<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
American Power Conversion Corporation
(Name of Registrant as Specified in Its Charter)
American Power Conversion Corporation
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[ X ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1),
or 14a-6(i)(2).
[ ] $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
[ ] 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: not applicable
(2) Aggregate number of securities to which transactions
applies: not applicable
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11: not applicable
(4) Proposed maximum aggregate value of transaction: not
applicable
[ ] 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: not applicable
(2) Form, Schedule or Registration Statement No.: not
applicable
(3) Filing party: not applicable
(4) Date filed: not applicable
<PAGE>
American Power Conversion Corporation
P.O. Box 278
132 Fairgrounds Road
West Kingston, RI 02892
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
______________________
To the Shareholders:
The Annual Meeting of Shareholders of American Power
Conversion Corporation, a Massachusetts corporation (the
"Company"), will be held on Thursday, June 13, 1996 at
10:00 a.m., local time, at Edwards Hall on the campus of the
University of Rhode Island, Kingston, Rhode Island 02881 for the
following purposes:
1. To fix the number of directors at five.
2. To elect a Board of Directors for the ensuing year.
3. To ratify the selection of the firm of KPMG Peat
Marwick LLP as auditors for the fiscal year ending
December 31, 1996.
4. To transact such other business as may properly come
before the meeting and any adjournments thereof.
Shareholders of record at the close of business on April 29,
1996, will be entitled to vote at the meeting or any adjournments
thereof.
By Order of the Board of Directors,
Emanuel E. Landsman,
Clerk
May 10, 1996
SHAREHOLDERS ARE REQUESTED TO SIGN THE ENCLOSED PROXY CARD AND
RETURN IT IN THE ENCLOSED STAMPED ENVELOPE BY RETURN MAIL.
<PAGE>
AMERICAN POWER CONVERSION CORPORATION
P.O. Box 278
132 Fairgrounds Road
West Kingston, RI 02892
____________________
PROXY STATEMENT FOR THE ANNUAL MEETING OF SHAREHOLDERS
To Be Held on June 13, 1996
_____________________
Proxies in the form enclosed with this proxy statement are
solicited by the Board of Directors of American Power Conversion
Corporation, a Massachusetts corporation (the "Company"), for use
at the Annual Meeting of Shareholders to be held on Thursday,
June 13, 1996 at 10:00 a.m., local time, at Edwards Hall, on the
campus of the University of Rhode Island, Kingston, Rhode Island
02881 (the "Meeting").
Only shareholders of record as of the close of business on
April 29, 1996 will be entitled to vote at the Meeting and any
adjournments thereof. As of that date, 93,298,672 shares of
Common Stock, par value $.01 per share, of the Company were
issued and outstanding. Each share of Common Stock outstanding
as of the record date will be entitled to one vote, and
shareholders may vote in person or by proxy. Execution of a
proxy will not in any way affect a shareholder's right to attend
the Meeting and vote in person. Any shareholder giving a proxy
has the right to revoke it by written notice to the Clerk of the
Company at any time before it is exercised or by delivering a
later executed proxy to the Clerk of the Company at any time
before the original proxy is exercised.
Each of the persons named as proxies in the proxy is a
director and officer of the Company. All properly executed
proxies returned in time to be cast at the Meeting will be voted.
With respect to the election of a Board of Directors, any
shareholder submitting a proxy has the right to withhold
authority to vote for any individual nominee to the Board of
Directors by writing the name of such individual or group in the
space provided on the proxy. The proxies will be voted as stated
below under "Election of Directors." In addition to the election
of directors, the shareholders will consider and vote upon
proposals (i) to fix the number of directors at five and (ii) to
ratify the selection of KPMG Peat Marwick as the Company's
auditors for 1996. Where a choice has been specified on the
proxy with respect to the foregoing matters, the shares
represented by the proxy will be voted in accordance with the
specification and will be voted FOR all of the matters set forth
in the accompanying Notice of Meeting if no specification is
indicated.
The representation in person or by proxy of at least a
majority of the outstanding shares of Common Stock entitled to
vote at the Meeting is necessary to establish a quorum for the
transaction of business. Votes withheld from any nominee,
abstentions and broker non-votes are counted as present or
represented for purposes of determining the presence or absence
of a quorum at the Meeting. A "non-vote" occurs when a broker
holding shares for a beneficial owner votes on one proposal, but
does not vote on another proposal because, with respect to such
other proposal, the broker does not have discretionary voting
power and has not received instructions from the beneficial
owner. Directors are elected by a plurality of the votes cast by
shareholders entitled to vote at the Meeting. All other matters
being submitted to shareholders require the affirmative vote of
the majority of shares present in person or represented by proxy
<PAGE>
2
at the Meeting. An automated system administered by the
Company's transfer agent tabulates the votes. The vote on each
matter submitted to shareholders is tabulated separately.
Abstentions are included in the number of shares present or
represented and voting on each matter. Broker "non-votes" are
not so included.
