, but
less than 90%, the Committee has the discretion to award to any
participant an amount relating to the Operating Income Pool
ranging in value from zero to the full amount of the award such
participant would otherwise receive. If the average growth in
earnings per share is at least 6%, but less than 9%, the
Committee has the discretion to reduce an award to any
participant an amount relating to the EPS Pool ranging in value
from zero to the full amount of the award such participant would
otherwise receive.
The aggregate amount of incentive compensation awards for any
fiscal year under the Executive Officer Plan and other incentive
compensation plans is limited to 5% of the Company's operating
income for such fiscal year.
The recommended base salary and incentive compensation award
for the President is determined each year by the Committee based
upon overall financial performance of the Company and the
performance of the President relative to corporate objectives and
other factors under the terms of the Executive Officer Plan.
Mr. Fulton's base salary and incentive compensation during
fiscal 1996 decreased 4% to $345,000 from fiscal 1995. The
increase in Mr. Fulton's base salary related to the level of
responsibility and accountability of the Chief Executive Officer,
as well as external factors such as inflation and base salary
levels in comparable companies. The amount of incentive
compensation awarded to Mr. Fulton was determined based on
performance relative to budgeted operating income, growth in
earnings per share, the total return to shareholders of the
Company relative to the Amex Market Value Index and individual
performance relative to stated objectives under the terms of the
Executive Officer Plan. Each of these financial measurers was
met or exceeded, and Mr. Fulton achieved substantially all of the
personal objectives established by the Board of Directors during
fiscal 1996.
In 1993, the tax laws were amended to limit the deduction a
publicly-held company is allowed for compensation paid to the
chief executive officer and the four most highly compensated
executive officers other than the chief executive officer.
Generally, amounts paid in excess of $1 million to a covered
executive, other than performance-based compensation, cannot be
deducted. In order to constitute performance-based compensation,
the performance measures must be approved by stockholders. No
executive officer of the Company has earned over $1 million in
any fiscal year of the Company.
Members of the Compensation Committee:
Herbert Roth, Jr.,Gary D. Eppen,Paul B. Rosenberg
Michael D. Winfield,C. Vincent Vappi, Chairman (Retired)
PERFORMANCE GRAPH
The following graph reflects a comparison of the cumulative
total return (change in stock price plus reinvested dividends)
assuming $100 invested in the Common Stock of the Company, in the
American Stock Exchange ("AMEX") Index, and in the AMEX High Tech
Sub-Index during the period from September 30, 1991 through
September 30, 1996. The comparisons in the following table are
historical and are not intended to forecast or be indicative of
possible future performance of the Common Stock of the Company.
<TABLE>
<CAPTION>
Value of Investment at September 30,
------------------------------------
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Landauer, Inc. $ 100 $ 115 $ 118 $ 123 $ 152 $ 167
AMEX Index 100 101 123 122 145 153
AMEX HiTech Sector 100 94 111 116 155 196
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has entered into a consulting agreement, which
expires on December 31, 1998, with Tech/Ops Corporation, a
company owned by Paul B. Rosenberg and Dr. Marvin G. Schorr, two
of the Company's directors. Under the terms of the agreement,
the annual cost of these services will not exceed $30,000 plus
reimbursement for certain expenses.
In connection with the 1988 transfer of the personnel dosimetry
business, the Company has entered into a Liability Assumption and
Sharing Agreement with Tech/Ops, Inc. (Tech/Ops) providing for,
among other things, (i) assumption by the Company of all
determinable and contingent liabilities and obligations of
Tech/Ops relating to the personnel dosimetry and radon detection
business, (ii) assumption by the other former subsidiary of
Tech/Ops of all determinable and contingent liabilities and
obligations of Tech/Ops relating to its electronic controller
business, (iii) joint and several assumption by the Company and
the other former subsidiary of all contingent liabilities of
Tech/Ops and (iv) the allocation of other liabilities jointly and
severally assumed to the business in which they relate or, if
they relate to neither business, in ratios reflective of relative
profit contributions of the respective businesses for the five
years ended September 30, 1987. Under the terms of this
agreement, $22,000 of expenses were charged to operations of the
Company for the fiscal year ended September 30, 1996.
