<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 [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
CYTYC Corporation
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
________________________________________________________________________
(5) Total fee paid:
________________________________________________________________________
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
________________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
________________________________________________________________________
(3) Filing Party:
________________________________________________________________________
(4) Date Filed:
________________________________________________________________________
<PAGE>
CYTYC CORPORATION
85 SWANSON ROAD
BOXBOROUGH, MA 01719
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 6, 1998
----------------
To the Stockholders of Cytyc Corporation:
Notice is hereby given that the annual meeting of stockholders of Cytyc
Corporation, a Delaware corporation (the "Company"), will be held at 9:30
a.m., local time, on Wednesday, May 6, 1998, at the Holiday Inn, One Adams
Place, Boxborough, Massachusetts to consider and act upon the following
proposals:
1. To elect two directors to Class II of the Company's Board of
Directors, to serve for a term of three years or until successors are
elected and qualified.
2. To ratify the selection of the firm of Arthur Andersen LLP,
independent public accountants, as auditors for the fiscal year ending
December 31, 1998.
3. To transact such other business as may properly come before the
meeting or any postponements or adjournments thereof.
Only stockholders of record at the close of business on March 9, 1998 are
entitled to notice of and to vote at the meeting.
All stockholders are cordially invited to attend the meeting in person. To
ensure your representation at the meeting, however, you are urged to mark,
sign, date and return the enclosed proxy card as promptly as possible in the
enclosed postage-prepaid envelope. You may revoke your proxy in the manner
described in the accompanying Proxy Statement at any time before it has been
voted at the annual meeting. Any stockholder attending the annual meeting may
vote in person even if he or she has returned a proxy.
By Order of the Board of Directors,
A. Suzanne Meszner-Eltrich
Secretary
Boxborough, Massachusetts
April 3, 1998
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN
ORDER TO ASSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF
THE PROXY CARD IS MAILED IN THE UNITED STATES.
<PAGE>
CYTYC CORPORATION
85 SWANSON ROAD
BOXBOROUGH, MA 01719
----------------
PROXY STATEMENT
----------------
April 3, 1998
This Proxy Statement is being furnished in connection with the solicitation
of proxies by the Board of Directors of Cytyc Corporation, a Delaware
corporation (the "Company") for use at the Annual Meeting of the Company's
stockholders to be held on Wednesday, May 6, 1998 (the "Annual Meeting") at
9:30 a.m., local time, at the Holiday Inn, One Adams Place, Boxborough,
Massachusetts 01719, or at any adjournments thereof. The Company's Summary
Annual Report and Form 10-K, which includes financial statements and
Management's Discussion and Analysis of Financial Condition and Results of
Operations for the fiscal year ended December 31, 1997, are being mailed
together with this Proxy Statement to all stockholders entitled to vote at the
Annual Meeting.
The Board of Directors has fixed the close of business on March 9, 1998 as
the record date (the "Record Date"). Accordingly, only holders of record of
Common Stock as of the close of business on the Record Date will be entitled
to notice of, and to vote at, the Annual Meeting or an adjournment thereof. As
of the Record Date, an aggregate of 17,582,797 shares of Common Stock, $.01
par value per share (the "Common Stock"), of the Company were issued and
outstanding. The holders of Common Stock are entitled to one vote per share on
any proposal presented at the Annual Meeting. Stockholders may vote in person
or by proxy. Execution of a proxy will not in any way affect a stockholder's
right to attend the Annual Meeting and vote in person. Any proxy given
pursuant to this solicitation may be revoked by the person giving it at any
time before it is voted. Proxies may be revoked by (1) filing with the
Secretary of the Company, before the taking of the vote at the Annual Meeting,
a written notice of revocation bearing a later date than the proxy, (2) duly
executing a later dated proxy relating to the same shares and delivering it to
the Secretary of the Company before the taking of the vote at the Annual
Meeting or (3) attending the Annual Meeting and voting in person (although
attendance at the Annual Meeting will not in and of itself constitute a
revocation of a proxy). Any written notice of revocation or subsequent proxy
should be sent so as to be delivered to Cytyc Corporation, 85 Swanson Road,
Boxborough, MA 01719, Attention: Secretary, at or before the taking of the
vote at the Annual Meeting.
QUORUM AND VOTES REQUIRED
The representation in person or by proxy of at least a majority of the
outstanding shares of Common Stock entitled to vote at the Annual Meeting is
necessary to establish a quorum for the transaction of business at the Annual
Meeting. Votes withheld from the nominee, abstentions and broker "non-votes"
are counted as present or represented for purposes of determining the presence
or absence of a quorum. 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, in respect of such other proposal, the broker does not have
discretionary voting power and has not received instructions from the
beneficial owner.
In the election of Class II Directors, the two nominees receiving the
highest number of affirmative votes of the shares present or represented and
entitled to vote at the Annual Meeting shall be elected as Class II Directors.
<PAGE>
On all other matters being submitted to stockholders, the affirmative vote of
a majority of shares present, in person or represented by proxy, and voting on
each such matter is required for approval. An automated system administered by
the Company's transfer agent tabulates the votes. The vote on each matter
submitted to stockholders is tabulated separately. Abstentions are included in
the number of shares present or represented and voting on each matter. Broker
"non-votes" are not considered voted for the particular matter and have the
effect of reducing the number of affirmative votes required to achieve a
majority for such matter by reducing the total number of shares from which the
majority is calculated.