The Board of Directors knows of no other matter to be
presented at the Meeting. If any other matter should be
presented at the Meeting upon which a vote may be properly taken,
shares represented by all proxies received by the Board of
Directors will be voted with respect thereto in accordance with
the judgment of the persons named as attorneys in the proxies.
An Annual Report to Shareholders, containing financial
statements for the fiscal year ended December 31, 1995, is being
mailed together with this proxy statement to all shareholders
entitled to vote. This Proxy Statement and the accompanying
proxy were first mailed to shareholders on or about May 10, 1996.
<PAGE>
3
MANAGEMENT AND PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth as of April 22, 1996, certain
information regarding beneficial ownership of the Company's
Common Stock (i) by each person who, to the knowledge of the
Company, beneficially owned more than 5% of the
outstanding shares of Common Stock of the Company outstanding at
such date, (ii) by each director or nominee for director of the
Company, (iii) by each executive officer named in the Summary
Compensation Table on page 9, and (iv) by all directors, nominees
for director and executive officers of the Company as a group.
<TABLE>
<CAPTION>
Amount and
Nature of Percentage of
Name and Address Beneficial Common Stock
of Beneficial Owner Ownership(1) Outstanding(2)
<S> <C> <C>
State of Wisconsin 9,169,700 9.8%
Investment Board
P.O. Box 7842
Madison, WI 53707
Rodger B. Dowdell, Jr. 9,851,997(3) 10.5%
American Power
Conversion
Corporation
P.O. Box 278
132 Fairgrounds Road
West Kingston, RI
02892
Neil E. Rasmussen 5,535,505(4) 5.9%
APC America, Inc.
755 Middlesex Turnpike
Billerica, MA 01862
Emanuel E. Landsman 2,159,183(5) 2.3%
APC America, Inc.
755 Middlesex Turnpike
Billerica, MA 01862
James D. Gerson 278,488(6) *
Fahnestock & Co.
110 Wall Street
New York, NY 10005
Ervin F. Lyon 907,790(7) 1.0%
270 North Haverhill Rd.
Kensington, NH 03833-5503
</TABLE>
<PAGE>
4
<TABLE>
<S> <C> <C>
Edward W. Machala 625,525(8) *
APC America, Inc.
P.O. Box 278
132 Fairgrounds Road
West Kingston, RI 02892
David P. Vieau 273,116(9) *%
American Power
Conversion
Corporation
P.O. Box 278
132 Fairgrounds Road
West Kingston, RI 02892
All directors and 19,730,495(10) 21.1%
executive officers
as a group(10 persons)
</TABLE>
________________________
*Less than 1.0%
(1) Unless otherwise indicated, the named person possesses sole
voting and investment power with respect to the shares
listed.
(2) The number of shares of Common Stock deemed outstanding on
April 22, 1996 includes (i) 93,298,672 shares outstanding
on such date and (ii) all options that are currently
exercisable or will become exercisable within 60 days
thereafter by the person or group in question.
(3) Includes 372,485 shares of Common Stock currently allocated
to Mr. Dowdell under the Company's Employee Stock Ownership
Plan (the "ESOP"). Does not include any shares held by the
ESOP other than the shares allocated to Mr. Dowdell's
account. The ESOP currently holds an aggregate of
4,860,245 shares. Mr. Dowdell is a trustee of the ESOP and
as such, may be deemed to be a beneficial owner of the
shares currently held by it. Mr. Dowdell disclaims
beneficial ownership of such shares, other than the shares
allocated to him.
(4) Includes 300,421 shares of Common Stock currently allocated
to Mr. Rasmussen under the Company's ESOP. Does not include
any shares held by the ESOP other than the shares allocated
to Mr. Rasmussen's account.
Does not include 100,000 shares held by The Neil
and Anna Rasmussen Foundation. Mr. Rasmussen is a trustee
and disclaims beneficial ownership of the shares held by it.
The ESOP currently holds an aggregate of 4,860,245 shares.
Mr. Rasmussen is a trustee of the ESOP and as such, may be
deemed to be a beneficial owner of the shares currently held
by it. Mr. Rasmussen disclaims beneficial ownership of such
shares, other than the shares allocated to him.
(5) Includes 248,183 shares of Common Stock currently allocated
to Dr. Landsman under the Company's ESOP. Does not include
30,000 shares held by a trust for the benefit of certain
family members or 250,000 shares held by the Landsman
Charitable Trust. Dr. Landsman disclaims beneficial
ownership of the shares held by such trusts.
(6) Includes 15,000 shares of Common Stock issuable to Mr.
Gerson pursuant to options which may be exercised within the
<PAGE>
5
next 60 days. Does not include 4,000 shares held by
Mr. Gerson's wife for the benefit of his children.
Mr. Gerson disclaims beneficial ownership of the shares held
by his wife for the benefit of his children.
