<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
- --------------------------------------------------------------------------------
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
Cognex 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> 2
[Cognex LOGO]
March 17, 1998
Dear Stockholder:
As you know, Cognex has once again turned in record results; we reported
both record revenues and record net income for the company in 1997. But breaking
records is expected at Cognex. Over the years, your company has consistently
turned in outstanding financial performance. The stock performance chart
included in the Proxy Statement shows that Cognex's stock price has
outperformed, by a wide margin, both the NASDAQ Stock Market and the NASDAQ
Computer and Data Processing Sector over the last five years. Your management
team and all Cognoids worldwide are very proud of what we have accomplished for
our customers and our shareholders.
In order to continue to deliver the outstanding results that you expect
from Cognex, we need your help to ensure that in the future the best and the
brightest will choose Cognex as their employer. Hiring, retaining and motivating
the best people has become increasingly challenging in high-tech companies in
America. As you know, unemployment is at a 20 year low, and in the high-tech
sector it is virtually zero. The competition for educated, motivated employees
has never been more intense and is likely not to ease in the foreseeable future.
We are in a competitive world, and to continue to be successful we must
respond to that competition. Simply put, to hire and retain the best employees,
Cognex must either substantially increase the cash compensation paid to them or
we must continue on our proven successful path of creating employee stockholders
through the granting of stock options. Unlike the immediate dilutive effect on
Earnings Per Share ("EPS") caused by increases in compensation, grants of stock
options have no effect on EPS until our stock increases in value beyond the
option exercise price. No pain unless there is gain!
While it may be true that Cognex has a higher percentage of outstanding
stock options than some companies, it is also true that Cognex has consistently
outperformed our peers. Forty-three successive quarters of profitability.
Average net income of 25% (as a percent of sales) for the last 10 years. 38%
compound growth in both revenue and profits over the last 5 years. We made it
happen, and we will continue to work hard to make it happen in the future. But
we will only be successful in our endeavors if you, the stockholders, continue
to allow me to build and motivate the Cognex team by continuing to grant them
stock options.
What about the dilutive effect of all of these options on EPS? Well, EPS is
calculated by dividing the company's Net Income by the number of shares
outstanding. If there are more shares outstanding . . . and if the earnings stay
the same . . . then, obviously, EPS decreases. But, at Cognex we have
successfully used stock options to motivate our employees to increase earnings!
So any slight increase in the number of shares outstanding
<PAGE> 3
due to stock options has, in the past, been more than compensated for by an
increase in the earnings. The net effect has been an increase in EPS.
In the past, when Cognex needed additional options . . . about every five
years or so . . . we went to the stockholders and asked them to approve
additional shares, and in the past you have agreed. The process of contacting
shareholders is both time consuming and very expensive. In response to this
increasing burden, this year we are proposing a new stock option plan that would
adopt what is termed an "Evergreen Plan." I am requesting your support and vote
in favor of this plan that will provide Cognex with the necessary tools to
maintain and attract the best and brightest employees. Once approved, this plan
will provide that every year on January 1st, there will be a sufficient number
of options in the pool for the coming year. Please read the enclosed description
of the plan which has been recommended, unanimously, for approval by the Board
of Directors.
As Cognex's largest shareholder, you can be sure that I am strongly
motivated to protect shareholders' interests. My goal is the same as
yours . . . to increase shareholder value. Please help to ensure our continued
success by voting YES on Item 4 either in person at the upcoming shareholder
meeting (10:00 a.m. on April 21, 1998 at the Offices of Hutchins, Wheeler &
Dittmar, Suite 3100, 101 Federal Street, Boston, Massachusetts) or by mailing in
the enclosed Proxy card.
Sincerely,
/s/ Robert J. Shillman
Robert J. Shillman
President, Chief Executive Officer,
and Chairman of the Board
<PAGE> 4
COGNEX CORPORATION
NOTICE OF SPECIAL MEETING IN LIEU OF
THE 1998 ANNUAL MEETING OF STOCKHOLDERS
APRIL 21, 1998
To the Stockholders:
A Special Meeting of the Stockholders of COGNEX CORPORATION in lieu of the
1998 Annual Meeting will be held on Tuesday, April 21, 1998, at 10:00 a.m. at
the offices of Hutchins, Wheeler & Dittmar, A Professional Corporation, Suite
3100, 101 Federal Street, Boston, Massachusetts, for the following purposes:
1. To elect Robert J. Shillman to serve as Director for a term of
three years as more fully described in the accompanying Proxy Statement.
2. To elect Anthony Sun to serve as Director for a term of three
years as more fully described in the accompanying Proxy Statement.
3. To approve the Cognex Corporation 1998 Non-Employee Director Stock
Option Plan.
4. To approve the Cognex Corporation 1998 Stock Incentive Plan.
5. To consider and act upon any other business which may properly
come before the meeting.
The Board of Directors has fixed the close of business on March 12, 1998,
as the record date for the meeting. All stockholders of record on that date are
entitled to notice of and to vote at the meeting.
PLEASE COMPLETE AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING IN PERSON.
By order of the Board of Directors
ANTHONY J. MEDAGLIA, JR., Clerk
Natick, Massachusetts
March 17, 1998
<PAGE> 5
COGNEX CORPORATION
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Cognex Corporation (the "Corporation") for
use at the Special Meeting of Stockholders in Lieu of the 1998 Annual Meeting to
be held on Tuesday, April 21, 1998, at the time and place set forth in the
notice of the meeting, and at any adjournments thereof. The approximate date on
which this Proxy Statement and form of proxy are first being sent to
stockholders is March 17, 1998.
If the enclosed proxy is properly executed and returned, it will be voted
in the manner directed by the stockholder. If no instructions are specified with
respect to any particular matter to be acted upon, proxies will be voted in
favor thereof. Any person giving the enclosed form of proxy has the power to
revoke it by voting in person at the meeting, or by giving written notice of
revocation to the Clerk of the Corporation at any time before the proxy is
exercised.
The holders of a majority in interest of all Common Stock issued,
outstanding and entitled to vote are required to be present in person or be
represented by proxy at the meeting in order to constitute a quorum for
transaction of business. The election of the nominees for Director will be
decided by plurality vote. Both abstentions and broker "non-votes" are counted
as present for the purposes of determining the existence of a quorum for the
transaction of business. However, for purposes of determining the number of
shares voting on a particular proposal, abstentions and broker "non-votes" are
not counted as votes cast or shares voting.
The Corporation will bear the cost of the solicitation. It is expected that
the solicitation will be made primarily by mail, but regular employees or
representatives of the Corporation (none of whom will receive any extra
compensation for their activities) may also solicit proxies by telephone,
telegraph and in person and arrange for brokerage houses and other custodians,
nominees and fiduciaries to send proxies and proxy materials to their principals
at the expense of the Corporation.
