SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 [ ] Confidential, For Use of the Commission
Only (as permitted by Rule 14a-6(e)(2)
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CFM TECHNOLOGIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement no.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
CFM TECHNOLOGIES, INC.
1336 Enterprise Drive
West Chester, PA 19380
----------
NOTICE OF 1998 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 5, 1998
----------
TO OUR SHAREHOLDERS:
You are invited to be present either in person or by proxy at the Annual
Meeting of Shareholders of CFM Technologies, Inc. to be held at the Sheraton
Great Valley Hotel, 707 East Lancaster Pike, Frazer, Pennsylvania 19355, on
Tuesday, March 5, 1998 beginning at 10:00 A.M., for the following purposes:
1. To elect six (6) directors; and
2. To act upon such other matters as may properly come before the meeting.
The Board of Directors has fixed the close of business on January 30, 1998
as the record date for determining shareholders entitled to notice of and to
vote at the meeting and any adjournments thereof. A list of shareholders
entitled to vote at the meeting will be available for examination by any
shareholder for any purpose germane to the meeting ten days prior to the meeting
during normal business hours at the Company's offices at 1336 Enterprise Drive,
West Chester, PA 19380. Such list of shareholders will also be available for
inspection at the meeting.
The Directors hope that you will find it convenient to attend the meeting
in person, but whether or not you plan to attend, please sign, date and return
the enclosed proxy promptly to ensure your shares are represented at the
meeting. Shareholders who execute proxies retain the right to revoke them (in
writing) at any time prior to the voting thereof. A return envelope, which
requires no postage if mailed in the United States, is enclosed for your
convenience.
By Order of the Board of Directors
Lorin J. Randall
Secretary
West Chester, Pennsylvania
February 5, 1998
<PAGE>
CFM TECHNOLOGIES, INC.
1336 Enterprise Drive
West Chester, PA 19380
----------
PROXY STATEMENT
FOR 1998 ANNUAL MEETING OF SHAREHOLDERS
To be held March 5, 1998
----------
This Proxy is furnished to the shareholders of CFM Technologies, Inc., a
Pennsylvania corporation (the "Company"), in connection with the solicitation of
proxies by the Board of Directors for use at the 1998 Annual Meeting of
Shareholders of the Company to be held on March 5, 1998 at 10:00 A.M. and any
adjournment or postponement thereof (the "Meeting"). The Meeting will be held at
the Sheraton Great Valley Hotel, 707 Lancaster Pike, Frazer, Pennsylvania 19355.
A copy of the notice of the Meeting accompanies this Proxy Statement. It is
anticipated that the mailing of this Proxy Statement will commence on or about
February 5, 1998.
If the enclosed proxy is executed and returned, it may nevertheless be
revoked at any time before it is exercised by giving written notice to the
Secretary of the Company, but mere attendance at the Meeting, without such
notice, will not revoke the proxy. Shares represented by a valid proxy which is
received pursuant to this solicitation and not revoked before it is exercised
will be voted as provided on the proxy at the Meeting or any adjournments
thereof.
VOTING AT THE MEETING
Only holders of shares of Common Stock of the Company (the "Common Stock")
of record at the close of business on January 30, 1998 will be entitled to vote
at the Meeting. On such date, there were 7,913,588 shares of Common Stock, the
only outstanding voting securities of the Company, issued and outstanding. Each
share of Common Stock is entitled to one vote on all matters.
The holders of a majority of the shares entitled to vote, present in person
or represented by proxy, constitute a quorum. Each nominee for director must
receive a plurality of the votes cast by the holders of shares entitled to vote
at the Meeting. Shares cannot be voted at the Meeting unless the holder of
record is present in person or by proxy. The shares of Common Stock represented
by each properly executed proxy will be voted at the Meeting in accordance with
each shareholder's directions. Shareholders are urged to specify their choices
by marking the appropriate boxes on the enclosed proxy; if no choice has been
specified, the shares will be voted as recommended by the Board of Directors. If
any other matters are properly presented to the Meeting for action, the proxy
holders will vote the proxies (which confer discretionary authority to vote on
such matters) in accordance with their best judgment.