(7) Includes 15,000 shares issuable to Dr. Lyon pursuant to
options which may be exercised within the next 60 days. Does
not include 4,800 shares held by Dr. Lyon's daughter.
Dr. Lyon disclaims beneficial ownership of the shares held
by his daughter. Does not include 49,742 shares held by a
trust for the benefit of Dr. Lyon's daughter. Dr. Lyon
disclaims beneficial ownership of the shares held by such
trust.
(8) Includes 43,325 shares of Common Stock currently allocated
to Mr. Machala under the Company's ESOP. Does not include
any shares held by the ESOP other than the shares allocated
to Mr. Machala's account. The ESOP currently holds an
aggregate of 4,860,245 shares. Mr. Machala is a trustee of
the ESOP and as such, may be deemed to be a beneficial owner
of the shares currently held by it. Mr. Machala disclaims
beneficial ownership of such shares, other than the shares
allocated to him.
(9) Includes 5,116 shares of Common Stock currently allocated to
Mr. Vieau under the Company's ESOP and 244,000 shares
issuable to Mr. Vieau pursuant to options which may be
exercised within the next 60 days.
(10) Includes (i) 291,500 shares issuable to certain officers
and directors of the Company pursuant to options which may
be exercised within the next 60 days, and (ii) 981,771
shares allocated to the accounts of the officers of the
Company under the Company's ESOP. Also see footnotes (3)
through (9).
<PAGE>
6
NUMBER AND ELECTION OF DIRECTORS
At the Meeting, the shareholders will vote on fixing the
number of directors at five and electing the entire Board of
Directors. The directors of the Company are elected annually and
hold office until the next annual meeting of shareholders and
until their successors shall have been elected and qualified.
Shares represented by all proxies received by the Board of
Directors and not so marked as to oppose or abstain from voting
on fixing the number of directors will be voted for fixing the
number of directors for the ensuing year at five. The Board of
Directors recommends a vote FOR fixing the number of directors at
five.
Shares represented by all proxies received by the Board of
Directors and not so marked as to withhold authority to vote for
any individual director or for all directors will be voted
(unless one or more nominees is unable or unwilling to serve)
for the election of the nominees named in the table below. The
Board of Directors knows of no reason why any such nominee should
be unable or unwilling to serve, but if such should be the case,
proxies will be voted for the election of some other person or
for fixing the number of directors at a lesser number.
All of the nominees are currently directors of the Company
and were elected at the Annual Meeting of Shareholders held on
June 14, 1995. The following table sets forth the year each
nominee first became a director of the Company and the positions
each nominee currently holds with the Company.
Nominee's or Director's
Name and Year Nominee
Director Position(s) Held
First Became Director with Company
Rodger B. Dowdell, Jr. -- 1985 President, Chairman of the
Board of Directors, Chief
Executive Officer
Emanuel E. Landsman -- 1981 Vice President, Secretary,
Clerk and Director
Neil E. Rasmussen -- 1981 Vice President and Director
Ervin F. Lyon -- 1981 Director
James D. Gerson -- 1988 Director
Meetings of the Board of Directors and Committees
The Board of Directors met four times and took action by
unanimous written consent one time during the fiscal year ended
December 31, 1995.
The Company's Compensation and Stock Option Committee,
comprised of Messrs. Dowdell, Gerson and Lyon, took action by
unanimous written consent two times during the fiscal year ended
December 31, 1995. The Compensation and Stock Option Committee
<PAGE>
7
makes recommendations to the Board of Directors regarding
compensation and benefits for employees, consultants and
directors of the Company, determines the compensation of
executive officers and is responsible for the administration of
the Company's 1987 Stock Option Plan.
The Company's Audit Committee, comprised of Messrs. Gerson
and Lyon, met one time during the fiscal year ended December 31,
1995. The Audit Committee oversees the accounting, tax and
financial functions of the Company, including matters relating to
the appointment and activities of the Company's auditors.
The Company does not currently have a standing Nominating
Committee.
During the fiscal year ended December 31, 1995, all of the
directors attended at least 75% of the total number of meetings
held by the Board of Directors, and all of the members of the
Compensation and Stock Option Committee and the Audit Committee
attended all of the meetings of such committees.
Compensation of Directors
As compensation for serving on the Board of Directors, each
non-employee director is paid $1,000 by the Company for each
meeting attended. Non-employee directors are also reimbursed for
reasonable expenses incurred while attending meetings.
On February 25, 1993, the Board of Directors of the Company
adopted the 1993 Non-Employee Director Stock Option Plan (the
"1993 Director Plan"), subject to approval by the Company's
stockholders, which approval was granted on May 20, 1993. The
1993 Director Plan authorized the grant on February 25, 1993 of a
stock option for 20,000 shares of Common Stock to each member of
the Company's Board of Directors who is neither an employee nor
officer of the Company. An option was granted to each of
Messrs. Gerson and Lyon, the two members of the Board of
Directors entitled to participate in the 1993 Director Plan.