SELECTION OF AUDITORS
The stockholders of the Company will be asked at the annual
meeting to approve the selection of auditors for the fiscal year
ending September 30, 1997. Arthur Andersen LLP, 33 West Monroe
Street, Chicago, Illinois, has served as auditors for the Company
and its predecessor Tech/Ops, Inc. since the latter was formed,
and it will be recommended to the stockholders that such firm be
selected again. The Audit Committee of the Board of Directors
comprised of Gary D. Eppen, Paul B. Rosenberg, Herbert Roth, Jr.
and Michael D. Winfield, has approved this recommendation.
Representatives of Arthur Andersen LLP are expected to be present
at the meeting with an opportunity to make a statement if they
desire to do so, and are expected to be available to respond to
appropriate questions.
If a quorum is present, in order to approve the selection of
Arthur Andersen LLP as the Company's auditors for the fiscal year
ending September 30, 1997, a majority of the shares present in
person or by proxy at the annual meeting and entitled to vote on
such proposal must vote in favor of it. Accordingly, abstentions
will have the same effect as votes against and non-votes will
reduce the number of shares considered present and entitled to
vote on the proposal.
The Board of Directors recommends a vote FOR the selection of
Arthur Andersen LLP as auditors of the Company for the fiscal
year ended September 30, 1997.
APPROVAL OF
1997 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
General
The Board of Directors is proposing for stockholder approval at
the annual meeting the Landauer, Inc. 1997 Non-Employee
Directors' Stock Option Plan (the "1997 Plan" or the "Plan").
The Company historically has maintained a Directors' Retirement
Plan under which directors, in certain circumstances, may be
entitled to receive an annual cash retirement benefit. The Board
of Directors has determined to terminate the Directors'
Retirement Plan for periods subsequent to 1996 upon adoption of
the 1997 Plan. The purposes of the Plan are (i) to align the
interests of the Company's stockholders and recipients of stock
options under the Plan by increasing the proprietary interest of
such recipients in the Company's growth and success and (ii) to
advance the interests of the Company by attracting and retaining
well-qualified persons who are not employees of the Company for
service as directors of the Company. Reference is made to
Exhibit A to this Proxy Statement for the complete text of the
Plan which is summarized below.
Unless otherwise instructed, the proxy holders will vote the
proxies received by them FOR approval of the Plan.
Description of the Plan
Administration. The Plan will be administered by a committee
of the Board of Directors (the "Committee") consisting of not
less than two directors. The Compensation Committee of the Board
of Directors is expected to serve as the Committee under the 1997
Plan.
All grants of stock options under the Plan will be evidenced by
a written agreement containing such provisions not inconsistent
with the Plan as the Committee shall approve. The Committee will
also have authority to prescribe rules and regulations for
administering the Plan and to decide questions of interpretation
or application of any provision of the Plan.
Available Shares. Under the 1997 Plan, 50,000 shares of Common
Stock are available for the grant of options under the Plan,
subject to adjustment in the event of a stock split, stock
dividend, recapitalization, reorganization, merger, spin-off or
other similar change or event. The number of available shares
will be reduced by the sum of the aggregate number of shares of
Common Stock which become subject to outstanding options. To the
extent that shares of Common Stock subject to an outstanding
option are not issued or delivered by reason of the expiration,
termination, cancellation or forfeiture of such option or by
reason of the delivery of shares of Common Stock to pay all or a
portion of the exercise price of an option, if any, then such
shares of Common Stock shall again be available under the Plan.
Effective Date, Termination and Amendment. If approved by
stockholders at the annual meeting, the 1997 Plan will become
effective as of the date of the annual meeting and will terminate
ten years thereafter, unless terminated earlier by the Board of
Directors. The Board of Directors may amend the Plan at any
time, subject to any requirement of stockholder approval required
by applicable law, rule or regulation.