With regard to the election of directors, votes may be cast in favor or
withheld; votes that are withheld will be excluded entirely from the vote and
will have no effect, other than for purposes of determining the presence of a
quorum. Abstentions will be considered present and entitled to vote at the
Meeting, but will not be counted as votes cast in the affirmative.
Brokers who hold shares in street name for customers have the authority to
vote on certain items when they have not received instructions from beneficial
owners. Brokers that do not receive instructions are entitled to vote those
shares with respect to the election of directors. A failure by a broker to vote
those shares will
<PAGE>
have no effect on the outcome of this proposal because such shares are not
considered shares present and entitled to vote with respect to this matter under
applicable Pennsylvania law.
The Company will bear the cost of the Meeting and the cost of soliciting
proxies, including the cost of mailing the proxy materials. In addition to
solicitation by mail, directors, officers and regular employees of the Company
(who will not be specifically compensated for such services) may solicit proxies
in person and by telephone or facsimile. Arrangements have been made for the
Company's transfer agent, American Stock Transfer & Trust Company (and may also
be made with brokerage houses and other custodians, nominees and fiduciaries),
for forwarding proxy materials to the beneficial owners of shares of Common
Stock held of record by such persons, and the Company will reimburse the
transfer agent (and such other entities) for reasonable out-of-pocket expenses
incurred in forwarding such materials.
Your proxy vote is important. Accordingly, the Company asks you to
complete, sign and return the accompanying proxy whether or not you plan to
attend the Meeting. If you plan to attend the Meeting to vote in person and your
shares are registered with the Company's transfer agent in the name of a broker,
bank or other custodian, nominee or fiduciary, you must secure a proxy from such
person assigning you the right to vote your shares.
SECURITY OWNERSHIP
The following table sets forth certain information as of January 30, 1998,
as supplied to the Company, regarding the beneficial ownership of the Common
Stock by all persons known to the Company who own more than 5% of the
outstanding shares of the Company's Common Stock, each director of the Company,
each executive officer named in the summary compensation table under the caption
"Executive Compensation" included elsewhere herein and all executive officers
and directors as a group. Unless otherwise indicated, based upon information
provided to the Company by the directors, executive officers and principal
shareholders, the persons named in the table below have sole voting and
investment power with respect to all shares of Common Stock shown as
beneficially owned by them.
Shares Beneficially Owned (1)
-----------------------------
NAME * Number Percent
- ------ ------ -------
Christopher F. McConnell (2) ............ 1,226,001 15.46%
Alan E. Walter (3) ...................... 337,481 4.26
Roger A. Carolin (4) .................... 224,837 2.78
James J. Kim (5) ........................ 67,038 **
Burton E. McGillivray (6) ............... 53,297 **
Milton S. Stearns, Jr. (7) .............. 44,043 **
Joseph E. Berger (8) .................... 39,613 **
Lorin J. Randall (9) .................... 35,267 **
Brad S. Mattson (10) .................... 9,534 **
David L. deLesdernier (11) .............. 9,375 **
All directors and executive
officers as a group (9 persons) (12).... 1,713,994 20.75%
- ----------
* Unless otherwise indicated the business address of each shareholder named
in this table is CFM Technologies, Inc., 1336 Enterprise Drive, West
Chester, PA 19830.
** Less than 1%.
(1) Based on 7,913,588 shares outstanding.
(2) Includes 38,919 shares owned by Mr. McConnell's wife, 3,154 shares owned
jointly with Mr. McConnell's wife and 26,624 shares held in trust for Mr.
McConnell's children.
(3) Includes exercisable options to purchase 5,000 shares and 3,000 shares held
in trust for Mr. Walter's children.
(4) Consists of 41,159 shares owned by Mr. Carolin's wife and exercisable
options to purchase 183,678 shares.
2
<PAGE>
(5) Includes 60,758 shares owned by ANAM S&T Co., Ltd. ("ANAM"), of which Mr.
Kim is, directly and indirectly, the largest shareholder.
(6) Includes 24,948 shares owned jointly with Mr. McGillivray's wife and
exercisable options to purchase 24,349 shares.
(7) Includes 4,000 shares held in a trust of which Mr. Stearns is a trustee and
exercisable options to purchase 14,843 shares.
(8) Consists of exercisable options to purchase 39,416 shares.
(9) Consists of exercisable options to purchase 34,431 shares.
(10) Consists of exercisable options to purchase 9,534 shares.