Such options have an exercise price of $12.00 per share, the
fair market value on the date of grant. Each director can
currently exercise an option to purchase up to 15,000 shares of
Common Stock.
Occupations of Directors
The following table sets forth the names of all nominees for
directors and all current directors, their ages and present
position(s) with the Company.
Name Age Position(s)
Rodger B. Dowdell, 46 President, Chief
Jr.(1) Executive Officer
and Chairman of the
Board of Directors
Emanuel E. Landsman 59 Vice President,
Secretary, Clerk and
Director
Neil E. Rasmussen 41 Vice President and
Director
Ervin F. Lyon (1)(2) 60 Director
<PAGE>
8
James D. Gerson 52 Director
(1)(2)
______________________
(1) Member, Compensation and Stock Option Committee
(2) Member, Audit Committee
The By-laws of the Company provide that each director is
elected to hold office until the next annual meeting of
shareholders, and until his successor is chosen and qualified.
The officers of the Company are elected annually at the first
meeting of the Board of Directors following the annual meeting of
shareholders, and hold office until their respective successors
are chosen and qualified.
Rodger B. Dowdell, Jr. joined the Company in August 1985 and
has been President and a Director since that time. From January
to August 1985, Mr. Dowdell worked for the Company as a
consultant, developing a marketing and production strategy for
UPS products. From 1978 to December 1984 he was President of
Independent Energy, Inc., a manufacturer of electronic
temperature controls.
Emanuel E. Landsman has been Vice President, Clerk and
Director of the Company since its inception. From 1966 to 1981,
Dr. Landsman worked at Massachusetts Institute of Technology's
Lincoln Laboratory ("M.I.T."), where he was in the Space
Communications Group from 1966 to 1977 and the Energy Systems
Engineering Group from 1977 to 1981.
Neil E. Rasmussen has been Vice President and a Director of
the Company since its inception. From 1979 to 1981,
Mr. Rasmussen worked in the Energy Systems Engineering Group at
M.I.T.'s Lincoln Laboratory.
Ervin F. Lyon has been a Director of the Company since its
inception. From September 1986 to March 1993, Dr. Lyon worked
for M.I.T's Lincoln Laboratory, from which he retired in March
1993. From the inception of the Company through August 1985, Dr.
Lyon was President and Chairman of the Company. From 1977 to
1981, Dr. Lyon was a member of the technical staff at M.I.T's
Lincoln Laboratory.
James D. Gerson has been a Director of the Company since
August 1988. Since March 1993, Mr. Gerson has been Senior Vice
President of Fahnestock & Co. and currently serves as a mutual
fund portfolio manager. From January 1992 to March 1993, Mr.
Gerson was Managing Director of Corporate Finance of Reich & Co.,
Inc. Commencing January 1986 through January 1992, Mr. Gerson
was Vice President and Manager - Corporate Finance of Josephthal
& Co., Inc., and successor firms, an investment banking and
brokerage firm. Mr. Gerson is also a member of the Board of
Directors of Ag Services of America, Inc., Conceptronic, Inc.,
Energy Research Corporation, Hilite Industries, Inc. and Computer
Outsourcing Services, Inc.
<PAGE>
9
EXECUTIVE COMPENSATION
The following table sets forth the annual and long-term
compensation for services in all capacities to the Company for
the fiscal years ended December 31, 1995, 1994 and 1993, of those
persons who were at December 31, 1995 (i) the chief executive
officer and (ii) the other four most highly compensated executive
officers of the Company (the "Named Officers"):
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation (1) Compensation
Awards(2)
Securities
Name and Principal Underlying All Other
Position Year Salary Bonus($)(3) Options/SARs Compensation
<S> <C> <C> <C> <C> <C>
Rodger B. Dowdell, Jr. 1995 $392,000 $216,000 0 $22,728(4)
Chief Executive 1994 392,000 360,000 0 30,180(4)
Officer, President & 1993 370,000 400,000 0 30,180(4)
Director
Neil E. Rasmussen 1995 259,000 144,180 0 22,728(5)
Vice President, 1994 259,000 240,300 0 30,180(5)
Engineering 1993 244,000 267,000 0 30,180(5)
and Director
Edward W. Machala 1995 259,000 144,180 0 22,728(6)
Vice President, 1994 259,000 240,300 0 30,180(6)
Operations and 1993 244,000 267,000 0 30,180(6)
Treasurer
David P. Vieau 1995 138,232 50,000 0 22,614(7)
Vice President, 1994 170,000 155,700 0 30,180(7)
Worldwide Business 1993 160,000 173,000 0 30,180(7)
Development
Emanuel E. Landsman 1995 127,000 55,600 0 22,614(8)
Vice President, 1994 127,000 92,920 0 30,180(8)
Clerk and Director 1993 120,000 100,800 0 30,180(8)
</TABLE>
______________________________
(1) Excludes perquisites and other personal benefits, the
aggregate annual amount of which for each officer was less
than the lesser of $50,000 or 10% of the total salary and
bonus reported.
