<PAGE>
===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
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, 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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
CYTYC CORPORATION
85 Swanson Road
Boxborough, MA 01719
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 5, 1999
----------------
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 5, 1999, at the Holiday Inn, One Adams
Place, Boxborough, Massachusetts to consider and act upon the following
proposals:
1. To elect two directors to Class III of the Company's Board of
Directors, to serve for a term of three years or until their 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, 1999.
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 22, 1999 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 5, 1999
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 5, 1999
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 5, 1999 (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, 1998, 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 22, 1999 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 17,820,040 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 III 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 III
<PAGE>
Directors. 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 III 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>
Massachusetts Financial Services
Company(3).......................... 2,265,415 12.71%
500 Boylston Street,
Boston, MA 02116
FMR Corp. (4)........................ 2,134,382 11.98%
82 Devonshire Street,
Boston, MA 02109
Capital Research and Management
Company(5).......................... 933,700 5.24%
333 South Hope Street,
Los Angeles, CA 90071
Putnam Investments, Inc.(6).......... 916,900 5.15%
1 Post Office Square,
Boston, MA 02109
T. Rowe Price Associates, Inc.(7).... 905,900 5.08%
100 E. Pratt Street,
Baltimore, MD 21202
Patrick J. Sullivan(8)............... 258,912 1.45%
Joseph W. Kelly(9)................... 75,728 *
Daniel J. Levangie(10)............... 61,787 *
Ted S. Geiselman(11)................. 51,370 *
A. Suzanne Meszner-Eltrich(12)....... 8,425 *
Sally W. Crawford(13)................ 11,875 *
Franklin J. Iris(14)................. 30,394 *
William G. Little(15)................ 7,875 *
C. William McDaniel(16).............. 23,167 *
Anna S. Richo(17).................... 6,922 *
Monroe E. Trout, M.D.(18)............ 51,409 *
All directors, nominees for director
and executive officers as a group
(11 persons)(19).................... 587,864 3.30%
</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
17,820,040 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 after the Record Date
3
<PAGE>
("presently exercisable stock options") 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/A filed with the Securities and
Exchange Commission by Massachusetts Financial Services Company on
February 11, 1999.
(4) Information obtained from Schedule 13G/A filed with the Securities and
Exchange Commission by FMR Corp. on February 12, 1999. Includes 1,842,500
shares beneficially owned by Fidelity Management & Research Company, a
wholly owned subsidiary of FMR Corp. and an investment adviser registered
under Section 203 of the Investment Advisers Act of 1940, as amended (the
"Investment Advisers Act"). Also includes 260,482 shares beneficially
owned by Fidelity Mangement Trust Company, a wholly owned subisdiary of
FMR Corp. and a bank as defined under the Securities Exchange Act of
1934, as amended. Also includes 23,200 shares owned directly by Edward C.
Johnson III, Chairman of FMR Corp., or in trusts for the benefit of
Edward C. Johnson III or his family members.
(5) Information obtained from Schedule 13G filed with the Securities and
Exchange Commission by Capital Research and Management Company on
February 11, 1999. 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"). Capital Research and Management Company, an
investment adviser registered under the Investment Advisers Act, 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.
(6) Information obtained from Schedule 13G/A filed with the Securities and
Exchange Commission by Putnam Investments, Inc. on February 4, 1999.
Includes 916,000 shares beneficially owned by Putnam Investment
Management, Inc., an investment adviser to the Putnam family of mutual
funds registered under the Investment Advisers Act. Putnam Investment
Management, Inc. is wholly-owned by Putnam Investments, Inc. Also
includes 892,200 shares beneficially held by Putnam Health Sciences
Trust.
(7) Information obtained from Schedule 13G filed with the Securities and
Exchange Commission by T. Rowe Price Associates, Inc. on February 8,
1999. T. Rowe Price Associates, Inc. may be deemed to beneficially own
such shares as a result of acting as investment adviser to the various
individual and institutional investors which own such shares.
