<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 [_] 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 Section 240.14a-11(c) or Section
240.14a-12
Laser Power 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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[_] 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.
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Notes:
<PAGE>
Laser Power Corporation
12777 High Bluff Drive
San Diego, California 92130
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 25, 2000
TO THE STOCKHOLDERS OF LASER POWER CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Laser
Power Corporation, a Delaware corporation (the "Company"), will be held on
Friday, February 25, 2000 at 9:00 a.m. local time at the Doubletree Hotel
located at 11915 El Camino Real, San Diego, California for the following
purposes:
1. To elect directors to hold office until the 2001 Annual Meeting of
Stockholders.
2. To ratify the selection of Ernst & Young LLP as independent auditors
of the Company for its fiscal year ending September 30, 2000.
3. To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on January 24, 2000,
as the record date for the determination of stockholders entitled to notice of
and to vote at this Annual Meeting and at any adjournment or postponement
thereof.
By Order of the Board of Directors
/s/ PAUL P. WICKMAN
Paul P. Wickman
Secretary
San Diego, California
January 28, 2000
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE TO ENSURE YOUR REPRESENTATION
AT THE MEETING. A RETURN ENVELOPE, WHICH IS POSTAGE PREPAID IF MAILED IN THE
UNITED STATES, IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE GIVEN YOUR PROXY,
YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE NOTE, HOWEVER,
THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER NOMINEE AND
YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD HOLDER A PROXY
ISSUED IN YOUR NAME.
<PAGE>
LASER POWER CORPORATION
12777 High Bluff Drive
San Diego, California 92130
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
February 25, 2000
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed proxy is solicited on behalf of the Board of Directors of
Laser Power Corporation, a Delaware corporation (the "Company"), for use at the
Annual Meeting of Stockholders to be held on Friday, February 25, 2000, at 9:00
a.m. local time (the "Annual Meeting"), or at any adjournment or postponement
thereof, for the purposes set forth herein and in the accompanying Notice of
Annual Meeting. The Annual Meeting will be held at the Doubletree Hotel located
at 11915 El Camino Real, San Diego, California. The Company intends to mail this
proxy statement and accompanying proxy card on or about January 28, 2000, to all
stockholders entitled to vote at the Annual Meeting.
Solicitation
The Company will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the proxy
and any additional information furnished to stockholders. Copies of
solicitation materials will be furnished to banks, brokerage houses, fiduciaries
and custodians holding in their names shares of Common Stock beneficially owned
by others to forward to such beneficial owners. The Company may reimburse
persons representing beneficial owners of Common Stock for their costs of
forwarding solicitation materials to such beneficial owners. Original
solicitation of proxies by mail may be supplemented by telephone, telegram or
personal solicitation by directors, officers or other regular employees of the
Company. No additional compensation will be paid to directors, officers or
other regular employees for such services.
Voting Rights and Outstanding Shares
Only holders of record of Common Stock at the close of business on January
24, 2000 will be entitled to notice of and to vote at the Annual Meeting. At the
close of business on January 24, 2000, the Company had outstanding and entitled
to vote 8,644,917 shares of Common Stock.
Each holder of record of Common Stock on such date will be entitled to one
vote for each share held on all matters to be voted upon at the Annual Meeting.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards a
quorum but are not counted for any purpose in determining whether a matter has
been approved.
Revocability of Proxies
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive office, 12777 High
Bluff Drive, San Diego, California 92130, a written notice of revocation or a
duly executed proxy bearing a later date, or it may be revoked by attending the
meeting and voting in person. Attendance at the meeting will not, by itself,
revoke a proxy.
<PAGE>
Stockholder Proposals
Proposals of stockholders that are intended to be presented at the
Company's 2001 Annual Meeting of Stockholders must be received by the Company
not later than September 30, 2000 in order to be included in the proxy statement
and proxy relating to that annual meeting. Stockholders who wish to submit
proposals to be presented at an annual meeting are also advised to review the
Company's Bylaws, which contain additional requirements with respect to advance
notice of stockholder proposals and director nominations.
Unless a stockholder who wishes to bring a matter that will not be included
in the proxy statement before the stockholders at the Company's 2001 Annual
Meeting notifies the Company of such matter prior to December 16, 2000,
management will have discretionary authority to vote all shares for which it has
proxies in opposition to such matter.