(2) The Company did not grant any restricted stock awards or
stock appreciation rights ("SARs") or make any long term
incentive plan payouts during the fiscal years ended
December 31, 1995, 1994 and 1993.
(3) Includes bonus payments earned by the Named Officers in the
year indicated, for services rendered in such year, which
were paid in the next subsequent year.
(4) Includes $22,500, $30,000 and $30,000, respectively, the
market value of the shares of Common Stock contributed to
the Employee Stock Ownership Plan on behalf of Mr. Dowdell
<PAGE>
10
and $228, $180 and $180, respectively, in premiums on a term
life insurance policy for Mr. Dowdell's benefit for fiscal
years ended December 31, 1995, 1994 and 1993.
(5) Includes $22,500, $30,000 and $30,000, respectively, the
market value of the shares of Common Stock contributed to
the Employee Stock Ownership Plan on behalf of Mr. Rasmussen
and $228, $180 and $180, respectively, in premiums on a term
life insurance policy for Mr. Rasmussen's benefit for fiscal
years ended December 31, 1995, 1994 and 1993.
(6) Includes $22,500, $30,000 and $30,000, respectively, the
market value of the shares of Common Stock contributed to
the Employee Stock Ownership Plan on behalf of Mr. Machala
and $228, $180 and $180, respectively, in premiums on a term
life insurance policy for Mr. Machala's benefit for fiscal
years ended December 31, 1995, 1994 and 1993.
(7) Includes $22,500, $30,000 and $30,000, respectively, the
market value of the shares of Common Stock contributed to
the Employee Stock Ownership Plan on behalf of Mr. Vieau and
$228, $180 and $180, respectively, in premiums on a term
life insurance policy for Mr. Vieau's benefit for fiscal
years ended December 31, 1995, 1994 and 1993.
(8) Includes $22,500, $30,000 and $30,000, respectively, the
market value of the shares of Common Stock contributed to
the Employee Stock Ownership Plan on behalf of Mr. Landsman
and $228, $180 and $180, respectively, in premiums on a term
life insurance policy for Mr. Landsman's benefit for fiscal
years ended December 31, 1995, 1994 and 1993.
<PAGE>
11
OPTION GRANTS IN THE LAST FISCAL YEAR
The Company did not grant any stock options during the fiscal
year ended December 31, 1995 to the Named Officers listed in the
Summary Compensation Table.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth information with respect to
options to purchase the Company's Common Stock granted under the
1987 Stock Option Plan including (i) the number of shares
purchased upon exercise of options in 1995, (ii) the net value
realized upon such exercise, (iii) the number of unexercised
options outstanding at December 31, 1995 and (iv) the value of
such unexercised options at December 31, 1995:
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND DECEMBER 31, 1995 OPTION VALUES
Number of Value of
Shares Unexercised Unexercised In-
Acquired Options at the-Money
on Value December 31, Options at
Exercise(#) Realized 1995 (#) December 31,
1995 ($)(1)
Exercisable/ Exercisable/
Unexercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Rodger B. -- -- -- -- -- --
Dowdell, Jr.
Neil E. -- -- -- -- -- --
Rasmussen
Edward W. -- -- -- -- -- --
Machala
David P. Vieau 36,000 $461,808 244,000 0 $1,300,032 0
Emanuel E. -- -- -- -- -- --
Landsman
</TABLE>
- ------------------
(1) Value is based on the difference between option exercise
price and the fair market value at December 29, 1995 ($9.375
per share as quoted on The Nasdaq Stock Market) multiplied
by the number of shares underlying the option.
<PAGE>
12
AMERICAN POWER CONVERSION CORPORATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered
by the three-member Compensation and Stock Option Committee of
the Board of Directors (the "Compensation Committee"). Two
members of the Compensation Committee are non-employee directors.
Pursuant to the authority delegated by the Board of Directors,
the Compensation Committee establishes each year the compensation
of senior management.
Under the supervision of the Compensation Committee, the
Company has developed and implemented compensation policies. The
Compensation Committee's executive compensation policies are
designed to (i) enhance profitability of the Company and
shareholder value, (ii) integrate compensation with the Company's
annual and long-term performance goals, (iii) reward above-
average long-term corporate performance, (iv) recognize
individual initiative and achievement, as well as teamwork and
(v) assist the Company in attracting and retaining qualified
executive officers. Compensation under the executive
compensation program is comprised of cash compensation in the
form of annual base salary and performance-based bonuses, and
long term incentive compensation in the form of stock options.