Grant and Exercisability of Stock Options. The Plan provides
that, immediately following approval of the Plan by stockholders
at the 1997 annual meeting, each member of the Board of Directors
who is then serving and who is not an employee, either full time
or part time, of the Company (a "Non-Employee Director") will be
granted an option to purchase 5,000 shares of Common Stock at a
purchase price per share equal to the fair market value (based on
the average of the high and low transaction prices of a share of
Common Stock on the American Stock Exchange) of a share of Common
Stock on such date. Any Non-Employee Director who is first
elected or first begins to serve as a member of the Board of
Directors, other than by reason of termination of employment with
the Company, at a date subsequent to the date of the 1997 annual
meeting of stockholders will also be granted at the time of such
first election or service an option to purchase 5,000 shares of
Common Stock at a purchase price per share equal to the fair
market value of a share of Common Stock on the date of such
grant. Each option granted will expire 90 days after the tenth
anniversary of the date of its grant and, subject to the
provisions of the immediately following sentence, will become
exercisable in equal 500 share amounts on each of the first ten
anniversaries of the date of its grant. All outstanding options
issued under the Plan shall immediately be exercisable in full in
the event of a "Change in Control" of the Company (as defined in
the Plan). The acceleration of options in the event of a Change
in Control could increase the cost to a potential acquiror of the
Company and, therefore, could affect the willingness of an
acquiror to propose such a transaction with the Company.
Upon exercise of an option, the purchase price may be paid in
cash or by delivery of previously owned shares of Common Stock.
The Committee also has the discretion to permit payment by a note
or in installments under certain circumstances.
Termination of Directorship. Subject to the provisions
governing exercisability following a Change of Control, if an
optionee ceases to be a member of the Board of Directors for any
reason, each option issued under the Plan to such optionee will
be exercisable only to the extent that such option is exercisable
on the effective date of such optionee ceasing to be a member of
the Board of Directors and may thereafter be exercised by such
optionee (or such optionee's executor, administrator, legal
representative, beneficiary of similar person) until and
including the earliest to occur of (i) the one year anniversary
of the date such optionee ceased to be a member of the Board of
Directors and (ii) the expiration date of the term of such option
(provided that if the optionee dies during the one year period
following his or her cessation of membership on the Board of
Directors, such optionee's executor, administrator, legal
representative, beneficiary or similar person, as the case may
be, will have not less than six months from the date of death to
so exercise such option).
Federal Income Tax Consequences
The following is a brief summary of certain U.S. federal income
tax consequences generally arising with respect to grants of
options under the 1997 Plan.
A participant will not recognize any income upon the grant of
an option and the Company will not be allowed a tax deduction at
such time. A participant will recognize compensation taxable as
ordinary income upon exercise of a stock option equal to the
excess of the fair market value of the shares purchased over
their exercise price, and the Company will be entitled to a
corresponding deduction at the time of such exercise.
The following table sets forth information regarding the grant
of options to non-employee directors on the date of the 1997
annual meeting of stockholders. On December 12, 1996, the
closing price of the common stock on the American Stock Exchange
was $22.00 per share.
1997 Non-Employee Directors Stock Option Plan
<TABLE>
<CAPTION>
Name and Position Number of Units
<S> <C>
All non-employee directors
as a group (totalling 7 persons) 35,000
</TABLE>
The affirmative vote of a majority of the shares present at the
meeting in person or by proxy is necessary to approve the Plan.
The Board of Directors recommends a vote FOR approval of the
1997 Non-Employee Directors Stock Option Plan.
PROPOSALS OF AND NOMINATIONS BY SECURITY HOLDERS FOR
1998 ANNUAL MEETING
Proposals intended to be presented by security holders at the
annual meeting of the Company's stockholders scheduled for
February 5, 1998 must be received by the Company in order to be
considered for inclusion in its proxy statement and form of proxy
relating to that meeting not later than August 31, 1997. Such
proposals may be included in next year's proxy statement if they
comply with certain rules and regulations of the Securities and
Exchange Commission.
Under the Company's by-laws, nominations for directorships to
be acted on at the 1998 annual meeting may be made only pursuant
to written notice received at the Company's principal office not
less than 50 nor more than 75 days prior to the meeting.