(8) Includes 32,145 shares issuable pursuant to presently exercisable stock
options. Excludes 162,565 shares issuable pursuant to stock options that
are not presently exercisable.
(9) Includes 22,188 shares issuable pursuant to presently exercisable stock
options. Excludes 100,812 shares issuable pursuant to stock options that
are not presently exercisable.
(10) Includes 56,597 shares issuable pursuant to presently exercisable stock
options. Excludes 71,930 shares issuable pursuant to stock options that
are not presently exercisable.
(11) Includes 51,370 shares issuable pursuant to presently exercisable stock
options. Excludes 56,776 shares issuable pursuant to stock options that
are not presently exercisable.
(12) Includes 7,125 shares issuable pursuant to presently exercisable stock
options. Excludes 18,875 shares issuable pursuant to stock options that
are not presently exercisable.
(13) Includes 6,250 shares issuable pursuant to presently exercisable stock
options. Also includes the accrued portion of a stock award of 500 shares
granted on January 1, 1999, which accrues monthly in twelve equal
installments over the course of the calendar year. Excludes 8,750 shares
issuable pursuant to stock options which are not presently exercisable.
(14) Includes 22,000 shares issuable pursuant to presently exercisable stock
options. Also includes the accrued portion of a stock award of 500 shares
granted on January 1, 1999, which accrues monthly in twelve equal
installments over the course of the calendar year.
4
<PAGE>
(15) Includes 6,250 shares issuable pursuant to presently exercisable stock
options. Also includes the accrued portion of a stock award of 500 shares
granted on January 1, 1999, which accrues monthly in twelve equal
installments over the course of the calendar year. Excludes 8,750 shares
issuable pursuant to stock options which are not presently exercisable.
(16) Includes 17,000 shares issuable pursuant to presently exercisable stock
options. Also includes the accrued portion of a stock award of 500 shares
granted on January 1, 1999, which accrues monthly in twelve equal
installments over the course of the calendar year.
(17) Includes 6,250 shares issuable pursuant to presently exercisable stock
options. Also includes the accrued portion of a stock award of 500 shares
granted on January 1, 1999, which accrues monthly in twelve equal
installments over the course of the calendar year. Excludes 8,750 shares
issuable pursuant to stock options which are not presently exercisable.
(18) Includes 42,826 shares held by the Trout Family Trust. Also includes
5,416 shares issuable pursuant to presently exercisable stock options.
Also includes the accrued portion of a stock award of 500 shares granted
on January 1, 1999, which accrues monthly in twelve equal installments
over the course of the calendar year.
(19) Includes 232,591 shares issuable pursuant to presently exercisable stock
options.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors is currently fixed at seven (7) members. There are
presently seven (7) individuals serving as Directors of the Company. 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.
Ms. Anna S. Richo and Monroe E. Trout, M.D. are Class III 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 II directors (Messrs. Franklin J. Iris
and William G. Little), whose terms expire upon the election and qualification
of directors at the Annual Meeting of Stockholders to be held in 2001.
Two Class III Directors will be elected at this Annual Meeting of
Stockholders for a term of three years. The Class III nominees, Ms. Anna S.