In setting cash compensation levels for executive officers
(including the Chief Executive Officer), the Compensation
Committee prepares a salary plan annually. The base salaries are
fixed at levels comparable to the amounts paid to senior
executives with comparable qualifications, experience and
responsibilities at other companies of similar size and engaged
in a similar business to that of the Company. In addition, the
base salaries take into account the Company's relative financial
performance as compared to comparable companies. The financial
performance measures utilized include sales growth, return on
equity and pre-tax earnings levels. The Chief Executive
Officer's employment agreement provides that his cash
compensation shall be in accordance with the American Electronics
Association's (AEA) standards for chief executive officers of
similar size companies for salary and bonus. The AEA standards,
which are published annually, are used to determine the base
salary of chief executive officers of companies in the
electronics industry which are of comparable size in terms of
annual revenues. The Compensation Committee has the discretion
to increase or decrease the AEA standards when arriving at
compensation levels for the Company's executives based upon its
comparison of the Company's performance to that of similar
companies, as well as its assessments of the Company's
achievement of established financial performance metrics and
strategic goals.
During fiscal 1995, the Compensation Committee referred to
the American Electronics Association's Executive Compensation
Survey (the "AEA Survey") results to establish annual salaries
for executives, including the Chief Executive Officer. The
Compensation Committee's assessment of the Company's relative
financial performance placed the Company above the 75th
percentile of similar companies participating in the AEA Survey.
Accordingly, the base salaries for the executive officers were
set at a level intended to be comparable with similar companies
above the 75th percentile.
The Compensation Committee relies on incentive compensation
in the form of performance-based bonuses and stock options to
retain and motivate executive officers. Incentive compensation
in the form of performance-based bonuses for the Chief Executive
Officer and the Company's other executive officers is based upon
management's success in meeting the Company's financial
performance metrics and strategic goals. Financial metrics
include sales growth, pre-tax profits, return on equity and cash
flow, while strategic goals focus on product development and
increasing market share. The Compensation Committee assigns
<PAGE>
13
approximately equal weight to each of the financial performance
metrics and strategic goals. The Company also utilizes the AEA
Survey results to determine comparable amounts paid in the form
of incentive bonuses to executive officers, subject to adjustment
(upward or downward) based upon the Company's performance in
relation to the AEA Survey participants. The Compensation
Committee concluded that the Company's performance, on average,
was better than similar AEA Survey participants; however, the
Compensation Committee also concluded that the Company's
financial performance, particularly pretax operating income (as a
percent of net sales), for 1995 had declined compared with 1994's
financial performance, resulting in a decline in cash bonuses
paid to non-executive employees. The Compensation Committee made
an initial determination of the 1995 cash bonuses in an amount
which, when combined with base salaries, represented a total cash
compensation award intended to be comparable with similar
companies above the 75th percentile. This amount was then
reduced to reflect the same percentage decline in cash bonuses
paid to non-executive employees during 1995 compared to the prior
year.
Incentive compensation in the form of stock options is
designed to provide long term incentives to executive officers
and other employees, to encourage the executive officers and
other employees to remain with the Company and to enable
optionees to develop and maintain a significant, long-term stock
ownership position in the Company's Common Stock. The Company's
1987 Stock Option Plan, administered by the Compensation
Committee, is the vehicle for the granting of stock options.
The 1987 Stock Option Plan permits the Compensation
Committee to grant stock options to eligible employees, including
executive officers. During 1995, the Compensation Committee
granted stock options to various employees. Options become
exercisable based upon a vesting schedule tied to years of
service. The value realizable from exercisable options is
dependent upon the extent to which the Company's performance is
reflected in the market price of the Company's Common Stock at
any particular point in time. The Compensation Committee
believes that the executive officers of the Company who are
members of the Board of Directors continue to have significant
stock ownership in the Company based on their status as founders
of the Company. The Compensation Committee therefore has not
granted any stock options to such individuals to date. With
respect to the Company's other executives, option grants are
intended to last for several years and new grants are generally
not made until previously granted options are substantially
vested.
During 1995, the Compensation Committee granted options
potentially exercisable for 25,000 shares and 10,000 shares of
Common Stock to the Company's newly-appointed Chief Financial
Officer and Vice President of Sales, respectively. The exercise
price was equal to the stock market price on the date of grant.
The options granted to the Chief Financial Officer become
exercisable ratably over the next four years subject to his
continued employment with the Company. The options granted to
the Vice President of Sales become exercisable ratably over the
next six years subject to his continued employment with the
Company.
The Company also maintains an Employee Stock Ownership Plan
(the "ESOP") in which all executives participate on the same
terms as non-executive employees who meet applicable eligibility
criteria, subject to any legal limitations on the amounts that
may be contributed or the benefits that may be payable under the
ESOPs. The ESOP's assets are invested exclusively in the
Company's Common Stock so as to further align employees' and
shareholders' long-term financial interests. The Board of
Directors approves the contributions to the ESOP.
The Compensation Committee is satisfied that the executive
officers of the Company are dedicated to achieving significant
improvements in the long-term financial performance of the
<PAGE>
14
Company and that the compensation policies and programs
implemented and administered have contributed and will continue
to contribute towards achieving this goal.