PROPOSAL 1
ELECTION OF DIRECTORS
There are five nominees for the five Board positions currently authorized
pursuant to the Company's Certificate of Incorporation and Bylaws. Each
director to be elected will hold office until the next annual meeting of
stockholders and until his successor is elected and has qualified, or until such
director's earlier death, resignation or removal. Each nominee listed below is
currently a director of the Company, all such directors having been elected by
the stockholders.
Shares represented by executed proxies will be voted, if authority to do so
is not withheld, for the election of the five nominees named below. In the
event that any nominee should be unavailable for election as a result of an
unexpected occurrence, such shares will be voted for the election of such
substitute nominee as management may propose. Each person nominated for
election has agreed to serve if elected, and management has no reason to believe
that any nominee will be unable to serve.
The five candidates receiving the highest number of affirmative votes cast
at the meeting will be elected directors of the Company.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF EACH NAMED NOMINEE.
Nominees
The names of the nominees and certain information about them are set forth
below:
<TABLE>
<CAPTION>
Name Age Position
- ------------------------ ----- ------------------------------------
<S> <C> <C>
Robert G. Klimasewski 56 Chairman of the Board
Dick Sharman 65 Chief Executive Officer and Director
William G. Fredrick, Jr. 59 Director
Robert P. Perkins 47 Director
John C. Stiska 57 Director
</TABLE>
Robert G. Klimasewski has served as a director of the Company since 1980
and as Chairman of the Board of Directors of the Company since December 1998.
Mr. Klimasewski has served as the Chairman of the Board, President and Chief
Executive Officer of Transmation, Inc., an electronic instrumentation
manufacturer, since 1994 and as Vice Chairman of Burleigh Instruments, Inc., a
scientific instrument and laser manufacturer, since 1972.
2.
<PAGE>
Dick Sharman has served as a director of the Company since February 1998
and as Chief Executive Officer of the Company since December 1998. Mr. Sharman
was Chairman of the Board, President and Chief Executive Officer of EMI
Acquisition Corp. ("EMI") from 1993 until February 1998 and Chairman of the
Board of Exotic Materials, Inc. ("Exotic"), a wholly owned subsidiary of EMI,
from 1988 until February 1998. From 1988 until June 1996 and from June 1997
until November 1997, Mr. Sharman also served as President and Chief Executive
Officer of Exotic.
William G. Fredrick, Jr. has served as a director of the Company since
1980. Mr. Fredrick has served as president of Laser Mechanisms, Inc. ("LMI"), a
laser device and accessory manufacturer, since 1980, and Oxid Corporation, a
laser device and accessory manufacturer, since 1986.
Robert P. Perkins has served as a director of the Company since February
1998. Mr. Perkins has been a private investor and self-employed business
consultant since 1991. From 1991 to February 1998, Mr. Perkins served as a
director of Exotic. From June 1993 until February 1998, Mr. Perkins also served
as a director of EMI and Vice President and Chief Financial Officer of both EMI
and Exotic.
John C. Stiska has served as a director of the Company since 1987. He is
Chairman of Commercial Bridge Capital, LLC, a secured bridge loan fund in
formation, and is Of Counsel to the law firm of Latham & Watkins. From February
1996 until February 1998, Mr. Stiska was a Corporate Senior Vice President and
General Manager of the Technology Applications Division of QUALCOMM
Incorporated, a wireless communications company. From 1990 to January 1996, Mr.
Stiska served as President and Chief Executive Officer of Triton Group Ltd., an
operating-holding company that emerged in 1993 from the Chapter 11 bankruptcy
proceedings of Triton Group Ltd. and Intermark, Inc. Mr. Stiska is a director
of Jaymark, Inc., FirstWorld Communications, Inc., Eaton Vorad, Inc. and
WebSense, Inc.
Board Committees and Meetings
The Company's Board of Directors has an Audit Committee, a Compensation
Committee and a Committee on Directors.
The Audit Committee currently consists of Messrs. Perkins and Stiska. The
Audit Committee makes recommendations to the Board of Directors regarding the
selection of independent auditors, reviews the results and scope of the audit
and other services provided by the Company's independent auditors and reviews
and evaluates the Company's audit and control functions. The Audit Committee
met six times during the fiscal year ended September 30, 1999.