(11) Consists of exercisable options to purchase 9,375 shares.
(12) Includes exercisable options to purchase 342,615 shares.
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
The Company's By-laws provide that the Board of Directors will consist of
not fewer than three members, as determined from time to time by resolution of
the Board of Directors. At the meeting, six directors are to be elected by the
holders of Common Stock with each share of Common Stock being entitled to one
vote.
It is the intention of the persons named in the proxy, unless otherwise
directed, to vote all proxies in favor of the election to the Board of Directors
of the nominees identified below. Each nominee has consented to being named in
this Proxy Statement and to serve if elected. If any nominee should become
unavailable for any reason, which management does not anticipate, the proxy will
be voted for any substitute nominee selected by management prior to or at the
meeting, or the Board of Directors may reduce the membership of the Board of
Directors to the number of nominees available.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE
NOMINEES FOR DIRECTOR.
Nominees
Set forth in the table below and the following paragraphs are the names and
ages of the nominees, their positions with the Company, their principal
occupations during the past five years and certain other directorships they
hold. All nominees are current members of the Board of Directors.
Name Age Position
- ---- --- --------
Christopher F. McConnell.. 44 Chairman of the Board of Directors
Roger A. Carolin ......... 42 President, Chief Executive Officer and Director
James J. Kim ............. 62 Director
Brad S. Mattson .......... 43 Director (1)
Burton E. McGillivray .... 41 Director (1) (2)
Milton S. Stearns, Jr .... 74 Director (2)
- ----------
(1) Member of Executive Compensation and Stock Option Committee.
(2) Member of Audit Committee.
Christopher F. McConnell founded the Company in May 1984 and served as
President and Chief Executive Officer until October 1990 when he was named
Chairman of the Board of Directors. Prior to forming the Company, Mr. McConnell
held various technical and marketing positions with Dow Chemical. Mr. McConnell
received his BS and MS degrees in Chemical Engineering from Dartmouth College
and Purdue University, respectively, and his MBA from Harvard Business School.
Mr. McConnell is a named inventor on all of the Company's patents.
3
<PAGE>
Roger A. Carolin has served the Company as a director since its inception
in 1984 and as President and Chief Executive Officer since April 1991. From
October 1990 to April 1991, he served as a marketing and sales consultant to the
Company. From June 1984 to October 1990, Mr. Carolin was Senior Vice President
of The Mills Group, Inc., a real estate development firm. Previously, Mr.
Carolin worked for The General Electric Company and Honeywell, Inc. in a variety
of technical positions. Mr. Carolin received his BS in Electrical Engineering
from Duke University and his MBA from Harvard Business School.
James J. Kim has been a director of the Company since 1991. Mr. Kim is the
founder, Chairman and Chief Executive Officer of AMKOR Electronics, a leading
semiconductor assembly company. He also founded and serves as Chairman and Chief
Executive Officer of The Electronics Boutique, an electronics products retailer,
and as Chairman of ANAM Group, the parent of ANAM, the Company's Korean
distributor. See "Certain Relationships and Related Transactions."
Brad S. Mattson has been a director of the Company since December 1995. Mr.
Mattson founded Mattson Technology, Inc., a manufacturer of semiconductor
fabrication equipment, and has served as its Chief Executive Officer, President
and a director since its inception in November 1988. Mr. Mattson was the founder
of Novellus, a semiconductor equipment company, and formerly served as its
President, Chief Executive Officer and Chairman. He has also held executive
positions at Applied Materials and LFE Corporation, both semiconductor equipment
companies.
Burton E. McGillivray has been a director of the Company since 1990. Since
January 1994. Mr. McGillivray has served as Managing Director of First Chicago
Equity Capital, a venture capital firm. From January to December 1993, Mr.
McGillivray was a Chicago-based private investor, and from September 1984 to
December 1992, Mr. McGillivray was employed by Continental Illinois Venture
Corporation and Continental Equity Capital Corporation, serving as Managing
Director of both from 1989 to 1992. Mr. McGillivray received his AB from Harvard
University and his MBA from Harvard Business School. Mr. McGillivray is a member
of the board of directors of Three-Five Systems, Inc.