The Corporation's principal executive offices are located at One Vision
Drive, Natick, Massachusetts 01760, telephone number (508) 650-3000.
RECORD DATE AND VOTING SECURITIES
Only stockholders of record at the close of business on March 12, 1998, are
entitled to notice of and to vote at the meeting. On that date the Corporation
had outstanding and entitled to vote 41,841,119 shares of Common Stock, par
value $.002 per share. Each outstanding share of the Corporation's Common Stock
entitles the record holder to one vote.
ELECTION OF DIRECTORS
Pursuant to Massachusetts law, the Board of Directors is divided into three
classes, with each class as nearly equal in number as possible. One class is
elected each year for a term of three years. It is proposed that the nominees
listed below, whose terms expire at this meeting, be elected to serve a term of
three years and until their successors are duly elected and qualified or until
they sooner die, resign or are removed. The Corporation presently has a Board of
Directors of five members.
The persons named in the accompanying proxy will vote, unless authority is
withheld, for the election of the nominees named below. If such nominees should
become unavailable for election, which is not anticipated, the persons named in
the accompanying proxy will vote for such substitute as the Board of
<PAGE> 6
Directors may recommend. The nominees are not related to any Executive Officer
of the Corporation or its subsidiaries.
<TABLE>
<CAPTION>
YEAR FIRST
ELECTED A POSITION WITH THE CORPORATION OR PRINCIPAL
NAME OF NOMINEE AGE DIRECTOR OCCUPATION DURING THE PAST FIVE YEARS
--------------- --- ---------- ------------------------------------------
<S> <C> <C> <C>
NOMINATED FOR A TERM ENDING IN 2001:
Robert J. Shillman........................ 51 1981 Since 1981, President, Chief Executive
Officer and Chairman of the Board of the
Corporation.
Anthony Sun............................... 45 1982 Since 1979, general partner of Venrock
Associates, a venture capital partnership.
Mr. Sun also serves as a Director of Award
Software International, Inc., Inference
Corp., Worldtalk Communications Corp.,
Komag, Inc., 3Dfx Interactive, Inc., and
several private companies.
SERVING A TERM ENDING IN 2000:
Reuben Wasserman.......................... 68 1990 Since 1985, serves as an independent
business consultant serving corporations
and venture capital firms. Prior to 1985
was Vice President of Strategic Planning
for Gould, Inc. Also, a director of AMR,
Inc., Mitech Corp., FASTech Integration,
Inc., and Pacer Electronics, Inc. and
Executive Advisor to Andover Controls Corp.
and PCT, Inc.
SERVING A TERM ENDING IN 1999:
William Krivsky........................... 68 1985 Since 1994, Principal of Kellogg, Krivsky &
Buttler, Inc. From 1986 to 1994, Executive
Vice President of Bird Corporation, a
manufacturer and distributor of building
materials and products and a provider of
environmental services. Previously, he had
served as CEO of Velcro Industries, N.V.
Mr. Krivsky also serves as a Director of
Hitchiner Manufacturing Corporation.
Jerald Fishman............................ 52 1988 Since 1971, held various management
positions at, and since 1996, President and
Chief Executive Officer of Analog Devices.
Mr. Fishman also serves as a member of the
Board of Directors of Kollmorgen Corp. and
Aware, Inc.
</TABLE>
2
<PAGE> 7
INFORMATION CONCERNING THE BOARD OF DIRECTORS
During fiscal 1997, there were five meetings of the Board of Directors of
the Corporation. All of the Directors attended at least 75% of the aggregate of
(i) the total number of meetings of the Board of Directors and (ii) the total
number of meetings held by committees of the Board of Directors on which they
served. The Board of Directors does not have a nominating committee. Each
non-employee Director received compensation in the amount of $7,000 for the
fiscal year plus an additional $1,500 for each meeting attended. Each non-
employee Director who served on a committee of the Board of Directors in 1997
received an annual fee of $2,000 per committee on which he served. In addition
to such fees, the Corporation paid $1,083 to Mr. Wasserman for payment for
consulting fees.
The Board of Directors has a Compensation/Stock Option Committee whose
members are William Krivsky and Anthony Sun, Chairman. The Compensation/Stock
Option Committee determines the compensation to be paid to key officers of the
Corporation and administers the Corporation's Stock Option Plans. The
Compensation/Stock Option Committee met on a total of five occasions in 1997.
The Corporation also has an Audit Committee whose present members are
Reuben Wasserman and William Krivsky, Chairman. The Audit Committee reviews with
the Corporation's independent auditors the scope of the audit for the year, the
results of the audit when compared and the independent auditor's fee for
services performed. The Audit Committee also recommends independent auditors to
the Board of Directors and reviews with management various matters related to
its internal accounting controls. During fiscal 1997 there were two meetings of
the Audit Committee.
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table shows as of March 1, 1998, any person who is known by
the Corporation to be the beneficial owner of more than five percent of any
class of voting securities of the Corporation. For purposes of this Proxy
Statement, beneficial ownership is defined in accordance with Rule 13d-3 under
the Securities Exchange Act of 1934 and means generally the power to vote or
dispose of the securities, regardless of any economic interest therein.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT OF
OF BENEFICIAL OWNER OWNERSHIP CLASS
------------------- ---------- ----------
<S> <C> <C>
Robert J. Shillman.......................................... 7,123,456(1) 17.0%
Cognex Corporation
One Vision Drive
Natick, MA 01760
J & W Seligman & Co., Inc................................... 4,915,108(2) 11.8%
100 Park Avenue
New York, NY
Pilgrim Baxter & Associates, Ltd............................ 3,522,900(2) 8.4%
825 Duportail Road
Wayne, PA 19087
</TABLE>
- ---------------
(1) Includes 3,000,000 shares held by the Robert J. Shillman 1990 Irrevocable
Trust, and 700 shares held by Mr. Shillman's wife. Mr. Shillman disclaims
beneficial ownership of such shares. Includes also 340,000 shares which Mr.
Shillman has the right to acquire upon the exercise of outstanding options
exercisable currently or within 60 days.
(2) According to Schedule 13G filed for the quarter ended December 31, 1997.