Richo and Monroe E. Trout, M.D., are each currently serving as Class III
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 2002 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:
Monroe E. Trout, M.D. Director 1999 III
(1993)
Anna S. Richo (1998) Director 1999 III
Continuing Directors:
Sally W. Crawford (1998) Director 2000 I
C. William McDaniel (1987) Director 2000 I
Patrick J. Sullivan (1994) Director 2000 I
Franklin J. Iris (1989) Director 2001 II
William G. Little (1998) Director 2001 II
</TABLE>
OCCUPATIONS OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth for each Class III nominee to be elected at
the Annual Meeting, the current Class I Directors and Class II 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)... 47 President, Chief Executive Officer and Director
Joseph W. Kelly.......... 54 Vice President, International, Chief Financial
Officer and Treasurer
Daniel J. Levangie....... 48 Vice President, Commercial Operations
Ted S. Geiselman......... 43 Vice President, Technical Operations
A. Suzanne Meszner-
Eltrich................. 46 Vice President, Human Resources, General Counsel
and Secretary
Monroe E. Trout,
M.D.(3)................. 67 Chairman of the Board of Directors
Sally W. Crawford(1)(2).. 45 Director
Franklin J. Iris(2)...... 68 Director
William G. Little(1)(3).. 56 Director
C. William
McDaniel(1)(3).......... 58 Director
Anna S. Richo(2)......... 38 Director
</TABLE>
- --------
(1) Member of Compensation Committee.
(2) Member of Audit Committee.
(3) Member of Nominating and Corporate Governance Committee.
6
<PAGE>
Directors to be Elected at the Annual 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. From March 1996 until July 1996, Dr.
Trout served as President and Chief Executive Officer of Cytran Inc. 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 Healthcare Corporation, West Pharmaceutical Services, Inc., the
University of California San Diego Foundation and SAIC.
Anna S. Richo became a director of the Company in January 1998. She is
currently the associate general counsel at Baxter Healthcare Corporation,
Hyland Immuno Division, where she has worked in various legal positions for
the past eight years. Prior to joining Baxter, Ms. Richo was an attorney for
The NutraSweet Company.
Directors Whose Terms Extend Beyond the Meeting
Sally W. Crawford became a director of the Company in January 1998. From
April 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. Since January 1997, Ms. Crawford has been a health
care consultant in New Hampshire. Ms. Crawford serves as a director of
Chittenden Corporation and Medical Resources, Inc.
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 healthcare companies and institutions and is also a director of
two publicly-held companies, Photon Technology International, Inc. and Cistron
Biotechnology, 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 1998. He is
currently the Chairman and Chief Executive Officer of West Pharmaceutical
Services, Incorporated. Prior to joining West, 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.
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.
7
<PAGE>
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 of the
Company. Prior to joining the Company, Mr. Sullivan was employed in several
marketing positions for five years by Abbott Laboratories, a diversified
healthcare 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.
Executive Officers
Joseph W. Kelly joined the Company in November 1995 as Vice President, Chief
Financial Officer, Treasurer and Secretary. Since January 1997, Mr. Kelly has
served as Vice President, International, Chief Financial Officer and
Treasurer. 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,
John 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, and from October 1996 until the end of 1997,
he served as Vice President of Sales. At the close of 1997, Mr. Levangie moved
into the expanded role of Vice President, Commercial Operations. Prior to
joining the Company, from 1975 through 1992, Mr. Levangie held a variety of
sales and marketing positions with Abbott Laboratories, a diversified health
care company. 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, Technical Operations. Mr. Geiselman was the Director of Instrument
Systems/Technology Management at Baxter Diagnostics, a medical diagnostics
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 seven times and acted by unanimous written
consent six times during the fiscal year ended December 31, 1998. The Board of
Directors has a standing Audit Committee, a standing Compensation Committee
and a standing Nominating and Corporate Governance Committee. The Audit
Committee, which oversees the accounting, financial functions and regulatory
affairs of the Company, met three times during 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 three times
and acted by written consent fourteen times during 1998. Messrs. McDaniel and
Little and Ms. Crawford are the current members of the Compensation Committee.