Milton S. Stearns, Jr. has been a director of the Company since December
1994. Since 1972, Mr. Stearns has been President of Charter Financial Company, a
corporate financial consulting company. Mr. Stearns has been a director of five
public and a number of private companies. In addition, from 1976 to 1987, he was
Chairman and Chief Executive Officer of Judson Infrared Inc., a manufacturer of
infrared detectors for military and telecommunications companies. Mr. Stearns
received his BS from Harvard University and his MBA from Harvard Business
School.
All directors hold office until the next annual meeting of shareholders or
until their successors have been elected and qualified. Officers are appointed
by the Board of Directors and serve at the discretion of the Board.
During the fiscal year ended October 31, 1997, the Board of Directors held
a total of four regular meetings and one special meeting, and the Executive
Compensation and Stock Option Committee held one regular meeting. The Audit
Committee held three meetings in fiscal 1997. Each director of the Company
attended more than 75% of the meetings of the Board of Directors and of the
committees of the Board of Directors on which such director served.
Certain Relationships and Related Transactions
In October 1994, the Company sold 332,633 shares of Common Stock of the
Company to ANAM, a company controlled by Mr. James J. Kim, a director and
shareholder of the Company, for $6.02 per share. ANAM acts as the Company's
sales agent in Korea. The Company believes that the terms of the sale of these
shares of Common Stock to ANAM were no less favorable than could have been
obtained from other large investors. The Company recorded commission expense in
fiscal 1997, 1996 and 1995 of $3,948,000, $2,444,000 and $282,000, respectively,
which related to commissions payable to ANAM. Commissions payable to ANAM
included in accrued expenses as of October 31, 1997 and 1996 were $2,586,000 and
$959,000, respectively. The terms of the commissions to ANAM were no less
favorable than would have been obtained from unrelated third parties. The
Company also recorded net sales in fiscal 1997 of $6,760,000 to Anam
Semiconductor Company, a company controlled by a director of the Company. The
terms of the sales to Anam Semiconductor Company were no more favorable than
would have been granted to unrelated third parties.
4
<PAGE>
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers and persons who own more than ten percent of
its Common Stock to file with the Securities and Exchange Commission and The
Nasdaq Stock Market initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to it and written representations that no other reports were
required during or with respect to the fiscal year ended October 31, 1997, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent shareholders were complied with.
EXECUTIVE COMPENSATION
The following table sets forth the total compensation for the Company's
Chief Executive Officer and the other four most highly compensated executive
officers of the Company (collectively, the "Named Executive Officers") for
services in all capacities the Company or its subsidiaries for the fiscal year
ended October 31, 1997 and the total compensation earned by such individuals for
the Company's prior two fiscal years.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation Awards
-------------------
Annual Compensation Securities All Other
Name and Fiscal ----------------------- Underlying Compensation
Principal Position Year Salary ($) Bonus ($) Options (#) ($)(1)
- ------------------ ---- ---------- --------- ----------- ------
<S> <C> <C> <C> <C> <C>
Roger A. Carolin 1997 $175,000 $34,500 63,300 $ 5,476
President and Chief 1996 150,000 60,000 -- 6,653
Executive Officer 1995 103,550 30,000 -- 6,531
Christopher F. McConnell 1997 150,000 40,250 40,000 6,786
Chairman of the Board of 1996 140,000 50,000 -- 8,066
Directors 1995 103,550 30,000 -- 9,386
Lorin J. Randall 1997 145,000 33,500 45,800 5,662
Vice President Finance, 1996 125,000 30,000 -- 5,426
Chief Financial Officer, 1995 101,563 15,000 39,916 72
Secretary and Treasurer (2)
Joseph E. Berger 1997 120,000 25,000 21,000 5,040
Vice President 1996 90,000 25,000 -- 3,691
Worldwide Sales and Marketing 1995 82,000 16,500 -- 2,236
Alan E. Walter 1997 115,000 21,000 20,000 6,366
Senior Vice President 1996 90,000 22,500 -- 6,744
Business Development (3) 1995 79,800 (2,500) -- 1,745
David L. deLesdernier 1997 110,000 10,500 -- 798
Vice President Engineering (4) 1996 32,082 -- 30,000 116
</TABLE>
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(1) Compensation reported represents (a) amounts from the Company's annual
profit sharing plan; (b) the Company's matching contribution to the 401-K
Plan paid in fiscal 1996 for the 1995 fiscal year, paid in fiscal 1997 for
the 1996 fiscal year and paid in fiscal 1998 for the 1997 fiscal year; (c)
the dollar value of premiums paid by the Company on life insurance policies
regularly furnished to all employees; and
5
<PAGE>
(d) payments under the Founders Club Bonus Plan. The amounts reported above
for fiscal year 1997 are comprised of:
Profit 401-K Company Life Founders Club
Sharing Match Insurance Bonus
------- ----- --------- -----
Roger A. Carolin $ 624 $4,750 $ 102 $ --
Christopher F. McConnell 624 4,546 102 1,515
Lorin J. Randall 624 4,750 288 --
Joseph E. Berger 624 4,350 66 --
Alan E. Walter 624 4,350 102 1,515
David L. deLesdernier 624 -- 174 --
(2) Mr. Randall joined the Company in January 1995.