3
<PAGE> 8
SECURITY OWNERSHIP OF DIRECTORS AND OFFICERS
The following information is furnished as of March 1, 1998, with respect to
Common Stock of the Corporation beneficially owned within the meaning of Rule
13d-3 by all Directors of the Corporation and nominees, and by all Directors and
Executive Officers of the Corporation as a group. Unless otherwise indicated,
the individuals named held sole voting and investment power over the shares
listed below.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT OF
NAME OWNERSHIP CLASS
---- ---------- ----------
<S> <C> <C>
Robert J. Shillman.......................................... 7,123,456(1)(2) 17.0%
Anthony Sun................................................. 202,288(1) *
Reuben Wasserman............................................ 24,000(1) *
William Krivsky............................................. 20,694 *
Patrick Alias............................................... 127,929(1) *
John J. Rogers Jr........................................... 132,425(1) *
Glenn Wienkoop.............................................. 33,000(1) *
Jerald Fishman.............................................. 0 *
All Directors and Executive Officers as a group
(8 persons)............................................... 7,663,792(1)(3)
</TABLE>
- ---------------
* Less than 1%.
(1) Includes the following shares which the specified individual has the right
to acquire upon the exercise of outstanding options, exercisable currently
or within 60 days: Mr. Shillman, 340,000 shares; Mr. Sun, 80,000 shares; Mr.
Wasserman, 24,000 shares; Mr. Alias, 124,000 shares; Mr. Rogers, 132,000
shares; and Mr. Wienkoop 32,000 shares.
(2) See Footnote (1) under "Principal Holders of Voting Securities".
(3) Includes 732,000 shares which certain Directors and Executive Officers have
the right to acquire upon the exercise of outstanding options, exercisable
presently or within 60 days.
Notwithstanding anything to the contrary set forth in any of the
Corporation's previous filings under the Securities Act of 1933, as amended, or
the Securities Exchange Act of 1934, as amended, that might incorporate future
filings, including this Proxy Statement, in whole or in part, the following
report and the Performance Graph on page 6 shall not be incorporated by
reference into any such filing.
COMPENSATION/STOCK OPTION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Corporation's executive compensation program is administered by the
Compensation/Stock Option Committee (the "Committee"), which determines
executive officer compensation annually. The Committee is composed of
independent directors who are not employees of the Corporation and its
determinations with respect to compensation for a fiscal year are made at the
beginning of the fiscal year.
In its deliberations, the Committee considers (i) the levels of
responsibility assorted with each executive's position, (ii) the past
performance of the individual executive, (iii) the extent to which any
individual, departmental or Corporation-wide goals have been met, (iv) the
overall competitive environment and the level of compensation necessary to
attract and retain talented and motivated individuals in key positions, and (v)
the recommendations of appropriate officers of the Corporation.
4
<PAGE> 9
The Corporation's compensation program utilizes a combination of base
salaries, annual bonuses and stock option awards.
In determining the base salaries paid to the Corporation's executive
officers for the year ended December 31, 1997, the Committee considered, in
particular, their levels of responsibility, salary increases awarded in the
past, and the executive's experience and potential.
The Committee views annual bonuses as a vehicle for rewarding executives
for meeting performance objectives. The Committee establishes individual and
corporate performance targets each year. Executive officers are eligible to
receive annual cash bonuses upon achievement of such pre-determined performance
targets. The annual bonuses for the fiscal year ended December 31, 1997 reflect
the achievement of predetermined targets related to the Corporation's operating
income, other Company metrics and individual goals.
The Corporation's stock option program is intended to reward the
participating executives for their efforts in building shareholder value and
improving corporate performance over the long term. The stock option program
also promotes the retention of talented executives. In determining the number of
options granted to executive officers, the Committee takes into consideration
options granted to such executives in previous years and the potential value
which may be realized upon exercise of the options as a result of appreciation
of the Corporation's stock during the option term.
In 1993, the Internal Revenue Code was amended to limit the deduction a
public company is permitted for compensation paid in 1994 and thereafter to the
chief executive officer and to the four most highly compensated executive
officers, other than the chief executive officer. Generally, amounts paid in
excess of $1 million to a covered executive, other than performance-based
compensation, cannot be deducted. In order to qualify as performance-based
compensation under the new tax law, certain requirements must be met, including
approval of the performance measures by the stockholders. The Committee intends
to consider ways to maximize deductibility of executive compensation, while
retaining the discretion the Committee considers appropriate to compensate
executive officers at levels commensurate with their responsibilities and
achievements.
COMPENSATION OF ROBERT J. SHILLMAN, PRESIDENT, CHIEF EXECUTIVE OFFICER AND
CHAIRMAN
The Committee established the compensation of Robert J. Shillman, the
President, Chief Executive Officer and Chairman of the Board of Directors of the
Corporation for the fiscal year ended December 31, 1997, using the same criteria
that were used to determine the compensation of other executive officers as
described above. Mr. Shillman's base compensation was increased approximately 1%
in general recognition of his level of responsibility and his individual efforts
for the benefit of the Corporation. Mr. Shillman's annual bonus of $326,570, for
the fiscal year ended December 31, 1997, was based upon the achievement by the
Corporation of pre-determined targets with respect to operating income and is
intended to reward Mr. Shillman for his role in the achievement of that
objective. It should be noted that the Corporation's operating income for the
year ended December 31, 1997 increased 35% over operating income for the year
ended December 31, 1996.
The foregoing report has been approved by all members of the Committee.
COMPENSATION/STOCK OPTION COMMITTEE
Anthony Sun, Chairman
William Krivsky
5
<PAGE> 10
COMPARISON OF FIVE YEAR-CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR COGNEX CORPORATION
<TABLE>
<CAPTION>
NASDAQ
NASDAQ COMPUTER
STOCK AND DATA
MEASUREMENT PERIOD COGNEX MARKET (US PROCESSING
(FISCAL YEAR COVERED) CORPORATION COMPANIES) STOCKS
<S> <C> <C> <C>
12/31/92 100.0 100.0 100.0
12/31/93 149.4 114.8 105.8
12/31/94 260.8 112.2 128.5
12/31/95 703.8 158.7 195.7
12/31/96 374.7 195.2 241.5
12/31/97 551.9 239.5 296.7
</TABLE>
6
<PAGE> 11
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
Messrs. Krivsky and Sun served as members of the Compensation/Stock Option
Committee during fiscal 1997. Mr. Sun served as President of Cognex Technology
and Investment Corporation, a subsidiary of the Corporation, during fiscal 1997.