COMPLIANCE WITH SECTION 16 OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's officers and directors and persons who own more
than ten percent of a registered class of the Company's equity
securities ("Reporting Persons") to file reports of ownership and
changes in ownership with the Securities and Exchange Commission
("SEC"). Reporting Persons are required by SEC regulation to
furnish the Company with copies of all Section 16(a) reports they
file.
Based solely on its review of the copies of such forms received
by it and representations from certain Reporting Persons, the
Company believes that during the fiscal year ended September 30,
1996 its Reporting Persons complied with all filing requirements
applicable to them.
MISCELLANEOUS
The Company's 1996 Annual Report to Stockholders (which
includes a copy of Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1996) accompanies this Proxy
Statement.
The Board of Directors does not know of any business which will
come before the meeting except the matters described in the
notice. If other business is properly presented for
consideration at the meeting, it is intended that the proxies
will be voted by the persons named therein in accordance with
their judgment on such matters.
In the event that a quorum is not present when the meeting is
convened, it is intended to vote the proxies in favor of
adjourning the meeting from time-to-time until a quorum is
obtained.
JAMES M. O'CONNELL
Vice President, Treasurer, Secretary
and Chief Financial Officer
Dated December 30, 1996
LANDAUER, INC.
1997 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
I. INTRODUCTION
I.1 Purposes. The purposes of the 1997 Non-Employee Directors
Stock Option Plan (the "Plan") of Landauer, Inc., a Delaware
corporation (the "Company"), and its subsidiaries from time to
time (individually a "Subsidiary" and collectively the
"Subsidiaries"), are to align the interests of the Company's
stockholders and the recipients of options under this Plan by
increasing the proprietary interest of such recipients in the
Company's growth and success and to advance the interests of the
Company by attracting and retaining well-qualified persons who
are not employees of the Company for service as directors of the
Company. For purposes of this Plan, references to service on
behalf of the Company shall also mean service on behalf of a
Subsidiary.
I.2 Administration. This Plan shall be administered by a
committee (the "Committee") designated by the Board of Directors
of the Company (the "Board") consisting of two or more members of
the Board.
The Committee shall, subject to the terms of this Plan,
interpret this Plan and the application thereof and establish
rules and regulations it deems necessary or desirable for the
administration of this Plan. All such interpretations, rules and
regulations shall be conclusive and binding on all parties. Each
option hereunder shall be evidenced by a written agreement (an
"Agreement") between the Company and the optionee setting forth
the terms and conditions applicable to such option. The
Committee shall determine the form of the Agreement.
No member of the Board of Directors or the Committee shall be
liable for any act, omission, interpretation, construction or
determination made in connection with this Plan in good faith,
and the members of the Board of Directors and the Committee shall
be entitled to indemnification and reimbursement by the Company
in respect of any claim, loss, damage or expense (including
attorneys' fees) arising therefrom to the full extent permitted
by law (except as otherwise may be provided in the Company's
Certificate of Incorporation and/or By-laws) and under any
directors' and officers' liability insurance that may be in
effect from time to time.
A majority of the Committee shall constitute a quorum. The
acts of the Committee shall be either (a) acts of a majority of
the members of the Committee present at any meeting at which a
quorum is present or (b) acts approved in writing by all of the
members of the Committee without a meeting.
I.3 Eligibility. Each member of the Board of Directors of the
Company who is not an employee, either full-time or part-time, of
the Company or a Subsidiary (a "Non-Employee Director") shall be
eligible to participate in this Plan and receive a grant of
options to purchase shares of Common Stock (as defined in Section
1.4) in accordance with Section II.
I.4 Shares Available. Subject to adjustment as provided in
Section 3.6, 50,000 shares of the common stock, par value $.10
per share, of the Company ("Common Stock"), shall be available
for grants of options under this Plan, reduced by the sum of the
aggregate number of shares of Common Stock which become subject
to outstanding options. To the extent that shares of Common
Stock subject to an outstanding option are not issued or
delivered by reason of the expiration, termination, cancellation
or forfeiture of such option or by reason of the delivery of
shares of Common Stock to pay all or a portion of the exercise
price of such option, then such shares of Common Stock shall
again be available under this Plan.