(3) Mr. Walter was an executive officer until March 1997.
(4) Mr. deLesdernier joined the Company in September 1996.
Compensation Committee Interlocks
The Executive Compensation and Stock Option Committee of the Company's
Board of Directors was formed in November 1991 and the members of this committee
are Messrs. Mattson and McGillivray. Neither of these individuals was at any
time during the fiscal year ended October 31, 1997, or at any other time an
officer or employee of the Company. No executive officer of the Company serves
as a member of the board of directors or compensation committee of any entity
which has one or more executive officers serving as a member of the Company's
Board of Directors or Executive Compensation and Stock Option Committee.
Option Grants In the Last Fiscal Year
The following table sets forth each grant of stock options made during the
fiscal year ended October 31, 1997 to each of the Named Executive Officers:
<TABLE>
<CAPTION>
Individual Grants
--------------------------------------------------------- Potential Realizable Value
Number of % of Total at Assumed Annual Rates
Securities Options of Stock Price Appreciation
Underlying Granted to Exercise or for Option Term (1)
Options Employees in Base Price Expiration --------------------------
Name Granted (#) Fiscal Year ($/Share) Date 5% ($) 10% ($)
- ---- ----------- ----------- --------- ---- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Roger A. Carolin 52,500 (2) 13.1% $18.250 12/18/06 $602,560 $1,527,004
10,800 (3) 2.7 36.125 3/11/07 245,363 621,799
Christopher F. McConnell 40,000 (4) 10.0 18.250 12/18/06 459,093 1,163,432
Lorin J. Randall 35,000 (5) 8.7 18.250 12/18/06 401,707 1,018,003
10,800 (6) 2.7 36.125 3/11/07 245,363 621,799
Joseph E. Berger 21,000 (7) 5.2 18.250 12/18/06 241,024 610,802
Alan E. Walter 20,000 (8) 5.0 18.250 12/18/06 229,547 581,716
David L. deLesdernier -- -- -- -- -- --
</TABLE>
- ----------
(1) The potential realizable value is based on the term of the option at the
time of the grant (ten years). Potential gains are net of the exercise
price but before taxes associated with the exercise. Amounts represent
hypothetical gains that could be achieved for the respective options if
exercised at the end of the relevant option term. The assumed 5% and 10%
rates of stock appreciation are based on appreciation
6
<PAGE>
from the exercise price per share established at the relevant grant date.
These rates are provided in accordance with the rules of the Securities and
Exchange Commission and do not represent the Company's estimate or
projection of the future Common Stock price. Actual gains, if any, on stock
options exercised are dependent on the future financial performance of the
Company, overall market conditions and the option holders' continued
employment through the vesting period. This table does not take into
account any appreciation in the price of Common Stock from the date of
grant to the date of this Proxy Statement, other than the columns
reflecting assumed rates of appreciation of 5% and 10%.
(2) These options vest with regard to 3,750 shares on the last day of each
fiscal quarter commencing on January 31, 1997 and concluding on April 30,
2000.
(3) These options vest with regard to 5,400 shares on each of July 31, 2000 and
October 31, 2000.
(4) These options vest with regard to 2,500 shares on the last day of each
fiscal quarter commencing on January 31, 1997 and concluding on October 31,
2000.