EXECUTIVE COMPENSATION
The following table sets forth all compensation awarded to, earned by or
paid to the Corporation's Chief Executive Officer and each of the Corporation's
Executive Officers whose total annual salary and bonus exceeded $100,000 for all
services rendered in a11 capacities to the Corporation and its subsidiaries for
the Corporation's three fiscal years ended December 31, 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL AWARDS
COMPENSATION -------------
NAME AND ----------------------------- STOCK OPTIONS ALL OTHER
PRINCIPAL POSITION YEAR SALARY(1) BONUS(1) (SHARES) COMPENSATION(2)
------------------ ---- --------- -------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Robert J. Shillman............... 1997 $197,977 $326,570 0 $ 1,440
President & CEO 1996 196,477 0 0 1,265
1995 188,842 243,812(3) 0 870
Patrick Alias.................... 1997 $194,142 $184,700 0 $ 1,440
Executive Vice President, 1996 191,515 0 0 1,440
Sales and Marketing 1995 183,789 179,814(3) 0 1,111
Glenn Wienkoop................... 1997 $144,615 $ 38,614 290,000 $49,403(5)
Executive Vice President of
Subsidiary Operations
John J. Rogers, Jr............... 1997 $163,354 $160,499 0 $ 328
Chief Financial Officer, 1996 133,152 0 90,000 287
Executive Vice President, 1995 128,077 56,230(3) 100,000(4) 271
Treasurer
</TABLE>
- ---------------
(1) Salary and bonus amounts are presented in the year earned. The payment of
such amounts may have occurred in other years.
(2) Amounts included are for insurance premiums paid by the Corporation for the
benefit of the named Executive Officer.
(3) The 1995 earned bonuses of Mr. Shillman, Mr. Alias, and Mr. Rogers consisted
of cash of $110,000, $76,000, and $45,000, respectively, and a restricted
common stock grant of 5,064, 3,929, and 425 shares, respectively. The
restricted stock award carries a two year restriction period during which
the shares may not be sold or otherwise transferred.
(4) Includes 100,000 options granted that were later revoked and terminated by
the Board of Directors.
(5) Includes transition payments of $48,461 in accordance with an employment
agreement with the Corporation.
7
<PAGE> 12
COGNEX CORPORATION 1993 STOCK OPTION PLAN AND THE
1993 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS AND CLERK
The Cognex Corporation 1993 Stock Option Plan (the "1993 Option Plan") was
adopted by the Board of Directors on December 14, 1993 and by the shareholders
on April 26, 1994, and was amended upon the approval of the Board of Directors
on November 14, 1995 and the shareholders on April 23, 1996. The Cognex 1993
Stock Option Plan for Non-Employee Directors and Clerk (the "1993 Non-Employee
Plan") was adopted by Board of Directors on December 14, 1993 and the
shareholders on April 26, 1994. On December 16, 1997, the 1993 Stock Option
Plan, as amended, and the 1993 Non-Employee Plan were amended by the Board of
Directors to allow for the transferability of certain options to (i) spouses or
children of the optionee or (ii) trusts for the benefit of the optionee or for
the benefit of the optionee, the optionee's children or the optionee's spouse.
Copies of the 1993 Option Plan and the 1993 Non-Employee Plan are available
from the Clerk of the Corporation upon request.
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on option grants in fiscal 1997 to
the named Executive Officers. Pursuant to applicable regulations of the
Securities and Exchange Commission, the following table also sets forth the
hypothetical value which might be realized with respect to such options based on
assumed rates of stock appreciation of 5% and 10% compounded annually from date
of grant to the end of the option terms.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
----------------------------------------- ANNUAL RATES OF
NUMBER OF PERCENTAGE OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM(1)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ---------------
NAME GRANTED FISCAL 1997 (PER SHARE) DATE 5% 10%
- ---- ---------- ------------- ----------- ---------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Glenn Wienkoop.......... 160,000(2) 11.21% $20.25 4/14/07 $2,037,616 $5,163,728
Executive Vice 100,000(3) 7.01% $20.25 4/14/12 $2,184,830 $6,433,930
President of Subsidiary 10,000(4) .70% $20.25 4/14/07 $ 127,351 $ 322,733
Operations 20,000(4) 1.40% $20.25 4/14/07 $ 254,702 $ 645,466
</TABLE>
- ---------------
(1) These values are based on assumed rates of appreciation only. Actual gains,
if any, on shares acquired on option exercises are dependent on the future
performance of the Corporation's Common Stock. There can be no assurance
that the values reflected in this table will be achieved.
(2) Options have a ten year term and vest at the rate of 20% per year over a
five year period commencing one year from the date of grant.
(3) Options have a fifteen year term and vest at the rate of 20% per year over a
five year period commencing five years from the date of grant.
(4) Options have a ten year term and vest according to performance metrics set
by the Corporation.
8
<PAGE> 13
AGGREGATED OPTION EXERCISES IN LAST
FISCAL YEAR AND 12/31/97 OPTION VALUES
The following table provides information on option exercises and on the
value of the named Executive Officers' unexercised options at December 31, 1997.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT 12/31/97 OPTIONS AT 12/31/97(1)
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Shillman.......... 100,000 $2,179,950 212,000 428,000 $4,355,000 $8,495,000
President & CEO
Patrick Alias............... 76,000 $2,138,202 108,000 336,000 $2,233,740 $6,660,000
Executive Vice President,
Sales and Marketing
Glenn Wienkoop.............. 0 $ 0 0 290,000 $ 0 $2,030,000
Executive Vice President of
Subsidiary Operations
John J. Rogers, Jr.......... 50,000 $1,430,761 92,000 303,000 $1,457,180 $5,418,850
Chief Financial Officer,
Executive Vice President,
Treasurer
</TABLE>
- ---------------
(1) Value of unexercised stock options represents difference between the
exercise prices of the stock options and the closing price of the
Corporation's Common Stock on NASDAQ National Market System on December 31,
1997.
(2) Value realized on exercise represents difference between the exercise prices
of the stock options and the trading price of the Corporation's Common Stock
on NASDAQ National Market System on the date of exercise.
APPROVAL OF 1998 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
There will be presented at the meeting a proposal to approve the Cognex
Corporation 1998 Non-Employee Director Stock Option Plan (the "1998 Non-Employee
Plan") which was adopted by the Board of Directors on February 28, 1998. The
1998 Non-Employee Plan is intended to attract and retain the services of
experienced and knowledgeable independent Directors who are not employees of the
Corporation through continuing ownership of its Common Stock. Under NASDAQ
regulations, any plan for over 25,000 shares, any of which may be granted to a
Director, is to be approved by the stockholders.
The Board of Directors recommends that the stockholders approve the 1998
Non-Employee Plan. The affirmative vote of the holders of at least a majority of
a quorum of the Corporation's Common Stock voting in person or by proxy at the
meeting will be required for such approval. Set forth below is a summary of the
principal provisions of the 1998 Non-Employee Plan. A copy of the entire Plan is
available from the Clerk of the Corporation upon request.