The persons named as attorneys in the proxies, Patrick J. Sullivan and
Joseph W. Kelly, were selected by the Board of Directors and are officers of
the Company. All properly executed proxies returned in time to be counted at
the Annual Meeting will be voted. Any stockholder giving a proxy has the right
to withhold authority to vote for any individual nominee to the Board of
Directors by writing that nominee's name in the space provided on the proxy.
In addition to the election of two Class II Directors, the stockholders will
consider and vote upon a proposal to ratify the selection of auditors, all as
further described in this Proxy Statement. ALL PROXIES WILL BE VOTED IN
ACCORDANCE WITH THE STOCKHOLDERS' INSTRUCTIONS, AND IF NO CHOICE IS SPECIFIED,
THE ENCLOSED PROXY CARD (OR ANY SIGNED AND DATED COPY THEREOF) WILL BE VOTED
IN FAVOR OF THE MATTERS SET FORTH IN THE ACCOMPANYING NOTICE OF ANNUAL
MEETING.
The Board of Directors knows of no other matter to be presented at the
Annual Meeting. If any other matter should be presented at the meeting upon
which a vote may properly be 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.
2
<PAGE>
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of the Record Date by: (i) each
person who is known by the Company to own beneficially more than 5% of the
outstanding shares of Common Stock; (ii) each director or nominee for director
of the Company; (iii) each executive officer of the Company named in the
Summary Compensation Table set forth below; and (iv) all directors, nominees
for director and executive officers of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND
NAME AND ADDRESS NATURE
OF BENEFICIAL OWNER OF OWNERSHIP(1) PERCENTAGE OF CLASS(2)
------------------- --------------- ----------------------
<S> <C> <C>
The Capital Group Companies,
Inc.(3)............................. 933,700 5.31%
333 South Hope Street
Los Angeles, CA 90071
FMR Corp.(4)......................... 2,265,715 12.89%
82 Devonshire Street
Boston, MA 02109
Putnam Investments, Inc.(5).......... 2,318,481 13.19%
One Post Office Square
Boston, MA 02109
Patrick J. Sullivan(6)............... 209,176 1.19%
Joseph W. Kelly(7)................... 35,159 *
Daniel J. Levangie(8)................ 18,050 *
Ted S. Geiselman(9).................. 40,342 *
Robert J. Silverman(10).............. 7,573 *
Sally W. Crawford(11)................ 1,250 *
Franklin J. Iris(12)................. 25,769 *
William G. Little(13)................ 1,250 *
C. William McDaniel(14).............. 14,084 *
Anna S. Richo(15).................... 1,250 *
Monroe Trout, M.D.(16)............... 42,160 *
All directors, nominees for director
and executive officers as a group
(12 persons)(17).................... 396,635 2.26%
</TABLE>
- --------
* Less than one percent of the outstanding Common Stock.
(1) The persons named in the table have sole voting and investment power with
respect to all shares shown as beneficially owned by them, except as
noted in the footnotes below.
(2) Applicable percentage ownership as of the Record Date is based upon
17,582,797 shares of Common Stock outstanding. Beneficial ownership is
determined in accordance with the rules of the Securities and Exchange
Commission and includes voting and investment power with respect to
shares. Shares of Common Stock subject to options currently exercisable
or exercisable within 60 days of the Record Date are deemed outstanding
for computing the percentage ownership of the person holding such
options, but are not deemed outstanding for computing the percentage
ownership of any other person.
(3) Information obtained from Schedule 13G filed with the Securities and
Exchange Commission by The Capital Group Companies, Inc. on February 11,
1998. Includes 933,700 shares beneficially owned by SMALLCAP World Fund,
Inc. SMALLCAP World Fund, Inc. is an investment company registered under
the Investment Company Act of 1940, as amended (the "Investment Company
Act"). The Capital Group
3
<PAGE>
Companies, Inc. wholly owns Capital Research and Management Company, an
investment adviser registered under Section 203 of the Investment Advisers
Act of 1940, as amended (the "Investment Advisers Act"). Capital Research
and Management Company may be deemed to beneficially own the shares owned
by SMALLCAP World Fund, Inc., as a result of acting as investment adviser
to SMALLCAP World Fund, Inc.
(4) Information obtained from Schedule 13G/A filed with the Securities and
Exchange Commission by FMR Corp. on March 10, 1998. Includes 2,106,215
shares owned by Fidelity Management & Research Company ("Fidelity
Research") and 149,500 shares owned by Fidelity Management Trust Company
("Fidelity Trust"). Fidelity Research and Fidelity Trust are both wholly-
owned subsidiaries of FMR Corp. Mr. Edward C. Johnson 3d., Chairman of
FMR Corp., and Abigail P. Johnson, a Director of FMR Corp., own 12% and
24.5%, respectively, of the outstanding voting common stock of FMR Corp.
Various Johnson family members, through the ownership of voting common
stock and the execution of a shareholders' voting agreement, may be
deemed to form a controlling group with respect to FMR Corp. Neither FMR
Corp. nor Mr. Johnson has the sole power to vote or direct the voting of
the shares owned directly by Fidelity Research, which power resides with
Fidelity Research's Board of Trustees. Fidelity Research carries out the
voting of the shares under written guidelines established by Fidelity
Research's Board of Trustees. Mr. Johnson and FMR Corp., through their
control of Fidelity Trust, have sole voting and dispositive power over
the shares owned by Fidelity Trust. Also includes 10,000 shares owned by
Fidelity International Limited ("FIL"), a Bermudan joint stock company,
which is an investment adviser to various investment companies and
certain institutional investors. A partnership controlled by Mr. Johnson
and members of his family owns shares of FIL voting stock with the right
to cast approximately 39.89% of the total votes which may be cast by all
holders of FIL voting stock. Mr. Johnson is also Chairman of FIL. FMR
Corp. and FIL are separate and independent corporate entities, and their
Boards of Directors are generally composed of different individuals.