During fiscal 1998, the Nominating Committee was responsible for recommending
to the Board of Directors persons to be nominated for election or appointment
as directors of the Company. The Nominating Committee did not hold any
meetings in fiscal 1998. In December 1998, the scope of authority of the
Nominating Committee was expanded to include the consideration of issues
relating to corporate goverance of the Company, and the name of the Nominating
Committee of the Company was changed to "Nominating and Corporate Goverance
Committee." The Nominating and Corporate Governance Committee did not hold any
meetings in fiscal 1998. Messrs. Little, McDaniel, Sullivan and Dr. Trout are
the current members of the Nominating and Corporate Governance Committee. The
Nominating and Corporate Governance 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, 1998, 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, 1998, 1997 and 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
-------------
Annual Compensation Awards(1)
-------------------- -------------
Securities
Underlying
Options
Name and Principal Position Year Salary($) Bonus($) (# of Shares)
- --------------------------- ---- ---------- --------- -------------
<S> <C> <C> <C> <C>
Patrick J. Sullivan.................... 1998 200,000 100,000 25,000
President and Chief Executive Officer 1997 175,000 115,000 0
1996 157,500 80,000 40,000
Joseph W. Kelly........................ 1998 160,000 35,000 15,000
Vice President, International, 1997 150,000 60,000 0
Chief Financial Officer and Treasurer 1996 140,000 50,000 30,000
Daniel J. Levangie..................... 1998 160,000 32,500 15,000
Vice President of Commercial 1997 150,000 60,000 0
Operations 1996 137,900 40,000 30,000
Ted S. Geiselman....................... 1998 160,000 37,500 15,000
Vice President of Technical Operations 1997 150,000 70,000 0
1996 127,500 50,000 30,000
A. Suzanne Meszner-Eltrich(2).......... 1998 130,000 25,000 10,000
Vice President, Human Resources, 1997 49,573 15,000 16,000
General Counsel and Secretary 1996 0 0 0
</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, 1998,
1997 and 1996.
(2) Ms. Meszner-Eltrich commenced employment with the Company in September
1997.
10
<PAGE>
Option Grants in Last Fiscal Year
The following table sets forth certain information concerning grants of
stock options to the Named Executive Officers during the fiscal year ended
December 31, 1998. The options, which were granted under the Company's 1995
Stock Plan, become exercisable over a four year period, at a rate of 2.084%
per month, until such options are exercisable in full. Options are subject to
the employee's continued employment.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates
Number of Percent of of Stock Price
Securities Total Options Appreciation for
Underlying Granted to Exercise or Option Term(2)
Options Employees in Base Price Expiration ---------------------
Name Granted (#) Fiscal Year ($/Share)(1) Date 5% 10%
---- ----------- ------------- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Patrick J. Sullivan..... 25,000 3.60% $21.88 1/28/08 $ 344,005 $ 871,777
Joseph W. Kelly......... 15,000 2.16% 21.88 1/28/08 206,403 523,066
Daniel J. Levangie...... 15,000 2.16% 21.88 1/28/08 206,403 523,066
Ted S. Geiselman........ 15,000 2.16% 21.88 1/28/08 206,403 523,066
A. Suzanne Meszner-
Eltrich................ 10,000 1.44% 21.88 1/28/08 137,602 348,711
</TABLE>
- --------
(1) The exercise price per share of each option was determined by the Board of
Directors to be equal to the fair market value per share of Common Stock
on the date of grant.
(2) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on assumed rates of stock price appreciation of 5% and 10%
compounded annually from the date the respective options were granted to
their expiration date. These assumptions are not intended to forecast
future appreciation of the Company's stock price. The potential realizable
value computation does not take into account federal or state income tax
consequences of option exercises or sales of appreciated stock. This table
does not take into account any appreciation in the price of the Common
Stock since the date of grant.
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, 1998; (ii) the net
value realized upon such exercise; (iii) the number of unexercised options
outstanding at December 31, 1998; and (iv) the value of unexercised options at
exercise prices equal to or less than the market value of the Common Stock at
December 31, 1998 ("In-the-Money").