Terms and Provisions of Options. The 1998 Non-Employee Plan provides for
the grant of non-qualified options not intended to meet the requirements of
Section 422 of the Code for the purchase of the Corporation's Common Stock by
each of the current non-employee Directors of the Corporation and by each other
person who is duly elected as a non-employee Director of the Corporation
subjected to availability of shares under the 1998 Non-Employee Plan. The
maximum number of shares for which options may be granted under the 1998
Non-Employee Plan is 250,000 shares, subject to adjustment for capital changes.
The exercise price for options granted under the 1998 Non-Employee Plan to the
four current non-employee
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<PAGE> 14
directors of the Corporation is $23.75 per share. The exercise price for options
granted to any subsequently elected non-employee director under the 1998
Non-Employee Plan shall be the mean between the high and low sales prices of the
Corporation's Common Stock on the NASDAQ National Market System as reported in
the Wall Street Journal on the date of the grant for the immediately preceding
business day, provided that if the Common Stock is not the listed on the NASDAQ
National Market System, the exercise price shall be the fair market value as
determined by the Board of Directors.
The options shall not be exercisable prior to the vesting date of such
options. Options granted to Messrs. Krivsky, Sun and Wasserman shall be
exercisable on December 14, 2000 with respect to 10,000 of the shares. The
remaining shares shall be exercisable on each of the following three anniversary
dates thereafter, with an additional 10,000 shares vesting on each such
anniversary. Options granted to Mr. Fishman shall be exercisable with respect to
10,000 shares on each of January 26, 2004 and January 26, 2005.
Options granted under the 1998 Non-Employee Plan generally are not
assignable or transferable by the optionee other than by will or by the laws of
descent and distribution or pursuant to a qualified domestic relations order,
except that an optionee may transfer options granted under the 1998 Non-Employee
Plan to the optionee's spouse or children or to a trust for the benefit of the
optionee or the optionee's spouse or children.
The exercise price of options granted thereunder must be paid in full upon
exercise. Payment may be made in cash or shares of the Common Stock of the
Corporation already owned for a period of six months by the person exercising
such option, or in some combination thereof.
In the event of the death of an optionee, the option granted to such
optionee may be exercised, to the extent the optionee was entitled to do so on
the date of such optionee's death by the estate of such optionee or by any
person or persons who acquired the right to exercise such option by bequest or
inheritance or otherwise by reason of the death of such optionee. Such option
may be exercised at any time within one (1) year after the date of death of such
optionee, at which time the option shall terminate, or prior to the date on
which the option otherwise expires by its terms, whichever is earlier.
If the optionee ceases to be a director of the Corporation because the
optionee has become permanently disabled, the option granted to such optionee
may be exercised by the optionee, to the extent the optionee was entitled to do
so on the date such optionee ceases to be a director. Such option may be
exercised at any time within six months after the date the optionee ceases to be
a director, at which time the option shall terminate, or prior to the date on
which the option otherwise expires by its terms, whichever is earlier.
The 1998 Non-Employee Plan provides that the number of shares issuable
thereunder shall be adjusted to prevent dilution in the event of any
reorganization, merger, consolidation, recapitalization, reclassification, stock
split-up, combination of shares or stock dividend.
The 1998 Non-Employee Plan will terminate ten years from the date upon
which it is approved by the stockholders, but the Board of Directors may at any
time terminate, modify or amend the Plan as it deems advisable.
Change of Control. In the event the Corporation undergoes a change of
control (as defined in the plan) the 1998 Non-Employee Plan provides for
acceleration of the options upon such change of control.
Under the terms of the 1998 Non-Employee Plan, each of the existing
non-employee directors were granted options. Options to purchase 20,000 shares
of the Corporation's Common Stock were granted to Mr. Fishman at an exercise
price of $23.75. Options to purchase 40,000 shares of the Corporation's Common
Stock were granted to each of Messrs. Krivsky, Sun and Wasserman at an exercise
price of $23.75 per share.
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Mr. Fishman was previously granted 40,000 shares under the 1993 Non-Employee
Plan, coinciding with his appointment to the Board of Directors.
APPROVAL OF COGNEX CORPORATION 1998 STOCK INCENTIVE PLAN
There will be presented at the meeting a proposal to approve the Cognex
Corporation 1998 Stock Incentive Plan (the "1998 Incentive Plan"), which was
adopted by the Corporation's Board of Directors on March 9, 1998. The Board of
Directors recommends that the Stockholders approve the 1998 Incentive Plan. The
affirmative vote of the holders of at least a majority of a quorum of the voting
stock of the Corporation voting in person or by proxy at the meeting will be
required for such approval. Set forth below is a summary of the principal
provisions of the 1998 Incentive Plan. A copy of the entire plan is available
from the Clerk of the Corporation upon request.
The 1998 Incentive Plan permits the grant of stock options, which may be
either incentive stock options meeting the requirements of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code") or nonqualified options
which are not intended to meet the requirements of the Code, and stock awards.
The maximum number of the shares of the Corporation's Common Stock available for
stock options and stock awards granted under the 1998 Incentive Plan through
December 31, 1998 is 1,700,000 shares of Common Stock. In addition, effective
January 1, 1999 and each January 1 thereafter during the term of the 1998
Incentive Plan, the number of shares of Common Stock available for grants of
stock options and stock awards made after such January 1 shall be increased
automatically to an amount equal to 4.5% of the total number of issued and
outstanding shares of Common Stock (including shares held in treasury) as of the
close of business on December 31 of the preceding year. Effective January 1,
1999 and effective on each succeeding January 1 thereafter during the term of
the 1998 Incentive Plan, the Board of Directors shall reserve for issuance
thereunder such number of shares of Common Stock as is equal to the sum of (i)
the number of shares of Common Stock issuable upon the exercise of options then
outstanding under the 1998 Incentive Plan; and (ii) the number of shares of
Common Stock resulting from the calculation described in the previous sentence.
Nevertheless, the maximum cumulative number of shares of Common Stock available
for grants of incentive stock options under the 1998 Incentive Plan shall be
1,500,000 shares. The maximum number of shares of Common Stock available for
grants is subject to adjustment for capital changes. Shares issued under the
1998 Incentive Plan may be authorized but unissued shares of Common Stock or
shares of Common Stock held in treasury. To the extent that any stock option
lapses, terminates, expires or otherwise is canceled without the issuance of
shares of Common Stock, or any stock award is settled in cash, the shares of
Common Stock covered by such option or award shall again be available for the
granting of stock options or awards under the 1998 Incentive Plan.
Following approval of the 1998 Incentive Plan by the stockholders, no
further options will be granted under the Corporation's 1993 Stock Option Plan.