Other than when one serves as a sub adviser to the other, their
investment decisions are made independently, and their clients are
generally different organizations. FMR Corp. and FIL are of the view that
they are not acting as a "group" for purposes of Section 13(d) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and that
they are not otherwise required to attribute to each other the beneficial
ownership of securities beneficially owned by the other corporation
within the meaning of Rule 13d-3 promulgated under the Exchange Act.
(5) Information obtained from Schedule 13G/A filed by Putnam Investments,
Inc. with the Securities and Exchange Commission on January 28, 1998.
Includes 2,053,564 shares beneficially owned by Putnam Investment
Management, Inc. and 264,917 shares owned by The Putnam Advisory Company,
Inc. Putnam Investments, Inc., a wholly-owned subsidiary of Marsh &
McLennan Companies, Inc., wholly owns two investment advisers registered
under Section 203 of the Investment Advisers Act: Putnam Investment
Management, Inc. and The Putnam Advisory Company, Inc. The Putnam
Advisory Company, Inc. is an institutional investment advisor.
(6) Includes 14,765 shares issuable pursuant to presently exercisable stock
options. Excludes 277,000 shares issuable pursuant to stock options that
are not presently exercisable.
(7) Includes 10,859 shares issuable pursuant to presently exercisable stock
options. Excludes 151,141 shares issuable pursuant to stock options that
are not presently exercisable.
(8) Includes 12,860 shares issuable pursuant to presently exercisable stock
options. Excludes 115,667 shares issuable pursuant to stock options that
are not presently exercisable.
(9) Includes 10,860 shares issuable pursuant to presently exercisable stock
options. Excludes 97,286 shares issuable pursuant to stock options that
are not presently exercisable.
(10) Includes 7,573 shares issuable pursuant to presently exercisable stock
options. Excludes 89,427 shares issuable pursuant to stock options that
are not presently exercisable.
4
<PAGE>
(11) Includes 1,250 shares issuable pursuant to presently exercisable stock
options. Excludes 13,750 shares issuable pursuant to stock options which
are not presently exercisable.
(12) Includes 20,251 shares issuable pursuant to presently exercisable stock
options. Also includes the vested portion of a stock award of 500 shares
granted on January 1, 1998, which vests monthly in twelve equal
installments over the course of the calendar year. Excludes 5,749 shares
issuable pursuant to stock options which are not presently exercisable.
(13) Includes 1,250 shares issuable pursuant to presently exercisable stock
options. Excludes 13,750 shares issuable pursuant to stock options which
are not presently exercisable.
(14) Includes 13,417 shares issuable pursuant to presently exercisable stock
options. Also includes the vested portion of a stock award of 500 shares
granted on January 1, 1998, which vests monthly in twelve equal
installments over the course of the calendar year. Excludes 4,083 shares
issuable pursuant to stock options which are not presently exercisable.
(15) Includes 1,250 shares issuable pursuant to presently exercisable stock
options. Excludes 13,750 shares issuable pursuant to stock options which
are not presently exercisable.
(16) Includes 39,326 shares held by the Trout Family Trust. Also includes
2,667 shares issuable pursuant to presently exercisable stock options.
Also includes the vested portion of a stock award of 500 shares granted
on January 1, 1998, which vests monthly in twelve equal installments over
the course of the calendar year. Excludes 5,749 shares issuable pursuant
to stock options which are not presently exercisable.
(17) Includes 97,575 shares issuable pursuant to presently exercisable stock
options.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors is currently fixed at seven members. There are
presently seven (7) individuals serving as Directors of the Company. Mr.
Frederick R. Blume, Mr. Guy de Chazal, Ms. Janet G. Effland and Mr. Edwin M.
Kania, Jr., each formerly a Director of the Company, resigned on January 28,
1998. The Company's Certificate of Incorporation divides the Company's Board
of Directors into three classes. The members of each class of directors serve
for staggered three-year terms.
Messrs. Franklin J. Iris and William G. Little are Class II directors whose
terms expire at this Annual Meeting of Stockholders. The Board is also
composed of (i) three Class I directors (Ms. Sally W. Crawford and Messrs. C.
William McDaniel and Patrick J. Sullivan), whose terms expire upon the
election and qualification of directors at the Annual Meeting of Stockholders
to be held in 2000 and (ii) two Class III directors (Ms. Anna S. Richo and
Monroe Trout, M.D.), whose terms expire upon the election and qualification of
directors at the Annual Meeting of Stockholders to be held in 1999.
Two Class II Directors will be elected at this Annual Meeting of
Stockholders for a term of three years. The Class II nominees, Messrs.
Franklin J. Iris and William G. Little are each currently serving as Class II
Directors of the Company. Shares represented by all proxies received by the
Board of Directors and not so marked as to withhold authority to vote for the
nominees will be voted FOR the election of both nominees, to hold office until
the Annual Meeting of Stockholders to be held in 2001 or until their
respective successors are duly elected and qualified. Both of the nominees
have indicated their willingness to serve, if elected; however, if any nominee
should be unable or unwilling to serve, the proxies may vote for the election
of a substitute nominee designated by the Board of Directors.