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised,
Underlying Unexercised In-the-Money
Shares Options at Options at
Acquired on December 31, 1998 December 31, 1998 ($)(2)
Exercise Value -------------------------- -------------------------
Name (#) Realized ($)(1) Exercisable/Unexercisable Exercisable/Unexercisable
---- ----------- --------------- -------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
Patrick J. Sullivan..... 203,110 $2,699,283 26,729 167,981 $ 46,671 $ 3,294,806
Joseph W. Kelly......... 39,000 585,000 18,438 104,562 13,305 1,858,245
Daniel J. Levangie...... 0 0 51,848 76,679 846,809 1,295,290
Ted S. Geiselman........ 0 0 47,621 60,525 742,115 894,314
A. Suzanne Meszner-
Eltrich................ 0 0 6,292 19,708 8,870 29,830
</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, and do not reflect amounts actually received by the Named
Executive Officers.
(2) Amounts calculated by subtracting the exercise price of the options from
the fair market value of the underlying Common Stock as quoted on The
Nasdaq Stock Market on December 31, 1998 of $25.75 per share, multiplied
by the number of shares underlying the options, and do not reflect amounts
that may be actually received by the Named Executive Officers upon
exercise of options.
11
<PAGE>
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 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 officers of the Company.
During fiscal year 1998, the Compensation Committee was comprised of C.
William McDaniel, Sally Crawford and William G. Little, none of whom was an
employee of the Company. This report addresses the compensation policies
determined by Ms. Crawford and Messrs. McDaniel and Little for fiscal year
1998 as they applied to Mr. Sullivan, in his capacity as President and Chief
Executive Officer of the Company, and other 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 officers and employees to achieve the Company's
strategic objectives, as determined by the Board of Directors.
. To align the interest of officers with the success of the Company.
. To align the interest of 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 officer's cash
compensation contingent upon the achievement of specific predetermined
corporate objectives as well as upon each 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 officer's compensation package for fiscal year 1998 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 officers,
including the Chief Executive Officer, are generally set within the range of
salaries that the Compensation Committee believes are paid to 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 officers are made near the end of each fiscal
year.
Fiscal 1998 base salaries were determined by the Compensation Committee
after considering the base salary level of the officers in prior years, and
taking into account for each officer the amount of base salary as a
12
<PAGE>
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 officer. Base salary levels for each of the
Company's officers, other than the Chief Executive Officer, were also based in
part upon evaluations and recommendations made by the Chief Executive Officer.
Bonus Compensation. Bonus compensation for executives is based on the
Company's achievement of predetermined corporate objectives, 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 officers' interests with those of the
stockholders. In addition, the Compensation Committee believes that equity
ownership by 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 officers to share in any appreciation in the value of the
Company's Common Stock. The Committee generally grants options that become
exercisable 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
outside 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 1998, the Company's
President and Chief Executive Officer, Patrick J. Sullivan, received a base
salary of $200,000, which represents an increase of $25,000 or 14.3% over his
1997 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 $100,000, which was determined based
on corporate performance and the achievement of various milestones in the
Company's growth and development over the fiscal year.
13
<PAGE>
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:
C. William McDaniel
Sally W. Crawford
William G. Little
Compensation of Directors
On April 9, 1998 the Board of Directors adopted the following compensation
plan for non-employee directors:
<TABLE>
<CAPTION>
Per Per
In-person Telephonic
Annual Meeting Meeting
------- --------- ----------
<S> <C> <C> <C>
Board Meetings
Chairman of the Board......................... $20,000 $2,000 $1,000
Directors..................................... $10,000 $1,000 $ 500
Committee Meetings
Committee Chair............................... $ 750 $ 500
Committee Members............................. $ 500 $ 300
</TABLE>
Payments to non-employee directors for meetings attended in person prior to
April 9, 1998 were $1,000 for each meeting of the Board and $500 for each
Committee meeting. The sole employee director of the Company did not receive
separate compensation for services rendered as a director.