Shares of Common Stock to be delivered under this Plan shall be
made available from authorized and unissued shares of Common
Stock, or authorized and issued shares of Common Stock reacquired
and held as treasury shares or otherwise or a combination
thereof.
II. STOCK OPTIONS
2.1 Grants of Stock Options. Each Non-Employee Director shall
be granted non-qualified stock options as follows:
(a) Time of Grant. On the date of the 1997 annual meeting of
stockholders of the Company (or such later date on which a person
is first elected or begins to serve as an Non-Employee Director,
other than by reason of termination of employment with the
Company), each person who is a Non-Employee Director immediately
after such meeting of stockholders (and any person who is first
elected or first begins to serve as a Non-Employee Director,
other than by reason of termination of employment, on a date that
is later than the date of the 1997 annual meeting of stockholders
of the Company) shall be granted an option to purchase 5,000
shares of Common Stock at a purchase price per share equal to the
Fair Market Value of the Common Stock on the date of grant of
such option. "Fair Market Value" shall mean the average of the
high and low transaction prices of a share of Common Stock as
reported on The American Stock Exchange on the date as of which
such value is being determined or, if the Common Stock is not
listed on The American Stock Exchange, the average of the high
and low transaction prices of a share of Common Stock on the
principal national stock exchange on which the Common Stock is
traded on the date as of which such value is being determined,
or, if there shall be no reported transactions on such date, on
the next preceding date for which transactions were reported;
provided, however, that if Fair Market Value for any date cannot
be determined as above provided, Fair Market Value shall be
determined by the Committee by whatever means or method as the
Committee, in the good faith exercise of its discretion, shall at
such time deem appropriate.
(b) Option Period and Exercisability. Except as otherwise
provided herein, each option granted under this Article II shall
not be exercisable during the first year following its date of
grant. Thereafter, such option may be exercised: (i) on and
after the first anniversary of its date of grant, for up to 500
shares of Common Stock subject to such option on its date of
grant, (ii) on and after the second anniversary of its date of
grant, for up to an additional 500 (1000 on a cumulative basis)
shares of Common Stock subject to such option on its date of
grant; (iii) on and after the third anniversary of its date of
grant, for up to an additional 500 (1,500 on a cumulative basis)
shares of Common Stock subject to such option on its date of
grant, (iv) on and after the fourth anniversary of its date of
grant, for up to an additional 500 (2,000 on a cumulative basis)
shares of Common Stock subject to such option on its date of
grant, (v) on and after the fifth anniversary of its date of
grant, for up to an additional 500 (2,500 on a cumulative basis)
shares of Common Stock subject to such option on its date of
grant, (vi) on and after the sixth anniversary of its date of
grant, for up to an additional 500 (3,000 on a cumulative basis)
shares of Common Stock subject to such option on its date of
grant, (vii) on and after the seventh anniversary of its date of
grant, for up to an additional 500 (3,500 on a cumulative basis)
shares of Common Stock subject to such option on its date of
grant, (viii) on and after the eighth anniversary of its date of
grant, for up to an additional 500 (4,000 on a cumulative basis)
shares of Common Stock subject to such option on its date of
grant, (ix) on and after the ninth anniversary of its date of
grant, for up to an additional 500 (4,500 on a cumulative basis)
shares of Common Stock subject to such option on its date of
grant and (x) on and after the tenth anniversary of its date of
grant, for up to the remaining 500 (all shares on a cumulative
basis) shares of Common Stock subject to such option on its date
of grant. Subject to Section 2.1(d) and (e), each option granted
under this Article II shall expire 90 days after the tenth year
anniversary of its date of grant. An exercisable option, or
portion thereof, may be exercised in whole or in part only with
respect to whole shares of Common Stock.