5
<PAGE>
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE "FOR" THE NOMINEES LISTED BELOW.
---
The following table sets forth for each nominee to be elected at the Annual
Meeting and for each director whose term of office will extend beyond the
Annual Meeting, the year each such nominee or director was first elected a
director, the positions currently held by each nominee or director with the
Company, the year each nominee's or director's term will expire and the class
of director of each nominee or director:
<TABLE>
<CAPTION>
NOMINEE'S OR DIRECTOR'S
NAME AND YEAR
NOMINEE OR DIRECTOR POSITION(S) HELD YEAR TERM
FIRST BECAME A DIRECTOR WITH THE COMPANY WILL EXPIRE CLASS OF DIRECTOR
----------------------- --------------------- ----------- -----------------
<S> <C> <C> <C>
NOMINEES:
Franklin J. Iris (1989) Director 1998 II
William G. Little (1998) Director 1998 II
CONTINUING DIRECTORS:
Sally W. Crawford (1998) Director 2000 I
C. William McDaniel Director 2000 I
(1987)
Patrick J. Sullivan Director 2000 I
(1994)
Anna S. Richo (1998) Director 1999 III
Monroe Trout, M.D. Director 1999 III
(1993)
</TABLE>
OCCUPATIONS OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth for each Class II nominee to be elected at
the Annual Meeting, the current Class I Directors and Class III Directors who
will continue to serve as directors beyond the Annual Meeting, and the
executive officers of the Company, their ages and present positions with the
Company as of the date of the Annual Meeting:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Patrick J. Sullivan(3)... 46 President, Chief Executive Officer and Director
Joseph W. Kelly.......... 53 Vice President, Finance, Chief Financial Officer
and Treasurer
Daniel J. Levangie....... 47 Vice President of Commercial Operations
Ted S. Geiselman......... 42 Vice President of Technical Operations
A. Suzanne Meszner- 45 Vice President, Human Resources, General Counsel
Eltrich................. and Secretary
Monroe Trout, M.D.(3).... 66 Chairman of the Board of Directors
Sally W. Crawford(1)(2).. 44 Director
Franklin J. Iris(2)...... 67 Director
William G. Little(1)(3).. 55 Director
C. William 56 Director
McDaniel(1)(3)..........
Anna S. Richo(2)......... 37 Director
</TABLE>
- --------
(1) Member of Compensation Committee.
(2) Member of Audit Committee.
(3) Member of Nominating Committee.
6
<PAGE>
DIRECTORS TO BE ELECTED AT THE ANNUAL MEETING
Franklin J. Iris became a director of the Company in 1989. Since 1986, Mr.
Iris has served as the President of Iris and Associates, a firm providing
investment consulting services for venture capital and emerging growth
companies in the medical industry. He serves on the board of a number of
privately-held health care companies and institutions and also on the board of
a publicly-held company, Photon Technology International, Inc. Mr. Iris was
formerly a senior executive at Becton Dickinson and Company where, at various
times, he served as Group President, President of the Clay Adams Division and
Corporate Controller.
William G. Little became a director of the Company in January of 1998. He is
currently the Chairman, President, and Chief Executive Officer of The West
Company, Incorporated. Prior to joining The West Company, Mr. Little served as
President of Kendall's Health Care Division, as well as Senior Group Vice
President for C.R. Bard's United States Operations, Managing Director and Area
Vice President for Bard's European Operations and General Manager of Johnson &
Johnson's Patient Care Division in England. Mr. Little currently serves on the
Board of Directors for Fox Chase Cancer Center.
DIRECTORS WHOSE TERMS EXTEND BEYOND THE MEETING
Monroe E. Trout, M.D., became a director of the Company in 1993 and was
elected Chairman of the Board of Directors of the Company in January 1998.
Following his retirement from American Healthcare Systems ("AmHS"), a major
national consortium of more than 1,000 hospitals, in January 1995, Dr. Trout
was named Chairman Emeritus of AmHS. Prior to his retirement, from 1986 to
January 1995, Dr. Trout held various positions with AmHS, including Chairman,
Chief Executive Officer and President. Prior to his employment at AmHS, Dr.
Trout was a Senior Vice President and a member of the Board of Directors of
Sterling Drug, Inc. Dr. Trout serves as a director of Baxter International,
Inc., The West Company, Incorporated, the University of California San Diego
Foundation and SAIC.
Sally W. Crawford became a director of the Company on January 28, 1998. From
1985 until January 1997, Ms. Crawford served as Chief Operating Officer of
Healthsource, Inc., a publicly held managed care organization headquartered in
New Hampshire. During her tenure at Healthsource, Inc., Ms. Crawford held a
variety of positions and responsibilities including leading that company's
Northern Region operations and marketing efforts. Prior to joining
Healthsource, Ms. Crawford served as the Marketing Director for Beacon Health
and Matthew Thornton Health Plan, both of which are New Hampshire health
maintenance organizations. Ms. Crawford currently is a health care consultant
in New Hampshire. Ms. Crawford serves as a director of Harborside Healthcare,
a long term and subacute care company, and is also a director of Yankee
Publishing, publisher of Yankee Magazine and The Old Farmers Almanac.
C. William McDaniel became a director of the Company in April 1987 and
served as a consultant to the Company from March 1995 to February 1997. Mr.
McDaniel served as a consultant to and a director of CP Ventures, Inc., a
venture capital firm, from April 1995 to April 1996 and June 1996,
respectively. From 1987 to March 1995, Mr. McDaniel was the President and a
director of CP Ventures, Inc.