Additionally, non-employee directors are eligible to participate in the
Company's 1995 Non-Employee Director Stock Option Plan. In October 1998, the
Board of Directors adopted a Non-Employee Director Deferred Compensation Plan,
under which each non-employee director may elect, with respect to any calendar
year, to receive payment of the annual retainer and meeting attendance fees
for such calendar year either in cash or in shares of the Company's Common
Stock, valued at the fair market value of the Common Stock on the date on
which such amounts become payable. Alternatively, each non-employee director
may elect to defer the payment of the annual retainer and meeting attendance
fees, and such deferred amounts are credited either to a cash account, which
accrues interest quarterly, or to a deferred share account, which is credited
as of the day the deferred fees would have been payable with share units equal
to the number of shares that could have been purchased on such day with the
amount of such deferred fees. Such share units appreciate (or depreciate) as
would an actual share of the Company's Common Stock purchased on the deferral
date. Each non-employee director designates one of the following dates as a
"distribution date" with respect to the deferred fees: (i) the
14
<PAGE>
first day of a month following the termination of service or retirement of the
non-employee director as a member of the Board of Directors, (ii) a fixed date
in the future at least one year after the date such non-employee director
first elects to defer payment of the fees, but no later than December 12,
2005, or (iii) the earlier to occur of (i) or (ii). On such designated
distribution date, cash deferrals will be paid in cash, and share unit
deferrals will be paid in shares of the Company's Common Stock.
15
<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, 1998, 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>
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
3/8/96 12/31/96 12/31/97 12/31/98
------ -------- -------- --------
Cytyc Corp 100 166 153 158
NASDAQ Market Value Index 100 116 142 200
Laboratory Analytical Instruments Index 100 104 124 155
- -----------------------------------------------------------------------------------------------------
</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 Media General Financial Services, Inc., a source believed to
be reliable, but the Company is not responsible for any errors or
omissions in such information.
16
<PAGE>
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, 1999. 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, 1998, the Company believes that all
Reporting Persons complied with Section 16(a) filing requirements in the
period ended December 31, 1998.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 2000 Annual
Meeting of Stockholders must be received no later than the close of business
on December 7, 1999 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.
Under the Company's by-laws, stockholders who wish to make a proposal at the
2000 Annual Meeting of Stockholders, other than one that will be included in
the Company's proxy materials, must notify the Company no earlier than the
close of business on November 7, 1999 and no later than December 7, 1999. If a
stockholder who wishes to present a proposal fails to notify the Company by
December 7, 1999, the stockholder would not be entitled to present the
proposal at the meeting. If, however, notwithstanding the requirements of the
Company's by-laws, the proposal is brought before the annual meeting of
stockholders, then under the proxy rules of the Securities and Exchange
Commission, the proxies solicited by management with respect to the next
annual meeting of stockholders will confer discretionary voting authority with
respect to the stockholder's proposal on the persons selected by management to
vote the proxies. If a stockholder makes a timely notification, the persons
appointed as proxies may still exercise discretionary voting authority under
circumstances consistent with the proxy rules promulgated by the Securities
and Exchange Commission.
17
<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 5, 1999
18
<PAGE>
- --------------------------------------------------------------------------------
PROXY
CYTYC CORPORATION
Proxy For Annual Meeting of Stockholders
May 5, 1999
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, proxy, with full power of substitution, to vote at the
Annual Meeting of Stockholders of the Company to be held on Wednesday, May 5,
1999 at 9:30 A.M. at the Holiday Inn, One Adams Place, Boxborough,
Massachusetts, and at any adjournments thereof, upon matters set forth in the
Notice of Annual Meeting of Stockholders and Proxy Statement dated April 5, 1999
a copy of which has been received by the undersigned. The proxies are further
authorized to vote, in their discretion, upon such other business as may
properly come before the meeting or any adjournments thereof.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Please mark
votes as in this
example.
/X/
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.
1. To elect two directors to Class III 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: Anna S. Richo and Monroe E. Trout, M.D.
---------------------------------------------------------
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, 1999.
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:
---------------- ------ ---------------- ------
- --------------------------------------------------------------------------------