Administration. At the discretion of the Corporation's Board of Directors,
the 1998 Incentive Plan is administered either (i) by the full Board of
Directors of the Corporation or (ii) by a Committee (the "Committee") consisting
of two or more members of the Corporation's Board of Directors. The Present
members of the Committee are Anthony Sun and William Krivsky. If the Board
administers the 1998 Incentive Plan, references to the Committee include the
Board. The Committee has the authority to adopt, amend and rescind such rules
and regulations as, in its opinion, may be advisable in the administration of
the 1998 Incentive Plan.
Termination and Amendment. Unless sooner terminated, the 1998 Incentive
Plan shall terminate ten years from March 9, 1998, the date upon which it was
adopted by the Board of Directors of the Corporation. The Board of Directors may
at any time terminate the 1998 Incentive Plan or make such modification or
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<PAGE> 16
amendment thereof as it deems advisable; provided however that the Board of
Directors may not, without the approval of the shareholders of the Corporation,
increase the maximum number of shares for which options may be granted or change
the designation of the class of persons eligible to receive options under the
1998 Incentive Plan. The Committee may terminate, amend or modify any
outstanding option without the consent of the option holder, provided however
that without the consent of the optionee, the Committee shall not change the
number of shares subject to an option, nor the exercise price thereof, nor
extend the term of such option.
Eligibility to Participate. Options designated as incentive stock options
may be granted only to employees of the Corporation or any subsidiary.
Non-qualified options may be granted to any officer, employee, consultant or
director of the Corporation or any of its subsidiaries. No option designated as
an incentive stock option shall be granted to any employee of the Corporation or
any subsidiary if such employee owns, immediately prior to the grant of an
option, stock representing more than 10% of the combined voting power of all
classes of stock of the Corporation or a parent or a subsidiary, unless the
purchase price for the stock under such option is at least 110% of its fair
market value at the time the option is granted and the option, by its terms is
not exercisable more than 5 years from the date it is granted.
The maximum number of shares of the Corporation's Common Stock with respect
to which an option or options may be granted to any employee in any calendar
year shall not exceed 500,000 shares, taking into account shares subject to
options granted and terminated, or repriced, during such calendar year.
Terms and Provisions of Options. Options granted under the 1998 Incentive
Plan are exercisable at such times and during such period as is set forth in the
option agreement, but no incentive stock option granted under the 1998 Incentive
Plan can have a term in excess of 10 years from the date of grant, and no non-
qualified stock option granted under the 1998 Incentive Plan can have a term in
excess of 15 years from the date of grant. The option agreement may contain such
provisions and conditions as may be determined by the Committee. The option
exercise price for options designated as non-qualified stock options granted
under the 1998 Incentive Plan is determined by the Committee. The option
exercise price for incentive stock options granted under the 1998 Incentive Plan
shall be no less than fair market value of the Common Stock of the Corporation
at the time the option is granted. Options granted under the 1998 Incentive Plan
may provide for the payment of the exercise price by delivery of cash or shares
of Common Stock of the Corporation owned by the optionee having a fair market
value equal in amount to the exercise price of the options being exercised, or
any combination thereof, provided however that the payment of the exercise price
by delivery of shares of Common Stock of the Corporation owned by the optionee
may be made only if the payment does not result in a charge to earnings for
financial accounting purposes, as determined by the Committee.
The right of any optionee to exercise an option granted to him or her shall
not be assignable or transferable by the optionee otherwise and by will or the
laws of descent and distribution, except that an optionee may transfer options
that are not incentive stock options to the optionee's spouse or children or to
a trust for the benefit of the optionee or the optionee's spouse or children.
Incentive stock options are exercisable during the lifetime of the optionee only
by the optionee. Any option granted under the 1998 Incentive Plan is null and
void and without effect upon the bankruptcy of the optionee to whom the option
is granted, or upon any attempted assignment or transfer, except as otherwise
provided in the 1998 Incentive Plan.
An option granted to any employee optionee who ceases to be an employee of
the Corporation or one of its subsidiaries shall terminate on the seventh
business day after the date such optionee ceases to be an employee of the
Corporation or one of its subsidiaries. If such termination of employment is
because of dismissal for cause or because the employee is in breach of any
employment agreement, such an option will terminate immediately on the date the
optionee ceases to be an employee of the Corporation or one of its subsidiaries.
If such termination of employment is because the optionee has become permanently
disabled, the
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<PAGE> 17
option shall terminate on the last day of the twelfth month from the date such
optionee ceases to be an employee. In the event of the death of the optionee,
the option shall terminate on the last day of the twelfth month from the date of
death. In no event shall an option be exercisable after the date upon which it
expires by its terms. The Committee has the authority to extend the expiration
date of any outstanding option in circumstances in which it deems such action to
be appropriate, provided that no such extension shall extend the term of an
option beyond the date on which the option would have expired if no termination
of the optionee's employment had occurred.
An option granted to an employee optionee who ceases to be an employee of
the Corporation or one of its subsidiaries shall be exercisable only to the
extent that the right to purchase shares under such option has accrued and is in
effect on the date such optionee ceases to be an employee of the Corporation or
one of its subsidiaries. In the event of the death of any optionee, the option
granted to such optionee may be exercised by the estate of such optionee, or by
any person or persons who acquired the right to exercise such option by bequest
or inheritance or by reason of the death of such optionee.
Recapitalization; Reorganization; Change of Control. The 1998 Incentive
Plan provides that the number and kind of shares as to which options or stock
awards may be granted thereunder and as to which outstanding options or awards
then unexercised shall be exercisable shall be adjusted to prevent dilution in
the event of any reorganization, merger, consolidation, recapitalization,
reclassification, stock split-up, combination of shares or dividends payable in
capital stock. In addition, unless otherwise determined by the Committee in its
sole discretion, in the case of any sale or conveyance to another entity of all
or substantially all of the property and assets of the Corporation or a Change
of Control as defined in the 1998 Incentive Plan, the purchaser of the
Corporation's assets or stock may deliver to the optionee the same kind of
consideration that is delivered to the shareholders of the Corporation as a
result of the sale, conveyance or Change of Control or the Committee may cancel
all outstanding options in exchange for consideration in cash or in kind, which
consideration shall be equal in value to the value of those shares of stock or
other securities the optionee would have received had the option been exercised
(to the extent then exercisable) and no disposition of the shares acquired upon
such exercise been made prior to such sale, conveyance or Change of Control,
less the option price therefor.
The Committee shall also have the power to accelerate the exercisability of
any options, notwithstanding any limitations in the 1998 Incentive Plan or in
the option agreement, upon such a sale, conveyance or Change of Control (as
defined in the Plan). Upon such a sale, conveyance or a Change of Control the
Committee may, in its sole discretion, amend any award agreement issued under
the 1998 Incentive Plan in such manner as it deems appropriate, including
without limitation, by amendments that advance the dates upon which any or all
outstanding awards shall become free of restrictions or shall become issued or
payable, or that advance the dates upon which any or all outstanding awards
shall terminate.