Patrick J. Sullivan has served as President and Chief Executive Officer and
as a director of the Company since March 1994. From January 1991 to March
1994, Mr. Sullivan served as Vice President of Sales and Marketing. Prior to
joining the Company, Mr. Sullivan was employed in several marketing positions
for five years by Abbott Laboratories, a diversified health care company.
Prior to that, Mr. Sullivan was a consultant with McKinsey and Company, an
international management consulting firm. Mr. Sullivan is a graduate of the
United States Naval Academy and received an M.B.A. from Harvard University.
7
<PAGE>
Anna S. Richo became a director of the Company on January 28, 1998. She is
currently the associate general counsel at Baxter International, Inc., where
she has worked in various legal positions for the past six years. Prior to
joining Baxter, Ms. Richo was an attorney for The NutraSweet Company.
EXECUTIVE OFFICERS
Joseph W. Kelly joined the Company in November 1995 as Vice President,
Finance, Chief Financial Officer, Treasurer and Secretary. From 1984 through
March 1995, Mr. Kelly held a variety of positions including Chairman, Chief
Executive Officer and Chief Financial Officer of Crop Genetics International,
a publicly held biotechnology company. From 1966 to 1983, Mr. Kelly held
various positions, including Partner, with Deloitte Haskins & Sells (now
Deloitte & Touche), an international consulting and accounting firm. He has
been a member of the faculty at Harvard University, Johns Hopkins University
and Loyola College. Mr. Kelly is a Certified Public Accountant and received
his B.B.A. from Niagara University.
Daniel J. Levangie joined the Company in June 1992 as Director of Sales,
North America. From March 1994 to October 1996, Mr. Levangie served as Vice
President of Sales and Marketing until October 1996 when he served as Vice
President of Sales. At the close of 1997, Mr. Levangie moved into the expanded
role of Vice President of Commercial Operations. Prior to joining the Company,
Mr. Levangie held a variety of sales and marketing positions with Abbott
Laboratories, a diversified health care company, from 1975 through 1992. Mr.
Levangie received a B.S. degree in Pharmacy from the College of Pharmacy &
Allied Health Sciences of Northeastern University.
Ted S. Geiselman joined the Company in October 1993 as Vice President of
Engineering. In May 1994, Mr. Geiselman assumed responsibility for
manufacturing operations. From May 1994 to June 1997, Mr. Geiselman served as
Vice President of Operations and since June 1997, has served as Vice President
of Technical Operations. Mr. Geiselman was the Director of Instrument
Systems/Technology Management at Baxter Diagnostics, a medical diagnostic
company, from March 1991 through October 1993. Mr. Geiselman received a B.S.
in Mechanical Engineering from Pennsylvania State University.
A. Suzanne Meszner-Eltrich joined the Company as Vice President, Human
Resources and General Counsel in September 1997. Prior to joining the Company,
Ms. Meszner-Eltrich was an independent general counsel and human resources
executive for a number of private and public high technology companies in New
England. From April 1992 through June 1995, she was Vice President, Human
Resources and General Counsel of Easel Corporation of Burlington, Massachusetts.
Ms. Meszner-Eltrich received her Doctor of Jurisprudence from New England School
of Law and a B.A. from Ohio State University.
8
<PAGE>
MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors met ten times during the fiscal year ended December
31, 1997. The Board of Directors has a standing Audit Committee, a standing
Compensation Committee and a standing Nominating Committee. The Audit
Committee, which oversees the accounting, financial functions and regulatory
affairs of the Company, met two times during 1997. Mr. Guy de Chazal, a former
Director and member of the Audit Committee, resigned on January 28, 1998. Mr.
Iris, Ms. Crawford and Ms. Richo are the current members of the Audit
Committee. The Compensation Committee of the Company, which determines the
compensation of the Company's senior management and administers the Company's
stock plans, met two times and acted by written consent 38 times during 1997.
Ms. Janet G. Effland and Mr. Frederick R. Blume, each a former Director and
member of the Compensation Committee, resigned on January 28, 1998. Messrs.
McDaniel and Little and Ms. Crawford are the current members of the
Compensation Committee. The Nominating Committee, which is responsible for
recommending to the Board of Directors persons to be nominated for election or
appointment as directors of the Company, met three times during 1997. Mr. de
Chazal and Ms. Effland, each a former director and member of the Nominating
Committee, resigned on January 28, 1998. Messrs. Little, McDaniel, Sullivan
and Dr. Trout are the current members of the Nominating Committee. The
Nominating Committee considers suggestions from shareholders regarding
possible candidates for director. Such suggestions, together with appropriate
biographical information, should be submitted to the Secretary of the Company.
During the year ended December 31, 1997, each of the Company's directors
attended at least 75 percent of the total number of meetings of the Board of
Directors and all committees of the Board of Directors on which he or she
served.