The Compensation Committee currently consists of Messrs. Klimasewski and
Fredrick. The Compensation Committee makes recommendations regarding the
Company's 1997 Equity Incentive Plan and Employee Stock Purchase Plan as well as
decisions concerning salaries and incentive compensation for officers and
employees of the Company. The Compensation Committee met four times during the
fiscal year ended September 30, 1999.
The Committee on Directors currently consists of Messrs. Sharman and
Klimasewski. The Committee on Directors makes recommendations on
characteristics, skills and functional needs required of directors, nominates
directors and reviews the performance of directors. The Committee on Directors
does not consider nominations made by stockholders of the Company.
During the fiscal year ended September 30, 1999, the Board of Directors
held seven meetings, and each director attended 75% or more of the aggregate of
the meetings of the Board and of the committees on which he served, which were
held during the period for which he was a director or committee member,
respectively.
3.
<PAGE>
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending September 30, 2000 and has
further directed that management submit the selection of independent auditors
for ratification by the stockholders at the Annual Meeting. Ernst & Young LLP
has audited the Company's financial statements since 1989. The Company expects
representatives of Ernst & Young LLP to be present at the Annual Meeting. These
representatives will have an opportunity to make a statement if they so desire
and will be available to respond to appropriate questions.
Stockholder ratification of the selection of Ernst & Young LLP as the
Company's independent auditors is not required by the Company's Bylaws or
otherwise. However, the Board is submitting the selection of Ernst & Young LLP
to the stockholders for ratification as a matter of good corporate practice. If
the stockholders fail to ratify the selection, the Audit Committee and the Board
will reconsider whether or not to retain that firm. Even if the selection is
ratified, the Audit Committee and the Board in their discretion may direct the
appointment of different independent auditors at any time during the year if
they determine that such a change would be in the best interests of the Company
and its stockholders.
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and voting at the Annual Meeting will be required
to ratify the selection of Ernst & Young LLP.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
4.
<PAGE>
EXECUTIVE COMPENSATION
Compensation of Directors
As consideration for service on the Company's Board of Directors, non-
employee directors receive $4,000 per year. In addition, non-employee directors
receive a $1,000 fee for their attendance at each Board meeting and a $500 fee
for their attendance at each committee meeting and are reimbursed for reasonable
out-of-pocket expenses in connection with attendance at Board and committee
meetings. In fiscal 1999, the total compensation paid to non-employee directors
was $63,000.
During fiscal 1999, the Company granted options covering 25,000 shares of
the following non-employee directors: William G. Fredrick, Jr., 5,000 shares;
Robert G. Klimasewski, 5,000 shares; Robert P. Perkins, 5,000 shares; Richard C.
Laird, 5,000 shares; and John C. Stiska, 5,000 shares. All such options are
exercisable within 60 days of December 1, 1999 at the exercise price per share
of $1.07. No options granted by the Company to its non-employee directors were
exercised in fiscal 1999.
Compensation of Executive Officers
The following table sets forth for the fiscal years ended September 30,
1999 and 1998 and August 31, 1997 compensation awarded or paid to, or earned by,
the Company's present and former chief executive officers, the three executive
officers of the Company who earned more than $100,000 in the fiscal year ended
September 30, 1999 and one former executive officer (Mr. Brawley) who was not
serving as an executive officer at the end of fiscal 1999 (collectively, the
"Named Executive Officers"):
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
---------------------------------- ------------
Securities
Underlying All Other
Name and Principal Position Year Salary(1) Bonus Options Compensation(2)
- -------------------------------- ---- -------- ------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Dick Sharman (3)................ 1999 $201,100 $ 6,600 -- $ 4,600
Chief Executive Officer 1998 -- -- -- --
1997 -- -- -- --
Glenn H. Sherman, Ph.D (4)...... 1999 $ 82,100 -- -- $174,400
Former Chairman of the Board 1998 $195,865 -- -- $ 34,715
and Chief Executive Officer 1997 $184,771 $23,500 26,666 $ 22,036
Douglas H. Tanimoto, Ph.D (5).... 1999 $160,000 -- -- $ 15,700
President, Research Division 1998 $150,961 -- -- $ 26,279
1997 $149,904 $14,000 -- $ 19,208
Dean T. Hodges, Ph.D (6)........ 1999 $155,900 -- -- $ 15,900
President, Microlasers Division 1998 $147,019 -- -- $ 20,946
1997 $144,904 $10,000 -- $ 11,728
Thomas Brawley (7).............. 1999 $159,655 $26,500 -- $ 23,100
Former President and Chief 1998 $149,004 -- -- $ 4,973
Executive Officer, Exotic 1997 -- -- -- --
Materials, Inc.; Former
President, Precision Optics
Group
Paul P. Wickman (8)............. 1999 $138,700 -- 25,000 $ 17,200
Senior Vice President and Chief 1998 $129,712 -- 25,000 $ 19,460
Financial Officer 1997 $119,808 $15,000 26,666 $ 11,585
</TABLE>
5.