(5) These options vest with regard to 2,500 shares on the last day of each
fiscal quarter commencing on January 31, 1998 and concluding on October 31,
1998, with regard to 5,000 shares on the last day of each fiscal quarter
commencing on January 31, 1999 and concluding on October 31, 1999, with
regard to 3,125 shares on January 31, 2000 and with regard to 1,875 shares
on April 30, 2000.
(6) These options vest with regard to 1,800 shares on April 30, 2000 and with
regard to 4,500 shares on each of July 31, 2000 and October 31, 2000.
(7) These options vest with regard to 750 shares on the last day of each fiscal
quarter commencing on January 31, 1997 and concluding on October 31, 1997
and with regard to 1,500 shares on the last day of each fiscal quarter
commencing on January 31, 1998 and concluding on October 31, 2000.
(8) These options vest with regard to 1,250 shares on the last day of each
fiscal quarter commencing on January 31, 1997 and concluding on October 31,
2000.
The following table sets forth information with respect to the exercise of
stock options during the 1997 fiscal year by each of the Named Executive
Officers, the number of shares covered by exercisable and unexercisable options
held by the Named Executive Officers on October 31, 1997 and the value of such
unexercised options on October 31, 1997.
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End Values
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised Options In-the-Money Options
Shares Value at Fiscal Year End (#) at Fiscal Year End ($) (2)
Acquired on Realized ------------------------------ -----------------------------
Name Exercise (#) ($) (1) Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ ------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Roger A. Carolin 28,000 $ 726,460 179,928 48,300 $2,613,284 $ --
Christopher F. McConnell -- -- 10,000 30,000 -- --
Lorin J. Randall 5,000 114,295 22,446 58,270 240,935 133,853
Joseph E. Berger 3,500 90,533 39,416 18,000 719,342 328,500
Alan E. Walter -- -- 5,000 15,000 91,250 273,750
David L. deLesdernier -- -- 7,500 22,500 136,875 410,625
</TABLE>
- ----------
(1) Represents market value of underlying securities on date of exercise less
the exercise price.
(2) Options are in-the-money if the market value of the shares covered thereby
is greater than the options' exercise price. Calculated based on the fair
market value at fiscal year end of $18.25 per share, less the exercise
price.
7
<PAGE>
Compensation of Directors
The Company reimburses directors for expenses incurred in connection with
attendance at meetings of the Board of Directors and committees. Each director
receives an option grant to purchase 3,000 shares of the Company's Common Stock
on the date of the Company's annual meeting of shareholders. In addition, the
director also receives an option grant to purchase 200 shares of Common Stock
for each committee on which the director serves. In March 1991, the Company
and Mr. McGillivray entered into a Stock Option Agreement (the "McGillivray
Agreement") pursuant to which the Company granted to Mr. McGillivray four-year
options to purchase shares of Common Stock, at an exercise price of $2.41 per
share, which vested with regard to 832 shares for each meeting of the Board of
Directors attended by Mr. McGillivray during a two year period beginning in
December 1990. This agreement was amended in June 1993 to provide for an
additional grant of options to purchase shares of Common Stock which vested with
regard to 832 shares for each meeting of the Board of Directors attended by Mr.
McGillivray during the period from March 1993 to April 17, 1997. The amendment
also extended the term of the options previously granted to ten years. The
McGillivray Agreement was also amended in September 1994 to provide an exercise
price of $7.52 per share, with respect to all stock options vested under the
McGillivray Agreement after January 6, 1994. In December 1994, the Company and
Mr. Stearns entered into a Stock Option Agreement (the "Stearns Agreement")
pursuant to which the Company granted to Mr. Stearns ten-year options to
purchase shares of Common Stock, at an exercise price of $7.52 per share, which
vested with regard to 832 shares for each meeting of the Board of Directors
attended by Mr. Stearns during a one year period beginning in December 1994.
This agreement was amended in November 1995 to provide for an additional grant
of options to purchase shares of Common Stock at an exercise price of $7.52 per
share for each meeting of the Board of Directors attended by Mr. Stearns during
the period from November 1995 to October 1997. Since the respective terminations
of the McGillivray Agreement and the Stearns Agreement, Messrs. McGillivray and
Stearns have been compensated for their service on the Board of Directors
pursuant to the Non-Employee Directors' Stock Option Plan.