9
<PAGE>
COMPENSATION AND OTHER INFORMATION CONCERNING DIRECTORS AND OFFICERS
EXECUTIVE COMPENSATION SUMMARY
The following table sets forth the annual and long-term compensation of the
Company's Chief Executive Officer and each of the Company's four other most
highly compensated executive officers (collectively, the "Named Executive
Officers") for fiscal years ended December 31, 1997, 1996 and 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
-------------
ANNUAL COMPENSATION AWARDS(1)
-------------------- -------------
SECURITIES
UNDERLYING
NAME AND PRINCIPAL OPTIONS ALL OTHER
POSITION YEAR SALARY($) BONUS($) (# OF SHARES) COMPENSATION
- ------------------ ---- ---------- --------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Patrick J. Sullivan....... 1997 175,000 115,000 0 --
President and Chief 1996 157,500 80,000 40,000 --
Executive Officer 1995 150,000 45,000 158,276 --
Joseph W. Kelly(2)........ 1997 150,000 60,000 0 --
Vice President, Chief 1996 140,000 50,000 30,000 --
Financial Officer
and Treasurer 1995 22,975 20,000 195,000 25,000(3)
Daniel J. Levangie........ 1997 150,000 60,000 0 --
Vice President of 1996 137,900 40,000 30,000 --
Commercial Operations 1995 125,000 30,000 93,545 --
Ted S. Geiselman.......... 1997 150,000 70,000 0 --
Vice President of 1996 127,500 50,000 30,000 --
Technical
Operations 1995 120,000 20,000 43,910 --
Robert J. Silverman(4).... 1997 150,000 45,000 0 140,400(3)
Vice President of 1996 53,700 -- 100,000 50,000(5)
Marketing
</TABLE>
- --------
(1) The Company did not grant any restricted stock awards or stock
appreciation rights or make any long term incentive plan payouts to the
Named Executive Officers during the fiscal years ended December 31, 1997,
1996 and 1995.
(2) Mr. Kelly commenced employment with the Company in November 1995.
(3) Represents payment made by the Company for reimbursement of moving and
relocation expenses.
(4) Mr. Silverman commenced employment with the Company in November 1996.
(5) Represents payment made by the Company as a signing bonus.
OPTIONS GRANTS IN LAST FISCAL YEAR
The Company did not grant any stock options to any of the Named Executive
Officers during the fiscal year ended December 31, 1997.
10
<PAGE>
AGGREGATE OPTION EXERCISES AND YEAR-END VALUES
The following table sets forth certain information with respect to options
to purchase the Company's Common Stock granted to the Named Executive
Officers, including (i) the number of shares of Common Stock purchased upon
exercise of options in the fiscal year ended December 31, 1997; (ii) the net
value realized upon such exercise; (iii) the number of unexercised options
outstanding at December 31, 1997; and (iv) the value of unexercised options
with exercise prices equal to or less than the market value of the Common
Stock at December 31, 1997 ("In-the-Money").
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED,
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES DECEMBER 31, 1997 DECEMBER 31, 1997 ($)(2)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE (#) REALIZED ($)(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ------------ --------------- ------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
Patrick J. Sullivan..... -- -- 112,055 260,765 $ 2,472,881 $ 5,588,532
Joseph W. Kelly......... 39,000 $828,750 7,500 139,500 -- 2,625,188
Daniel J. Levangie...... 41,565 992,767 8,500 105,027 23,688 1,992,495
Ted S. Geiselman........ 29,182 552,232 7,500 85,646 -- 1,527,073
Robert J. Silverman..... 13,000 139,890 7,000 80,000 69,563 795,000
</TABLE>
- --------
(1) Amounts calculated by subtracting the aggregate exercise price of the
options from the market value of the underlying Common Stock on the date
of exercise.
(2) Amounts calculated by subtracting the exercise price of the options from
the market value of the underlying Common Stock using the average of the
closing bid and ask price on the Nasdaq National Market of $24.9375 per
share of Common Stock on December 31, 1997 and do not reflect amounts that
may be actually received by the Named Executive Officer upon exercise of
options.
All of the stock options set forth in the table above become fully vested
and immediately exercisable upon a consolidation, merger or sale of
substantially all of the assets of the Company.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Pursuant to authority delegated by the Board of Directors, the Compensation
Committee is responsible for the policy and administration of compensation of
the Company's executive officers. The Compensation Committee is also
responsible for the administration of the Company's stock ownership plans
under which option grants and direct stock issuances may be made to executive
officers of the Company. During fiscal year 1997, the Compensation Committee
was comprised of Mr. Blume, Ms. Effland and Dr. Trout, none of whom was an
employee of the Company. (Mr. Blume and Ms. Effland, each formerly a Director
and member of the Compensation Committee, resigned on January 28, 1998). This
report addresses the compensation policies determined by Mr. Blume, Ms.
Effland and Dr. Trout for fiscal year 1997 as they applied to Mr. Sullivan, in
his capacity as President and Chief Executive Officer of the Company, and
other executive officers of the Company.
Overview and Philosophy. The Company uses its compensation program to
achieve the following objectives:
. To provide compensation that attracts, motivates and retains the
talented, high caliber executive officers and employees to achieve the
Company's strategic objectives, as determined by the Board of Directors.
11
<PAGE>
. To align the interest of executive officers with the success of the
Company.
. To align the interest of executive officers with stockholders by
including long-term equity incentives.
. To increase the long-term profitability of the Company and, accordingly,
increase stockholder value.
Compensation under the executive compensation program is comprised of cash
compensation in the form of base salary, annual cash incentive bonuses, and
long-term incentive awards in the form of stock option grants. It is the
Compensation Committee's objective to have a portion of each executive
officer's cash compensation contingent upon the achievement of specific
predetermined corporate objectives as well as upon each executive officer's
individual level of performance. In addition, the compensation program
includes various other benefits, including medical and insurance plans, the
Company's 401(k) Plan, the 1995 Stock Plan and the 1995 Employee Stock
Purchase Plan, which plans are generally available to all employees of the
Company.