<PAGE>
_________________________
(1) In accordance with the rules of the SEC, the compensation described in this
table does not include medical, group life insurance or other benefits
received by the Named Executive Officers, which are available generally to
all salaried employees of the Company, and certain perquisites and other
personal benefits received by the Named Executive Officers, which do not
exceed the lesser of $50,000 or 10% of such officer's salary and bonus
disclosed in this table.
(2) Includes premium payments made by the Company for split dollar life
insurance policies that are owned by the Named Executive Officers. The
policy owners have assigned to the Company the proceeds from termination of
the policies or from payment of death benefits in an amount equal to the
lesser of the cash surrender value or the cumulative payments made by the
Company on their behalf. The insurance premium payments for Messrs.
Sherman, Tanimoto, Hodges, Brawley and Wickman amounted to (i) in fiscal
1997 $22,036, $15,521, $9,903, $0, and $7,954, respectively, (ii) in fiscal
1998 $29,691, $21,191, $18,146, $0, and $14,765, respectively, and (iii) in
fiscal 1999 $0, $10,900, $14,000, $2,900, and $13,000, respectively. Also
includes 401(k) Plan employer matching contributions for Messrs. Sherman,
Tanimoto, Hodges, Brawley, Wickman and Sharman of (i) in fiscal 1997 $3,836,
$3,687, $1,825, $0, $3,631 and $0, respectively, (ii) in fiscal 1998 $5,024,
$5,088, $2,800, $0, $4,695 and $0, respectively and (iii) in fiscal 1999
$1,100, $4,800, $1,900, $1,100, $4,200 and $4,600, respectively.
(3) Mr. Sharman was appointed by the Board of Directors as Chief Executive
Officer of the Company on December 4, 1998.
(4) Dr. Sherman resigned as Chief Executive Officer and Chairman of the Board of
Directors of the Company on December 4, 1998. Dr. Sherman's other
compensation includes $173,300 for his services to the Company as a
consultant. Dr. Sherman would have received $200,000 in salary had he
remained at the Company for the entire fiscal year.
(5) Dr. Tanimoto resigned as an executive officer and director of the Company on
January 17, 2000.
(6) Dr. Hodges resigned as an executive officer of the Company on December 16,
1999.
(7) Mr. Brawley resigned as President and Chief Executive Officer at EMI, the
Company's wholly-owned subsidiary, on May 12, 1999. Mr. Brawley's other
compensation includes $19,100 for his services to the Company as a
consultant. Mr. Brawley would have received $165,900 in salary had he
remained at the Company for the entire fiscal year.
(8) The Company repriced 25,000 stock options previously granted to Mr. Wickman
under the 1997 Plan. See "- Option Grants Last Fiscal Year and Option
Repricing Information."
Stock Option Grants And Exercises
The Company currently grants options to its executive officers under the
1997 Plan. As of January 18, 2000, 473,922 shares remained available for grant
thereunder to all employees, including executive officers. On occasion, the
Company may also grant options to its executive officers outside of its stock
option plans. As of December 1, 1999, options to purchase 206,666 shares were
outstanding and held by executive officers of the Company outside the Company's
stock option plans.
6.