Certain executive officers of the Company will be subject to
the $1 million limitation on deductibility of compensation under
Section 162(m) of the Internal Revenue Code. It is not
anticipated that any executive officer will receive compensation
during 1995 which will not be deductible by reason of the
limitation. This limitation will be considered by the
Compensation Committee when it determines the amounts of
compensation to be paid to executive officers in 1996 and
subsequent calendar years.
This report has been submitted by the members of the
Compensation and Stock Option Committee.
Rodger B. Dowdell, Jr.
(Chairman, President and Chief Executive Officer)
James D. Gerson
Ervin F. Lyon
<PAGE>
15
PERFORMANCE GRAPH
The following graph illustrates a five year comparison of
cumulative total stockholder return among the Company, the
University of Chicago's Center for Research in Security i.e.
Prices ("CRSP") Index for the Nasdaq Stock Market and the CRSP
Index for Nasdaq Electronic Components Stocks (SIC 367, a peer
group index which includes electronic components companies). The
comparison assumes $100 was invested on December 31, 1990 in the
Company's Common Stock and in each of the foregoing indices and
assumes reinvestment of dividends, if any.
<TABLE>
<CAPTION>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG
THE COMPANY, THE NASDAQ STOCK MARKET AND NASDAQ
ELECTRONIC COMPONENTS STOCKS
(GRAPH INSERTED HERE)
1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
Broad Market Index(1) $100.00 $160.50 $186.80 $214.50 $209.70 $296.60
Peer Group Index(2) 100.00 142.40 222.70 305.70 337.70 559.10
APCC 100.00 293.20 613.70 1041.10 717.80 416.40
</TABLE>
Assumes $100 invested on 12/31/90.
(1) CRSP Index for Nasdaq Stock Market
(2) CRSP Index for Nasdaq Electronic Component Stocks
<PAGE>
16
EMPLOYMENT CONTRACT
The Company has entered into an employment agreement with
its Chief Executive Officer. The agreement is automatically
renewed annually unless either party notifies the other 60 days
prior to the renewal date. Pursuant to the agreement, the
Company pays the Chief Executive Officer an annual salary and a
bonus which are based on the salaries and bonuses paid to Chief
Executive Officers of electronics companies having approximately
the same revenues as the Company. The Chief Executive Officer is
obligated under the agreement not to compete with the Company
while he is employed by the Company and for a period of one year
thereafter. The Company does not have employment agreements with
any other executive officers.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1995, Messrs. Dowdell, Gerson and Lyon served on the
Compensation Committee. The Compensation Committee was
responsible for determining the non-equity and equity
compensation of executive officers of the Company.
Rodger B. Dowdell, Jr., the President and Chief Executive Officer
of the Company, participated in deliberations concerning
executive officer compensation, but was not present during
discussions of and abstained from voting with respect to
decisions concerning his own compensation as Chief Executive
Officer. Mr. Dowdell is not eligible for equity compensation
while a member of the Compensation Committee.
SECTION 16 REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires the Company's directors and officers, and
persons who own more than 10% of a registered class of the
Company's equity securities, to file initial reports of ownership
and reports of changes in ownership with the Securities and
Exchange Commission (the "SEC"). Such persons are required by
SEC regulations to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on its review of the copies of such forms
received by it with respect to fiscal 1995, or written
representations from certain reporting persons, the Company
believes that all of its directors, officers and persons who own
more than 10% of a registered class of the Company's equity
securities complied with all filing requirements applicable to
them with respect to transactions during 1995.
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has selected the firm of KPMG Peat
Marwick LLP ("KPMG"), independent certified public accountants,
to serve as auditors for the fiscal year ending December 31,
1996. KPMG Peat Marwick LLP has served as the Company's auditors
since fiscal 1991.
It is expected that a member of the firm of KPMG will be
present at the Annual Meeting of Shareholders with the
opportunity to make a statement if so desired and will be
available to respond to appropriate questions.
The Board of Directors recommends a vote FOR ratification of
the selection of KPMG for the fiscal year ending December 31,
1996. The ratification of this selection is not required under
the laws of the Commonwealth of Massachusetts, where the Company
<PAGE>
17
is incorporated, but the results of this vote will be considered
by the Board of Directors in selecting auditors for future fiscal
years.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended for inclusion in the
proxy statement to be furnished to all shareholders entitled to
vote at the next annual meeting of the Company must be received
at the Company's principal executive offices no later than
January 10, 1997. It is suggested that proponents submit their
proposals by Certified Mail - Return Receipt Requested.
EXPENSES AND SOLICITATION
The cost of solicitation of proxies will be borne by the
Company. In addition to soliciting shareholders by mail or by
its regular employees, the Company may request banks and brokers
to solicit their customers who have stock of the Company regis
tered in the name of a nominee and, if so, will reimburse such
banks and brokers for their reasonable out-of-pocket costs.