(c) Method of Exercise. An option may be exercised (i) by
giving written notice to the Company specifying the number of
whole shares of Common Stock to be purchased and accompanied by
payment therefor in full (or arrangement made for such payment to
the Company's satisfaction) either (A) in cash, (B) by delivery
of previously owned whole shares of Common Stock (which the
optionee has held for at least six months prior to the delivery
of such shares or which the optionee purchased on the open market
and for which the optionee has good title, free and clear of all
liens and encumbrances) having a Fair Market Value, determined as
of the date of exercise, equal to the aggregate purchase price
payable by reason of such exercise, (C) in cash by a
broker-dealer acceptable to the Company to whom the optionee has
submitted an irrevocable notice of exercise or (D) a combination
of (A) and (B), in each case to the extent set forth in the
Agreement relating to the option and (ii) by executing such
documents as the Company may reasonably request. The Committee
shall have sole discretion to disapprove of an election pursuant
to any of clauses (B)-(D). Notwithstanding the foregoing, the
Committee shall also have discretion to permit payment to be
made, in whole or in part, by a full-recourse note or in
installments at such time and upon such terms as the Committee
may approve; provided, however, that in the case of payment by
any such note or installments, certificates for any shares of
Common Stock issued in respect thereof shall contain such legend,
if any, as may be required by, and shall otherwise be subject to
the provisions of, the laws of the state of incorporation of the
Company relating to the issuance of shares on such terms. Any
fraction of a share of Common Stock which would be required to
pay such purchase price shall be disregarded and the remaining
amount due shall be paid in cash by the optionee. No certificate
representing Common Stock shall be delivered until the full
purchase price therefor has been paid.
(d) Termination of Directorship. Subject to Section 3.7, if the
holder of an option granted under this Article II shall cease to
be a member of the Board for any reason, each such option held by
such optionee shall be exercisable only to the extent that such
option is exercisable on the effective date of such holder's
ceasing to be a member of the Board and may thereafter be
exercised by such optionee (or such optionee's executor,
administrator, legal representative, beneficiary or similar
person) until and including the earliest to occur of (i) the date
which is one year after the date such optionee ceased to be a
member of the Board and (ii) the expiration date of the term of
such option.
(e) Death Following Termination of Directorship. If the holder
of an option granted under this Article II dies during the one
year period following the date on which such optionee ceased to
be a member of the Board, each such option held by such holder
shall be exercisable only to the extent that such option is
exercisable on the date of the holder's death and may thereafter
be exercised by such holder's executor, administrator, legal
representative, beneficiary or similar person, as the case may
be, until and including the earliest to occur of (i) the date
which is one year after the date of death and (ii) the expiration
date of the term of such option; provided, however, that, in the
event that the date of death is less than six months prior to
such expiration date, such holder's executor, administrator,
legal representative, beneficiary or similar person, as the case
may be, shall have not less than six months from the date of
death to so exercise such option.
III. GENERAL
3.1 Effective Date and Term of Plan. This Plan shall be
submitted to the stockholders of the Company for approval and, if
approved by the affirmative vote of a majority of the shares of
Common Stock present in person or represented by proxy at the
1997 annual meeting of stockholders, shall become effective on
the date of such approval. In the event that this Plan is not
approved by the stockholders of the Company, this Plan shall be
null and void and of no force or effect. This Plan shall
terminate on January 29, 2007 unless terminated earlier by the
Board. Termination of this Plan shall not affect the terms or
conditions of any option granted prior to termination.
Options may be granted hereunder at any time prior to the
termination of this Plan.
3.2 Amendments. The Board may amend this Plan as it shall deem
advisable, subject to any requirement of stockholder approval
required by applicable law, rule or regulation. No amendment may
impair the rights of a holder of an outstanding option without
the consent of such holder.
3.3 Agreement. No option shall be valid until an Agreement is
executed by the Company and the optionee and, upon execution by
the Company and the optionee and delivery of the Agreement to the
Company, such option shall be effective as of the effective date
set forth in the Agreement.