The principal factors which the Compensation Committee considered with
respect to each executive officer's compensation package for fiscal year 1997
are summarized below. The Compensation Committee may, however, in its
discretion apply different or additional factors in making decisions with
respect to executive compensation in future years.
Base Salary. Compensation levels for each of the Company's executive
officers, including the Chief Executive Officer, are generally set within the
range of salaries that the Compensation Committee believes are paid to
executive officers with comparable qualifications, experience and
responsibilities at similar companies. In setting compensation levels, the
Compensation Committee takes into account such factors as (i) the Company's
past performance and future expectations, (ii) individual performance and
experience and (iii) past salary levels. The Compensation Committee does not
assign relative weights or rankings to these factors, but instead makes a
determination based upon the consideration of all of these factors as well as
the progress made with respect to the Company's long-term goals and
strategies. Generally, salary decisions for the Company's executive officers
are made near the end of each fiscal year.
Fiscal 1997 base salaries were determined by the Compensation Committee
after considering the base salary level of the executive officers in prior
years, and taking into account for each executive officer the amount of base
salary as a component of total compensation. Base salary, while reviewed
annually, is only adjusted as deemed necessary by the Compensation Committee
in determining total compensation for each executive officer. Base salary
levels for each of the Company's executive officers, other than the Chief
Executive Officer, were also based in part upon evaluations and
recommendations made by the Chief Executive Officer.
Bonus and Commission Compensation. Bonus compensation for executives is
based on the Company's achievement of predetermined corporate objectives for
the executive's functional area, individual performance, and on a comparison
of the executive's actual performance against his performance objectives.
Bonuses are awarded on an annual basis.
Long Term Incentive Compensation. The Compensation Committee believes that
stock option participation aligns executive officers' interests with those of
the stockholders. In addition, the Compensation Committee believes that equity
ownership by executive officers helps to balance the short term focus of
annual incentive compensation with a longer term view and may help to retain
key executive officers. Long-term incentive compensation, in the form of stock
options, allows the executive officers to share in any appreciation in the
value of the Company's Common Stock. The Committee generally grants options
that become exercisable
12
<PAGE>
over a four year period as a means of encouraging executives to remain with
the Company and promote its success. In general, the Compensation Committee
awards executives of the Company stock options with exercise prices equal to
the market price of the Common Stock on the date of grant. As a result,
executives will benefit from these stock option grants only to the extent that
the price of the Company's Common Stock increases and the Company's
stockholders have also benefited.
When establishing stock option grant levels, the Compensation Committee
considers general corporate performance, the Chief Executive Officer's
recommendations, level of seniority and experience, existing levels of stock
ownership, previous grants of stock options, vesting schedules of outstanding
options and the current stock price.
It is the standard policy of the Company to grant an initial stock option
grant to all executive officers at the time they commence employment
consistent with the number of options granted to executive officers within and
without the industry at similar levels of seniority. In addition, the
Compensation Committee may from time-to-time make performance-based grants as
it deems appropriate. In making such performance-based grants, the
Compensation Committee considers individual contributions to the Company's
financial, operational and strategic objectives.
Other Benefits. The Company also has various broad-based employee benefit
plans. Executive officers participate in these plans on the same terms as
eligible, non-executive employees, subject to any legal limits on the amounts
that may be contributed or paid to executive officers under these plans. The
Company offers a stock purchase plan, under which employees may purchase
Common Stock at a discount, and a 401(k) plan, which allows employees to
invest in a wide array of funds on a pre-tax basis. The Company also maintains
insurance and other benefit plans for its employees, including executive
officers of the Company.
Chief Executive Officer Compensation. In fiscal year 1997, the Company's
President and Chief Executive Officer, Patrick J. Sullivan, received a base
salary of $175,000, which represents an increase of $17,500 or 11% over his
1996 base salary. The base salary is believed by the Committee to be
consistent with the range of salary levels received by executives in a similar
capacity in companies of comparable size and stage of development. Mr.
Sullivan received bonus compensation of $115,000, which was determined based
on corporate performance and the achievement of various milestones in the
Company's growth and development over the year.
Tax Deductibility of Executive Compensation. Section 162(m) of the Code
limits the tax deduction to the Company to $1 million for compensation paid to
any of the Named Executive Officers unless certain requirements are met. The
Compensation Committee has considered these requirements and the regulations.
It is the Compensation Committee's present intention that, so long as it is
consistent with its overall compensation objectives, substantially all
executive compensation be deductible for United States federal income tax
purposes. The Compensation Committee believes that any compensation deductions
attributable to options granted under the 1995 Plan currently qualify for an
exception to the requirements of Section 162(m).
Respectfully Submitted by the
Compensation Committee:
Frederick R. Blume
Janet G. Effland
Monroe Trout, M.D.
13
<PAGE>
COMPENSATION OF DIRECTORS
Non-employee directors receive a fee of $1,000 for each meeting of the
Board, $500 for each committee meeting that they attend in person and are
reimbursed for their reasonable out-of-pocket expenses incurred in attending
such meetings. No director who is an employee of the Company will receive
separate compensation for services rendered as a director. Non-employee
directors are also eligible for participation in the Company's 1995 Non-
Employee Director Stock Option Plan.
14
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the percentage change in the cumulative total
stockholder return on the Company's Common Stock during the period from the
Company's initial public offering through December 31, 1997, with the
cumulative total return of the Nasdaq Market Value Index ("Nasdaq Index") and
the Laboratory Analytical Instruments (SIC Code 3826) Index ("SIC Code 3826
Index"). The comparison assumes $100 was invested on March 8, 1996 in the
Company's Common Stock and in each of the foregoing indices and assumes any
dividends were reinvested.
