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VISX, INCORPORATED
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[VISX LOGO]
May 3, 1999
To Our Shareholders,
Approval of Proposal No. 4 in VISX's 1999 Proxy Statement is essential to VISX's
ongoing growth and financial success, benefiting all VISX shareholders. Proposal
No. 4 describes an amendment to VISX's 1995 Stock Plan which will extend the
plan, including the automatic share increase provisions, for an additional
five-year period through December 2005.
We urge you to vote in favor of Proposal No. 4, notwithstanding the result
tabulated by the Institutional Shareholder Services' quantitative model.
1995 STOCK PLAN: KEY TO VISX'S LEADERSHIP POSITION
In fourteen years VISX has transformed itself from a start-up into a worldwide
leader in the development of proprietary technologies and systems for laser
vision correction, achieving a greater than $4 billion market capitalization.
The use of stock options in hiring, retaining and motivating the most talented
people within the available human resource pool has been critical to our
business success (including market share gains, revenue growth and
profitability) which, in turn, has generated remarkable gains in VISX stock for
our shareholders.
Our challenge in this employment market is to ensure that employees, our most
significant asset, are appropriately recognized, rewarded, and encouraged to
stay with VISX, help it grow, and by doing so, continue to add shareholder
value. Every VISX employee receives some number of options when they join the
Company. We believe stock options are essential to attracting the best available
candidates and retaining our talented employee base. Indeed, stock options have
become indispensable currency in the current market for technically skilled
employees here in the Silicon Valley.
1995 STOCK PLAN: APPROVED ONCE BEFORE
Despite a negative recommendation from ISS when it was first proposed,
shareholders overwhelmingly approved the 1995 Stock Plan, with the original
five-year automatic share increase feature, at the 1996 Annual Meeting of
Stockholders. The vote in favor of the 1995 Plan has enabled the Company to
attract and retain qualified employees in the years since its approval.
Since VISX's fiscal year 1996:
o Revenues have grown 39% annually and operating income has grown over 100%
annually.
o Operating income has increased from 20% in 1996 to over 44% in 1998 (as
percentage of total revenue).
o We have received the broadest range of FDA approved indications, and we are
now the clear market share leader in the United States.
VISX returned to shareholders approximately a 295% increase in share price since
the end of VISX's FY1996, versus the S&P Medical Products returning
approximately 80%. (Please refer to the Performance Graph Comparison of
Five-Year Cumulative Total Return in VISX's Proxy Statement, page11.)
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1995 STOCK PLAN: AN ENABLING INITIATIVE
We believe the 1995 Stock Plan will have the following advantages:
o The proposed extension allows the Company to continue its broad based plan
to issue options to all employees.
o The ability to grant stock options is critical, especially here in the
Silicon Valley, to attracting and retaining the talent of key employees,
essential to the Company's long-term growth and success. At the end of 1998
we employed approximately 200 people, but still were able to lead the
market with the best combination of advanced technology, manufacturing
quality, service, customer training and patient care, or as we call it "the
VISX Experience."
o The use of stock options has proven very successful in aligning shareholder
and Company objectives.
o Our overall employee voluntary turnover rate in roughly half the turnover
rate in the Northern California Region according to the 1998 Radford
Benchmark Salary Survey. We believe stock options are a critical factor to
maintaining stability within the VISX employee base.
In summary, we urge you to support the Company and to vote in favor of Proposal
No. 4. If we can provide any further information regarding this matter, please
do not hesitate to call Tim Maier, Executive Vice President and Chief Financial
Officer, at 408-773-7003.
Regards,
/s/ Mark B. Logan
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Mark B. Logan
Chairman of the Board and
Chief Executive Officer