3.4 Non-Transferability. No option hereunder shall be
transferable other than (a) by will or the laws of descent and
distribution or pursuant to beneficiary designation procedures
approved by the Company or (b) as otherwise permitted under Rule
16b-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as set forth in the Agreement relating to such
option. Except to the extent permitted by the foregoing
sentence, each option may be exercised during the optionee's
lifetime only by the optionee or the optionee's legal
representative or similar person. Except as permitted by the
second preceding sentence, no option hereunder shall be sold,
transferred, assigned, pledged, hypothecated, encumbered or
otherwise disposed of (whether by operation of law or otherwise)
or be subject to execution, attachment or similar process. Upon
any attempt to so sell, transfer, assign, pledge, hypothecate,
encumber or otherwise dispose of any option hereunder, such
option and all rights thereunder shall immediately become null
and void.
3.5 Restrictions on Shares. Each option hereunder shall be
subject to the requirement that if at any time the Company
determines that the listing, registration or qualification of the
shares of Common Stock subject to such option upon any securities
exchange or under any law, or the consent or approval of any
governmental body, or the taking of any other action is necessary
or desirable as a condition of, or in connection with, the
purchase or delivery of shares thereunder, such shares shall not
be purchased or delivered unless such listing, registration,
qualification, consent, approval or other action shall have been
effected or obtained, free of any conditions not acceptable to
the Company. The Company may require that certificates
evidencing shares of Common Stock delivered pursuant to any
option hereunder bear a legend indicating that the sale, transfer
or other disposition thereof by the holder is prohibited except
in compliance with the Securities Act of 1933, as amended, and
the rules and regulations thereunder.
3.6 Adjustment. In the event of any stock split, stock
dividend, recapitalization, reorganization, merger,
consolidation, combination, exchange of shares, liquidation,
spin-off or other similar change in capitalization or event, or
any distribution to holders of Common Stock other than a regular
cash dividend, the number and class of securities available under
this Plan, the number and class of securities subject to each
outstanding option and the number and class of securities to vest
annually, the purchase price per security, and the number of
securities subject to each option to be granted to Non-Employee
Directors pursuant to Article II shall be appropriately adjusted
by the Committee, such adjustments to be made in the case of
outstanding options without an increase in the aggregate purchase
price. The decision of the Committee regarding any such
adjustment shall be final, binding and conclusive. If any
adjustment would result in a fractional security being (a)
available under this Plan, such fractional security shall be
disregarded, or (b) subject to an option under this Plan, the
Company shall pay the optionee, in connection with the first
exercise of the option in whole or in part, occurring after such
adjustment, an amount in cash determined by multiplying (i) the
fraction of such security (rounded to the nearest hundredth) by
(ii) the excess, if any, of (x) the Fair Market Value on the
exercise date over (y) the exercise price of the option.
3.7 Change in Control.
(a) Notwithstanding any provision in this Plan or any Agreement,
in the event of a Change in Control, all outstanding options
shall immediately be exercisable in full.
(b) "Change in Control" shall mean:
(i) the acquisition by any individual, entity or group (a
"Person"), including any "person" within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act, of beneficial ownership
within the meaning of Rule 13d-3 promulgated under the Exchange
Act, of 50% or more of either (A) the then outstanding shares of
common stock of the Company (the "Outstanding Company Common
Stock") or (B) the combined voting power of the then outstanding
securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting
Securities"); excluding, however, the following: (1) any
acquisition directly from the Company (excluding any acquisition
resulting from the exercise of an exercise, conversion or
exchange privilege unless the security being so exercised,
converted or exchanged was acquired directly from the Company),
(2) any acquisition by the Company, (3) any acquisition by an
employee benefit plan (or related trust) sponsored or maintained
by the Company or any corporation controlled by the Company or
(4) any acquisition by any corporation pursuant to a transaction
which complies with clauses (A), (B) and (C) of subsection (iii)
of this Section 3.7(b); provided further, that for purposes of
clause (2), if any Person (other than the Company or any employee
benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company) shall
become the beneficial owner of 50% or more of the Outstanding
Company Common Stock or 50% or more of the Outstanding Company
Voting Securities by reason of an acquisition by the Company, and
such Person shall, after such acquisition by the Company, become
the beneficial owner of any additional shares of the Outstanding