Solicitation by officers and employees of the Company, none of
whom will receive additional compensation therefor, may also be
made of some shareholders in person or by mail, telephone or
telegraph, following the original solicitation. The Company has
retained Morrow & Co. Incorporated to assist in the solicitation
of proxies, and will pay this company a fee of approximately
$3,500, plus expenses.
<PAGE>
PROXY
(FRONT SIDE)
AMERICAN POWER CONVERSION CORPORATION
Proxy for Annual Meeting of Shareholders
June 13, 1996
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Rodger B. Dowdell, Jr. and
Emanuel E. Landsman, and each of them, proxies, with full
power of substitution, to vote all shares of stock of
American Power Conversion Corporation (the "Company") which
the undersigned is entitled to vote at the Annual Meeting of
Shareholders of the Company to be held on Thursday, June 13,
1996, at 10:00 a.m., local time, at Edwards Hall on the
campus of the University of Rhode Island, Kingston, Rhode
Island 02881, and at any adjournments thereof, upon matters
set forth in the Notice of Annual Meeting of Shareholders
and Proxy Statement dated May 10, 1996, a copy of which has
been received by the undersigned. The proxies are further
authorized to vote, in their discretion, upon such other
business as may properly come before the meeting or any
adjournments thereof. Execution of a proxy will not in any
way affect a shareholder's right to attend the meeting and
vote in person. Any shareholder giving a proxy has the
right to revoke it by written notice to the Clerk of the
Company at any time before it is exercised or by delivering
a later executed proxy to the Clerk of the Company at any
time before the original proxy is exercised.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
(BACK SIDE)
[ X ] Please mark votes
as in this example
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS
DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED "FOR"
THE ELECTION OF DIRECTORS AND "FOR" THE PROPOSALS IN ITEMS 1
AND 3.
1. To fix the 2. To elect the 3. To ratify the
number of directors Board of Directors selection of the
at five. for the ensuing firm of KPMG Peat
year: Marwick LLP as
auditors for the
fiscal year ending
December 31, 1996.
Nominees: Rodger B.
[ ] FOR Dowdell, Jr., [ ] FOR
[ ] AGAINST Emanuel E. Landsman, [ ] AGAINST
[ ] ABSTAIN Neil E. Rasmussen, [ ] ABSTAIN
Ervin F. Lyon and
James D. Gerson
[ ] FOR
[ ] AGAINST
--------------------
[ ] FOR all nominees
except as noted
above.
4. To transact such
other business as
may properly come
before the meeting
and any adjournments thereof.
Mark here for [ ] Mark here if [ ]
address change you plan to
and note at attend the
left. meeting.
If signing as attorney, executor, trustee or
guardian, please give your full title as such.
If stock is held jointly, each owner should
sign.
Signature__________________ Date_______Signature__________________ Date_________
<PAGE>
PROXY
(FRONT SIDE)
AMERICAN POWER CONVERSION CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
Voting Instruction for Annual Meeting of Shareholders
June 13, 1996
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby instructs Rodger B. Dowdell, Jr.,
Neil E. Rasmussen and Edward W. Machala, as Trustees under
the American Power Conversion Corporation Employee Stock
Ownership Plan, to vote in person, or to grant a proxy
appointing Rodger B. Dowdell, Jr. and Emanuel E. Landsman,
and each of them, proxies, with full power of substitution,
to vote all shares of stock of American Power Conversion
Corporation (the "Company") which the undersigned is
entitled to vote at the Annual Meeting of Shareholders of
the Company to be held on Thursday, June 13, 1996, at 10:00
a.m., local time, at Edwards Hall on the campus of the
University of Rhode Island, Kingston, Rhode Island 02881,
and at any adjournments thereof, upon matters set forth in
the Notice of Annual Meeting of Shareholders and Proxy
Statement dated May 10, 1996, a copy of which has been
received by the undersigned. The proxies are further
authorized to vote, in their discretion, upon such other
business as may properly come before the meeting or any
adjournments thereof. Execution of a proxy will not in any
way affect a shareholder's right to attend the meeting and
vote in person. Any shareholder giving a proxy has the
right to revoke it by written notice to the Clerk of the
Company at any time before it is exercised or by delivering
a later executed proxy to the Clerk of the Company at any
time before the original proxy is exercised.
1. To fix the number of directors at five.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Continued and to be signed on reverse side
(BACK SIDE)
2. To elect the Board of Directors for the ensuing year:
Nominees: Rodger B. Dowdell, Jr., Emanuel E. Landsman, Neil
E. Rasmussen, Ervin F. Lyon and James D. Gerson
[ ] FOR all nominees [ ] WITHHELD from all nominees
FOR, except vote withheld from the following nominee(s):
________________________________
3. To ratify the selection of the firm of KPMG Peat Marwick
LLP as auditors for the fiscal year ending December 31,
1996.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To transact such other business as may properly come before the meeting and
any adjournment thereof.
Signature_____________________
Print Name_____________________
Date_____________