In March 1996, the Board of Directors granted options to purchase up to
3,000 shares of Common Stock to each of John N. McConnell, Sr. (father of
Christopher F. McConnell) and Vincent L. Verdiani in connection with the
appointment of these individuals as Honorary Lifetime Directors of the Company.
The exercise price of these ten-year options is $7.52 per share and such options
were fully exercisable on the date of grant. Honorary Lifetime Directors are not
elected by the Company's shareholders, do not receive any compensation for their
service as such and are not voting members of the Board of Directors.
Also in March 1996, the Board of Directors granted to Mr. Mattson ten-year
options to purchase up to 2,000 shares of Common Stock at an exercise price of
$7.52 per share, which became exercisable in full on March 3, 1997. In March
1996, Mr. Mattson also received a grant of options to purchase up to 10,000
shares of Common Stock at an exercise price of $7.52 per share pursuant to the
Company's Non-Employee Directors' Stock Option Plan. One-third of these options
vests on each of the first three anniversaries of the date of grant, and the
options will expire upon the earlier of the tenth anniversary of their grant or
twelve months after Mr. Mattson ceases to be a director of the Company. In March
1997, the Board of Directors granted to Mr. Mattson ten-year options to purchase
up to 1,000 shares of Common Stock at an exercise price of $34.31 per share
which will be exercisable with regard to 500 shares on March 11, 1998 and 500
shares on March 11, 1999. These options were granted as compensation for Mr.
Mattson's service as a consultant to the Company during the term of the options.
In the future, the Company may compensate directors for their service as
directors through cash compensation, stock options or stock grants.
Employment Contracts
The Company has entered into a written employment agreement with Lorin J.
Randall, its Vice President Finance and Chief Financial Officer. The agreement
continues until terminated pursuant to its terms. In the event the Company
terminates the agreement without "cause" (as defined in the agreement), Mr.
Randall will be entitled to continue to receive his then-current base salary for
six months following such termination, or until the date he commences permanent,
full-time employment elsewhere, whichever first occurs.
Except as set forth above, the Company does not have employment agreements
with any of its executive officers.
8
<PAGE>
Report of Executive Compensation and Stock Option Committee on Annual
Compensation
The Executive Compensation and Stock Option Committee of the Board of
Directors (the "Committee") is comprised entirely of the undersigned
independent, outside directors. The Committee meets at least once each year to
act on specific recommendations by management for the grant of stock options and
to review the overall compensation philosophy, policies and practices of the
Company with regard to all employees. The Committee also reviews policies upon
which compensation decisions are based, and, where required, recommends to the
Board of Directors for approval the philosophy and policies established by the
Committee.
The Company's overall philosophy on compensation, as adopted by the
Committee, is to provide competitive compensation capable of attracting talented
employees. Other than eligibility for certain levels of stock options and
incentive awards, there are no perquisites, pay or benefit programs offered to
executive officers which are not offered to all employees. An incentive awards
plan is generally proposed annually by management for senior executives and
reviewed and recommended, in aggregate, by the Committee. These awards are based
upon a combination of individual and Company performance against predetermined
objectives, each of which is tested against the goal of the creation of
shareholder value.
The components of overall compensation for each position are set by, among
other things, comparison with the pay practices of comparable companies. The
Company, on a discretionary basis, matches contributions to the 401(k) Plan at
the rate of 50 percent of the eligible employee contributions.
A portion of the Committee's meetings each year takes place without the
Chief Executive Officer's presence to discuss the performance and compensation
of the Chief Executive Officer. Objectives used in determining such performance
are based upon milestones related to the achievement of growth, profits,
financing, and technology development goals. Further, while difficult to
measure, the Committee believes that the demonstration of vision and unrelenting
commitment are critical measures of the performance of the Chief Executive
Officer. Cash compensation and stock option awards made to the Chief Executive
Officer during the fiscal year ended October 31, 1997 were made in accordance
with these principles.