Company Common Stock or any additional Outstanding Company Voting
Securities and such beneficial ownership is publicly announced,
such additional beneficial ownership shall constitute a Change in
Control;
(ii) individuals who, as of January 29, 1997, constitute the
Board of Directors (the "Incumbent Board") cease for any reason
to constitute at least a majority of such Board; provided that
any individual who becomes a director of the Company subsequent
to the date hereof whose election, or nomination for election by
the Company's stockholders, was approved by the vote of at least
a majority of the directors then comprising the Incumbent Board
shall be deemed a member of the Incumbent Board; and provided
further, that any individual who was initially elected as a
director of the Company as a result of an actual or threatened
election contest, as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act, or any other
actual or threatened solicitation of proxies or consents by or on
behalf of any Person other than the Board shall not be deemed a
member of the Incumbent Board;
(iii) consummation by the Company of a reorganization, merger or
consolidation or sale or other disposition of all or
substantially all of the assets of the Company (a "Corporate
Transaction"); excluding, however, a Corporate Transaction
pursuant to which (A) all or substantially all of the individuals
or entities who are the beneficial owners, respectively, of the
Outstanding Company Common Stock and the Outstanding Company
Voting Securities immediately prior to such Corporate Transaction
will beneficially own, directly or indirectly, more than 50% of,
respectively, the outstanding shares of common stock, and the
combined voting power of the outstanding securities of such
corporation entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from
such Corporate Transaction (including, without limitation, a
corporation which as a result of such transaction owns the
Company or all or substantially all of the Company's assets
either directly or indirectly) in substantially the same
proportions relative to each other as their ownership,
immediately prior to such Corporate Transaction, of the
Outstanding Company Common Stock and the Outstanding Company
Voting Securities, as the case may be, (B) no Person (other than:
the Company; any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation
controlled by the Company; the corporation resulting from such
Corporate Transaction; and any Person which beneficially owned,
immediately prior to such Corporate Transaction, directly or
indirectly, 35% or more of the Outstanding Company Common Stock
or the Outstanding Company Voting Securities, as the case may be)
will beneficially own, directly or indirectly, 35% or more of,
respectively, the outstanding shares of common stock of the
corporation resulting from such Corporate Transaction or the
combined voting power of the outstanding securities of such
corporation entitled to vote generally in the election of
directors and (C) individuals who were members of the Incumbent
Board will constitute at least a majority of the members of the
board of directors of the corporation resulting from such
Corporate Transaction; or
(iv) approval by the stockholders of the Company of a plan of
complete liquidation or dissolution of the Company.
3.8 No Right of Continued Service. Neither this Plan nor any
option granted hereunder shall confer upon any person any right
to continued services as a director of the Company, any
Subsidiary or any affiliate of the Company.
3.9 Rights as Stockholder. No person shall have any right as a
stockholder of the Company with respect to any shares of Common
Stock which are subject to an option hereunder until such person
becomes a stockholder of record with respect to such shares of
Common Stock.
3.10 Designation of Beneficiary. Each optionee may file with
the Committee a written designation of one or more persons as
such optionee's beneficiary or beneficiaries (both primary and
contingent) in the event of the optionee's death. To the extent
an outstanding option granted hereunder is exercisable, such
beneficiary or beneficiaries shall be entitled to exercise such
option.
Each beneficiary designation shall become effective only when
filed in writing with the Committee during the optionee's
lifetime on a form prescribed by the Committee. The spouse of a
married optionee domiciled in a community property jurisdiction
shall join in any designation of a beneficiary other than such
spouse. The filing with the Committee of a new beneficiary
designation shall cancel all previously filed beneficiary
designations.
If an optionee fails to designate a beneficiary, or if all
designated beneficiaries of an optionee predecease the optionee,
then each outstanding option hereunder held by such optionee, to
the extent exercisable, may be exercised by such optionee's
executor, administrator, legal representative or similar person.
3.11 Governing Law. This Plan, each option hereunder and the
related Agreement, and all determinations made and actions taken
pursuant thereto, to the extent not otherwise governed by the
Internal Revenue Code of 1986, as amended, or the laws of the
United States, shall be governed by the laws of the State of
Delaware and construed in accordance therewith without giving
effect to principles of conflicts of laws.