Upon dissolution or liquidation of the Corporation, all options granted
under the 1998 Incentive Plan shall terminate, but each optionee shall have the
right, immediately prior to such dissolution or liquidation, to exercise his or
her option to the extent then exercisable. The Committee shall have the right to
accelerate the vesting of any award or take such other action with respect
thereto as the Committee shall in its sole discretion determine in the event of
any contemplated dissolution or liquidation of the Corporation.
Stock Awards. The Committee may grant, subject to the limitation on the
number of shares of Common Stock available under the plan, stock awards to
employees of and other key individuals engaged to provide services to the
Corporation and its subsidiaries. A stock award may be made in stock or
denominated in stock subject to final settlement in cash or stock. Each stock
award granted will be subject to such terms and conditions as the Committee, in
its sole discretion, shall determine and establish.
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<PAGE> 18
The high and low sales prices of the Corporation's Common Stock on the
Nasdaq National Market on March 12, 1998 were $22.25 and $21.75, respectively.
TAX EFFECTS OF PLAN PARTICIPATION
Options granted under the 1998 Incentive Plan are intended to be either
incentive stock options, as defined in Section 422 of the Code, or non-qualified
stock options. Options under the 1998 Non-Employee Plan are intended to be
non-qualified stock options.
Incentive Stock Options. Except as provided below with respect to the
alternative minimum tax, the optionee will not recognize taxable income upon the
grant or exercise of an incentive stock option. In addition, if the optionee
holds the shares received pursuant to the exercise of the option for more than
one year after the date of transfer and for more than two years after the option
is granted, the optionee will recognize long-term capital gain or loss upon the
disposition of the stock measured by the difference between the option exercise
price and the amount received for such shares upon disposition.
In the event that the optionee disposes of the stock prior to the
expiration of the required holding periods (a "disqualifying disposition"), the
optionee generally will realize ordinary income to the extent of the lesser of
(i) the fair market value of the stock at the time of exercise over the exercise
price, or (ii) the amount received for the stock upon disposition over the
exercise price. The basis in the stock acquired upon exercise of the option in
such event will equal the amount of income recognized by the optionee plus the
option exercise price. Upon eventual disposition of the stock, the optionee will
recognize long-term or short-term capital gain or loss, depending on the holding
period of the stock and the difference between the amount realized by the
optionee upon disposition of the stock and his basis in the stock.
For alternative minimum tax purposes, generally, the excess of the fair
market value of stock on the date of the exercise of the incentive stock option
over the exercise price of the option is included in alternative minimum taxable
income for alternative minimum tax purposes. If the alternative minimum tax does
apply to the optionee, an alternative minimum tax credit may reduce the regular
tax of the optionee on future income including gain upon eventual disposition of
the stock.
The Corporation will not be allowed an income tax deduction upon the grant
or exercise of an incentive stock option. Upon a disqualifying disposition by
the optionee of shares acquired upon exercise of the incentive stock option, the
Corporation will be allowed a deduction in an amount equal to the ordinary
income recognized by the optionee.
Under proposed regulations issued by the Internal Revenue Service, the
exercise of an option with previously acquired stock of the Corporation will be
treated as, in effect, two separate transactions. Pursuant to Section 1036 of
the Code, the first transaction will be a tax-free exchange of the previously
acquired shares for the same number of new shares. The new shares will retain
the basis and, except, as provided below, the holding periods of the previously
acquired shares. The second transaction will be the issuance of additional new
shares having a value equal to the difference between the aggregate fair market
value of all of the new shares being acquired and the aggregate option exercise
price for those shares. Because the exercise of an incentive stock option does
not result in the recognition by the optionee of income, this issuance will also
be tax-free (unless the alternative minimum tax applies, as described above).
The optionee's basis in these additional shares will be zero and the optionee's
holding period for these shares will commence on the date on which the shares
are transferred. For purposes of the one and two-year holding period
requirements which must be met for favorable incentive stock option tax
treatment to apply, the holding periods of previously acquired shares are
disregarded.
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<PAGE> 19
Non-Qualified Stock Options. As in the case of incentive stock options, no
income is recognized by the optionee on the grant of a non-qualified stock
option. On the exercise by an optionee of a non-qualified option, generally the
excess of the fair market value of the stock when the option is exercised over
its cost to the optionee will be (a) taxable to the optionee as ordinary income
and (b) generally deductible for income tax purposes by the Corporation.
The Internal Revenue Service will treat the exercise of a non-qualified
stock option with already owned stock of the Corporation as two transactions.
First, there will be a tax-free exchange of the old shares for a like amount of
new shares under Section 1036 of the Code, with the new shares retaining the
basis and holding periods of the old shares. Second, the issuance of additional
new shares (representing the spread between the fair market value of all the new
shares and the option price) is taxable to the employee as ordinary income under
Section 83 of the Code, as is the case with any non-qualified option. The new
shares will have a basis equal to the spread between the fair market value of
the new shares and the option price.
The optionee's tax basis in his stock will equal his cost for the stock
plus the amount of ordinary income he had to recognize with respect to the
non-qualified stock option. Accordingly, upon a subsequent disposition of stock
acquired upon the exercise of a non-qualified option, the optionee will
recognize short-term or long-term capital gain or loss, depending upon the
holding period of the stock equal to the difference between the amount realized
upon disposition of the stock by the optionee and his basis in the stock.
Stock Awards. An employee who receives an award of stock that is not
subject to a substantial risk of forfeiture will recognize ordinary income on
the award date in an amount equal to the fair market value of the stock on the
award date less the purchase price, if any, paid for such stock. If the stock is
subject to a substantial risk of forfeiture, the employee will recognize
ordinary income on the date such forfeiture restriction lapses in an amount
equal to the fair market value of stock on that date less the purchase price, if
any, paid for such stock, unless the employee makes a so-called Section 83(b)
election. If a Section 83(b) election is made, the employee will recognize
ordinary income on the award date in an amount equal to the fair market value of
the stock on the award date less the purchase price, if any, paid for such
stock. Income tax withholding will be required by the Corporation with respect
to income recognized by the employee. The employee's basis in a stock award will
include the cost of such stock, if any, increased by the amount of income
recognized by the employee. Upon eventual sale of the stock, the employee will
recognize capital gain or loss, as the case may be, measured by the difference
between the amount realized on the sale and the employee's basis in the stock.