<PAGE>
Option Grants in Last Fiscal Year
The following table sets forth each grant of stock options made during the
fiscal year ended September 30, 1999 to each of the Named Executive Officers:
<TABLE>
<CAPTION>
Individual Grants
--------------------------------------------------------------
Potential Realizable Value
Percentage of at Assumed Annual
Number of Total Options Rates of Stock Price
Securities Granted to Appreciation
Underlying Employees in Exercise for Option Term(3)
Options Fiscal Price Expiration -----------------------
Name Granted(1) Year(%)(2) ($/Share) Date 5% 10%
- --------------------- --------- ------------ --------- ---------- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Dick Sharman................ -- -- -- -- -- --
Glenn H. Sherman, Ph.D .... -- -- -- -- -- --
Douglas H. Tanimoto, Ph.D... -- -- -- -- -- --
Dean T. Hodges, Ph.D........ -- -- -- -- -- --
Thomas J. Brawley........... -- -- -- -- -- --
Paul P. Wickman............. 25,000(4) 5.7 $3.00 12/8/07 $0(5) $0(5)
</TABLE>
__________________
(1) Options granted under the 1997 Plan generally become exercisable over a
four-year period with 25% vesting on the first anniversary of the date of
grant and the remainder vesting monthly thereafter. The options will fully
vest upon a change of control, as defined in the Company's 1997 Plan, unless
the acquiring company assumes the options or substitutes similar options.
The term of the options is ten years.
(2) Based on options to purchase 437,579 shares granted and repriced to
employees in fiscal 1999, including to the Named Executive Officers.
(3) The potential realizable value, or gain, is calculated based on the term of
the option at its time of grant (ten years). It is calculated assuming
that the stock price on the date of grant appreciates at the indicated
annual rate, compounded annually for the entire term of the option, and
that the option is exercised and sold on the last day of its term for the
appreciated stock price. These amounts represent certain assumed rates of
appreciation only, in accordance with the rules of the SEC, and do not
reflect the Company's estimate or projection of future stock price
performance. Actual gains, if any, are dependent on the actual future
performance of the Company's Common Stock and no gain to the optionee is
possible unless the stock price increases over the option term, which will
benefit all stockholders.
(4) On December 4, 1999, the Board of Directors approved a repricing of 25,000
stock options granted to Mr. Wickman under the 1997 Plan. The stock
options were previously granted at an exercise price of $7.00. Other than
the exercise price of the options, the terms of Mr. Wickman's stock options
remained the same. See "--Compensation of Executive Officers, Option
Repricing Information."
(5) Because the exercise price of the repriced options had a greater value than
the market price of the underlying securities as of September 30, 1999, the
potential realizable value of Mr. Wickman's options is $0.
7.
<PAGE>
Option Repricing Information
The following table shows certain information concerning the repricing of
options received by the Company's executive officers during the last ten years.
Ten Year Option Repricing
<TABLE>
<CAPTION>
Number of Length of
Securities Original Term
Underlying Market Price of Exercise Price at New Remaining at
Repriced Stock at Time of Time of Exercise Date of
Name Date Options Repricing Repricing Price Repricing
- ------------------------- ------- --------- --------------- ----------------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Paul P. Wickman (1)....... 12/4/98 25,000 $1.625 $7.00 $3.00 9 years
</TABLE>
(1) On December 4, 1998, the Board of Directors approved a repricing of certain
stock options held by employees of the Company and Mr. Wickman. All of the
repriced stock options were repriced with an exercise price of $3.00 per
share. The Company repriced 25,000 stock options previously granted to Mr.
Wickman under the 1997 Plan. See "--Compensation of Executive Officers,
Option Grants in Last Fiscal Year."
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
The following table sets forth information with respect to the exercise of
stock options by the Named Executive Officers during the fiscal year ended
September 30, 1999 and the number and value of securities underlying unexercised
options held by the Named Executive Officers as of September 30, 1999:
<TABLE>
<CAPTION>
Number of Value of
Securities Underlying Unexercised
Unexercised In-the-Money
Options at Options at
Shares September 30, 1999(2) September 30, 1999(3)
Acquired On Value -------------------------- -------------------------
Name Exercise Realized (1) Exercisable Unexercisable Exercisable Unexercisable
- ------------------------------ -------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Dick Sharman ................. -- -- -- -- -- --
Glenn H. Sherman, Ph.D........ -- -- 90,666 12,666 $0 $0
Douglas H. Tanimoto, Ph.D..... -- -- 206,666 -- $0 --
Dean T. Hodges, Ph.D.......... -- -- 205,333 1,333 $0 $0
Thomas J. Brawley............. -- -- 116,541 158,459 $0 $0
Paul P. Wickman............... -- -- 94,352 30,645 $0 $0
</TABLE>
______________________
(1) Value realized is based on the fair market value of the Company's Common
Stock on the date of exercise minus the exercise price (or the actual sales
price if the shares were sold by the optionee simultaneously with the
exercise) without taking into account any taxes that may be payable in
connection with the transaction.