Burton E. McGillivray, Committee Chairman Brad Mattson, Committee Member
9
<PAGE>
COMPARATIVE PERFORMANCE GRAPH
The graph below compares the cumulative total shareholder return on the
Common Stock with the cumulative total stockholder return of (i) The Nasdaq
Stock Market (U.S.) Index (the "Nasdaq Index"), and (ii) a peer group consisting
of the Hambrecht & Quist Semiconductor Index which represents companies in the
semiconductor industry (the "Peer Group"), assuming an investment of $100 on
June 18, 1996 in each of the Common Stock of the Company, the Nasdaq Index
stocks and the Peer Group stocks. The graph assumes dividend reinvestment and,
with respect to companies in the Peer Group, the returns of each company have
been weighted at each measurement point to reflect relative stock market
capitalization. The graph commences as of June 18, 1996, the date the Common
Stock became publicly traded.
[graph]
Cumulative Total Returns ($)
-------------------------------------------
June 18, October 31, October 31,
1996 1996 1997
---- ---- ----
CFM TECHNOLOGIES, INC. $100 $ 84 $183
NASDAQ STOCK MARKET - US 100 103 135
H & Q SEMICONDUCTORS 100 113 176
10
<PAGE>
APPOINTMENT OF AUDITORS
The Board of Directors has selected the firm of Arthur Andersen LLP as
independent public accountants for the fiscal year ending October 31, 1998.
A representative of Arthur Andersen LLP is expected to be present at the
Meeting to respond to appropriate questions and will have the opportunity to
make a statement if he or she so desires.
SHAREHOLDER PROPOSALS
For the next annual meeting of shareholders, shareholder proposals must be
received by the Secretary of the Company not later than October 2, 1998 to be
considered for inclusion in the Company's proxy materials for the annual meeting
to be held in 1999.
OTHER MATTERS
The Board of Directors is not aware of any other matters to be presented
for action at the Meeting. However, if any other matter properly comes before
the Meeting, it is the intention of the persons named in the enclosed proxy to
vote on such matters in accordance with their best judgment.
By Order of the Board of Directors
Lorin J. Randall
Secretary
February 5, 1998
<PAGE>
PROXY
CFM TECHNOLOGIES, INC.
1336 Enterprise Drive
West Chester, PA 19380
ANNUAL MEETING OF SHAREHOLDERS - MARCH 5, 1998
The undersigned shareholder of CFM Technologies, Inc. (the "Company")
hereby appoints Lorin J. Randall and Joseph E. Boyer, and each of them,
attorneys and proxies, with power of substitution in each of them, to vote and
to act for and on behalf of the undersigned at the Annual Meeting of
Shareholders to be held on March 5, 1998 and at all postponements and
adjournments thereof, according to the number of shares which the undersigned
would be entitled to vote if then personally present upon the matters described
on the reverse, hereby revoking any proxy heretofore executed by the undersigned
(i) as specified by the undersigned on the reverse and (ii) in the discretion of
any proxy upon such other business as may properly come before the meeting, all
as set forth in the notice of the meeting and in the proxy statement furnished
herewith, copies of which have been received by the undersigned and hereby
ratifies and confirms all that said attorneys and proxies may do or cause to be
done by virtue hereof.
PLEASE SIGN AND DATE THIS PROXY ON THE REVERSE SIDE
<PAGE>
1. ELECTION OF DIRECTORS.
[ ] FOR all nominees listed below (except as marked to the contrary)
[ ] VOTE WITHHELD
NOMINEES:
Christopher F. McConnell, Chairman of the Board of Directors
Roger A. Carolin, President, Chief Executive Officer and Director
James J. Kim, Director
Brad S. Mattson, Director
Burton E. McGillivray, Director
Milton S. Stearns, Jr., Director
To withhold a vote for any of the nominees listed above,
strike a line through that nominee's name.
[ ] WITHHOLD AUTHORITY to vote for all nominees listed above.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS, WHICH
RECOMMENDS A VOTE "FOR" ABOVE MATTER.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DIRECTED HEREIN. IF NO
DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED "FOR" THE ABOVE MATTER.
PLEASE SIGN AND DATE THIS PROXY AND RETURN IT PROMPTLY.
______________________________________ ___________________________________
Signature Signature
Dated:__________________________, 1998
IMPORTANT: Please date this proxy and sign exactly as your name or names
appear on the certificate(s) representing your shares of Common Stock of the
Company. If shares are registered in more than one name, all owners should sign.
When signing as an executor, administrator, trustee, guardian or in another
representative capacity, please give your full title(s). If this proxy is
submitted by a corporation or partnership, it should be executed in the full
corporate or partnership name by a duly authorized person.