COMPARISON OF CUMULATIVE TOTAL RETURN(1)(2)
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
3/8/96 3/31/96 6/30/96 9/30/96 12/31/96 3/31/97 6/30/97 9/30/97 12/31/97
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CYTYC Corp 100 105 162 94 169 117 170 157 155
NASDAQ Stock Market (U.S.) 100 104 112 116 122 115 136 159 150
H&Q Hlthcare-Excl Biotech 100 101 95 105 105 100 120 125 125
</TABLE>
- --------
(1) Prior to March 8, 1996 the Company's Common Stock was not publicly traded.
Comparative data is provided only for the period since that date. This
graph is not "soliciting material," is not deemed filed with the
Securities and Exchange Commission and is not to be incorporated by
reference in any filing of the Company under the Securities Act of 1933 or
the Securities Exchange Act of 1934, whether made before or after the date
hereof and irrespective of any general incorporation language in any such
filing.
(2) The stock price information shown on the graph is not necessarily
indicative of future price performance. Information used on the graph was
obtained from Research Data, San Francisco, California, a source believed
to be reliable, but the Company is not responsible for any errors or
omissions in such information.
15
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On February 25, 1997, the Company advanced an aggregate of $85,000 to Robert
J. Silverman, Vice President of Marketing of the Company, and his spouse for
housing assistance, which is evidenced by a promissory note. The loan has been
repaid in full. The accrued interest under the promissory note was waived and
recorded as moving expenses.
PROPOSAL 2
RATIFICATION OF SELECTION OF AUDITORS
Subject to ratification by the stockholders, the Board of Directors has
selected the firm of Arthur Andersen LLP, independent certified accountants,
to serve as auditors for the year ending December 31, 1998. It is expected
that a member of the firm of Arthur Andersen LLP will be present at the Annual
Meeting with an opportunity to make a statement if so desired and will be
available to respond to appropriate questions from the Company's stockholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A
VOTE "FOR" THE RATIFICATION OF THIS SELECTION.
---
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and holders of more than 10% of the Company's Common
Stock (collectively, the "Reporting Persons") to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock of the Company. Such persons are required by
regulations of the Commission to furnish the Company with copies of all such
filings. Based on its review of the copies of such filings received by it with
respect to the period ended December 31, 1997, the Company believes that all
Reporting Persons complied with Section 16(a) filing requirements in the
period ended December 31, 1997 except as noted below. Janet G. Effland and
Frederick R. Blume, each a former Director of the Company, each filed one late
Form 4 reflecting one transaction that was not reported in a timely manner.
Edwin M. Kania, Jr., a former Director of the Company, filed one late Form 4
reflecting two transactions that were not reported in a timely manner. Mr.
Geiselman filed a Form 5 reporting one transaction that was not reported in a
timely manner. Mr. Kelly filed a late Form 5 related to the purchase of shares
under the Company's Employee Stock Purchase Plan.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 1999 Annual
Meeting of Stockholders must be received no later than the close of business
on December 1, 1998 at the Company's principal executive offices in order to
be included in the Company's proxy statement for that meeting. Any such
proposal must comply with the rules and regulations of the Securities and
Exchange Commission.
16
<PAGE>
EXPENSES AND SOLICITATION
All costs of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, certain of the Company's directors,
officers and regular employees, without additional remuneration, may solicit
proxies in person or by telephone or telegraph. Brokers, custodians and
fiduciaries will be requested to forward proxy soliciting material to the
owners of stock held in their names, and the Company will reimburse them for
their reasonable out-of-pocket costs. Solicitation by officers and employees
of the Company may also be made of some stockholders in person or by mail,
telephone or telegraph following the original solicitation.
Boxborough, Massachusetts
April 3, 1998
17
<PAGE>
- --------------------------------------------------------------------------------
CYTYC CORPORATION
Proxy For Annual Meeting of Stockholders
May 6, 1998
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Patrick J. Sullivan and Joseph W.
Kelly and each or both of them, proxies, with full power of substitution, to
vote all shares of stock of Cytyc Corporation (the "Company") which the
undersigned is entitled to vote at the Annual Meeting of Stockholders of the
Company to be held on Wednesday, May 6, 1998 at 9:30 A.M. at the Holiday Inn,
One Adams Place, Boxborough, Massachusetts, and at any adjournment thereof, upon
matters set forth in the Notice of Annual Meeting of Stockholders and Proxy
Statement dated April 3, 1998, 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
adjournment thereof.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
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 AS DESCRIBED IN
ITEM 1, FOR THE PROPOSAL IN ITEM 2, AND IN THE JUDGMENT OF THE PROXIES NAMED
HEREIN WITH RESPECT TO ITEM 3.
Please mark
votes as in this
example.
/X/
1. To elect two directors to Class II of the Company's Board of Directors to
serve for a term of three years or until successors are elected and qualified.
FOR WITHHELD Nominees: Franklin J. Iris, William G. Little
- -------------------------------------------------------
For both nominees except as noted above
2. To ratify the selection of the firm of Arthur Andersen LLP, independent
public accountants, as auditors for the fiscal year ending December 31, 1998.
FOR AGAINST ABSTAIN
3. To transact such other business as may properly come before the meeting and
any adjournments thereof.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT
Please sign exactly as your name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.
Signature:__________________ Date:_____ Signature:_________________Date:_______
- -------------------------------------------------------------------------------