The Corporation will be allowed a deduction in an amount equal to the
income recognized by the employee. The deduction will be allowed in the
Corporation's tax year in which the date that the employee recognized such
income occurs.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Coopers & Lybrand, L.L.P. as
independent auditors to examine the consolidated financial statements of the
Corporation and its subsidiaries for the fiscal year ended December 31, 1998.
A representative of Coopers & Lybrand, L.L.P. is expected to be present at
the meeting and will have the opportunity to make a statement if he or she so
desires and to respond to appropriate questions. The engagement of Coopers &
Lybrand, L.L.P. was approved by the Board of Directors at the recommendation of
the Audit Committee of the Board of Directors.
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<PAGE> 20
COMPLIANCE WITH SECTION 16(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's officers and Directors and persons owning more than 10% of the
outstanding Common Stock of the Corporation to file reports of ownership and
changes in ownership with the Securities and Exchange Commission. Officers,
Directors and greater than 10% holders of Common Stock are required by SEC
regulation to furnish the Corporation with copies of all Section 16(a) forms
they file.
Based solely on copies of such forms furnished as provided above, or
written representations that no Forms 5 were required, the Corporation believes
that during the year ended December 31, 1997, all Section 16(a) filing
requirements applicable to its officers, Directors and owners of greater than
10% of its Common Stock were complied with.
DEADLINES FOR SUBMISSION OF STOCKHOLDER PROPOSALS
Under regulations adopted by the Securities and Exchange Commission, any
proposal submitted for inclusion in the Corporation's Proxy Statement relating
to the Annual Meeting of Stockholders to be held in 1999 must be received at the
Corporation's principal executive offices in Natick, Massachusetts on or before
November 27, 1998. Receipt by the Corporation of any such proposal from a
qualified stockholder in a timely manner will not ensure its inclusion in the
proxy material because there are other requirements in the proxy rules for such
inclusion.
In addition to the Securities and Exchange Commission requirements
regarding stockholder proposal, the Corporation's By-Laws contain provisions
regarding matters to be brought before stockholder meetings. If stockholder
proposals, including proposals regarding the election of Director, are to be
considered at the 1999 Annual Meeting, notice of them whether or not they are
included in the Corporation's proxy statement and form of proxy, must be given
by personal delivery or by United States mail, postage prepaid, to the Clerk of
the Corporation on or before February 12, 1999.
OTHER MATTERS
Management knows of no matters which may properly be and are likely to be
brought before the meeting other than the matters discussed herein. However, if
any other matters properly come before the meeting, the persons named in the
enclosed proxy will vote in accordance with their best judgment.
The cost of this solicitation will be borne by the Corporation. It is
expected that the solicitation will be made primarily by mail, but regular
employees or representatives of the Corporation (none of whom will receive any
extra compensation for their activities) may also solicit proxies by telephone,
telegraph and in person and arrange for brokerage houses and other custodians,
nominees and fiduciaries to send proxies and proxy material to their principals
at the expense of the Corporation.
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<PAGE> 21
10-K REPORT
THE CORPORATION WILL PROVIDE EACH BENEFICIAL OWNER OF ITS SECURITIES WITH A
COPY OF AN ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND
SCHEDULES THERETO, REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION FOR THE CORPORATION'S MOST RECENT FISCAL YEAR, WITHOUT CHARGE, UPON
RECEIPT OF A WRITTEN REQUEST FROM SUCH PERSON. SUCH REQUEST SHOULD BE SENT TO
JOHN J. ROGERS, JR., COGNEX CORPORATION, ONE VISION DRIVE, NATICK, MASSACHUSETTS
01760.
VOTING PROXIES
The Board of Directors recommends an affirmative vote on all proposal
specified. Proxies will be voted as specified. If signed proxies are returned
without specifying an affirmative or negative vote on any proposal, the shares
represented by such proxies will be voted in favor of the Board of Directors'
recommendations.
By order of the Board of Directors
ANTHONY J. MEDAGLIA, JR., Clerk
Natick, Massachusetts
March 17, 1998
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SKU# 1012-PS-98
<PAGE> 23
DETACH HERE
PROXY
COGNEX CORPORATION
SPECIAL MEETING IN LIEU OF
1998 ANNUAL MEETING OF STOCKHOLDERS
APRIL 21, 1998
The undersigned hereby appoints Robert J. Shillman and Anthony J. Medaglia, Jr.,
and each of them, with full power of substitution, proxies to represent the
undersigned at a Special Meeting in Lieu of the 1998 Annual Meeting of
Stockholders of COGNEX CORPORATION to be held April 21, 1998 at 10:00 a.m. at
the offices of Hutchins, Wheeler & Dittmar, A Professional Corporation, 101
Federal Street, Suite 3100, Boston, Massachusetts, and at any adjournment or
adjournments thereof, to vote in the name and place of the undersigned, with all
powers which the undersigned would possess if personally present, all of the
shares of COGNEX CORPORATION standing in the name of the undersigned upon such
business as may properly come before the meeting, including the following as set
forth on the reverse side.
- ----------- -----------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- ----------- -----------
<PAGE> 24
/X/ PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THE BOARD
RECOMMENDS AN AFFIRMATIVE VOTE ON ALL PROPOSALS SPECIFIED, SHARES WILL BE VOTED
AS SPECIFIED. IF NO SPECIFICATION IS MADE, THE SHARES REPRESENTED WILL BE VOTED
FOR THE ELECTION OF DIRECTORS AS SET FORTH IN THE PROXY STATEMENT AND FOR
PROPOSALS 3 AND 4.
FOR WITHHELD
1. Election of Director. / / / /
NOMINEE:
Robert J. Shillman
MARK HERE IF / /
YOU PLAN TO
ATTEND THE
MEETING
FOR WITHHELD
2. Election of Director. / / / / MARK HERE IF / /
NOMINEE: YOU PLAN TO
Anthony Sun ATTEND THE
MEETING
FOR AGAINST ABSTAIN
3. Approval of Cognex Corporation / / / / / /
1998 Non-Employee Director Stock
Option Plan.
FOR AGAINST ABSTAIN
4. Approval of Cognex Corporation / / / / / /
1998 Stock Incentive Plan.
5. In their discretion, the proxies are authorized to vote upon
such other business as may properly come before the meeting.
PLEASE DATE AND SIGN THIS PROXY IN THE SPACE PROVIDED AND RETURN
IT IN THE ENCLOSED ENVELOPE WHETHER OR NOT YOU EXPECT TO ATTEND
THE MEETING IN PERSON.
Please sign exactly as your name(s) appear(s) on the Proxy.
When shares are held by joint tenants, both should sign. When
signing as attorney, executor, administrator, trustee or guardian,
please give full title as such. If a corporation, please sign in full
corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Signature:___________________Date:_______ Signature:_______________Date:________