(2) Includes both "in-the-money" and "out-of-the-money" options. "In-the-money"
options are options with exercise prices below the market price of the
Company's Common Stock.
(3) Based on the fair market value of the Common Stock as of September 30, 1999.
Amounts reflected are based on the fair market value minus the exercise
price and do not indicate that the optionee sold such stock.
8.
<PAGE>
Employment Agreements
The Company has entered into employment agreements with the following
executive officers: (1) Dean T. Hodges, Ph.D., former President, Microlasers
Division, (2) Douglas H. Tanimoto, Ph.D., former President, Research Division
and (3) Paul P. Wickman, Senior Vice President and Chief Financial Officer.
Pursuant to such employment agreements and as adjusted by the Compensation
Committee of the Board of Directors, Messrs. Hodges, Tanimoto, and Wickman are
entitled to receive annual salaries of $145,000, $150,000 and $120,000,
respectively, subject to further adjustment in the discretion of the Board of
Directors. Annual bonuses are determined by the Board of Directors. The term
of each employment agreement is three years and may be extended by mutual
written consent of the parties. Each employment agreement also provides that if
employment is terminated for cause or the employee voluntarily resigns, the
employee shall receive only the salary payments earned prior to the date of
termination. If employment is terminated without cause, the employee will
receive consulting fees equal to his base salary times the number of months
equal to the number of years he would have been employed at the next anniversary
date of his employment. As consideration for the consulting fees, the employee
will provide consulting services on an as needed basis. In addition, during the
term of employment, and for as long as the employee is receiving consulting
fees, the employee will not, subject to certain limitations, compete with the
Company.
On January 1, 2000, the Company entered into an employment agreement with
Dick Sharman pursuant to which Mr. Sharman shall receive an annual salary of
$250,000, subject to adjustment by mutual agreement of the Company and Mr.
Sharman. An annual bonus is provided for, subject to fiscal year achievements.
The term is for one year and is automatically renewed by one year until a final
termination date of December 31, 2002 unless written notice is provided by the
Company or Mr. Sharman. The employment agreement also provides that if
employment is terminated for cause or the employee voluntarily resigns, the
employee shall receive only the salary payments earned prior to the date of
termination. If employment is terminated without cause, the employee will
receive severance payments equal to his monthly salary with full benefits for a
period of twelve months. In addition, during the term of employment, and for so
long as Mr. Sharman is receiving severance payments, Mr. Sharman will not,
subject to certain limitations, compete with the Company.
The Company has entered into a Separation Agreement with Dr. Sherman
pursuant to which Dr. Sherman receives $17,333 per month and certain other
benefits until December 4, 2000 for his services to the Company as a consultant.
In the event the Company materially breaches this Separation Agreement, Dr.
Sherman is entitled to accelerate the payments of all amounts to be paid to him
pursuant to the Separation Agreement.
Mr. Brawley's service as the President and Chief Executive Officer of
Exotic ended on May 12, 1999. Pursuant to a Memorandum of Understanding, dated
May 21, 1999, Mr. Brawley receives severance benefits until February 1, 2000 for
his services as a consultant.
9.
<PAGE>
REPORT OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION/1/
The Company's executive compensation program is administered by the
Board of Directors and the Compensation Committee of the Board of Directors.
The Compensation Committee is appointed by the Board and is comprised of two
non-employee directors.
Overall Compensation Policy
The Board believes that for the Company to succeed it must be able to
attract and retain qualified executives. The objectives of the Board in
determining the type and amount of executive officer compensation are to provide
a compensation package consisting of a base salary, bonus, and long term
incentives in the form of stock options that allows the Company to attract and
retain talented executive officers and to align their interests with those of
stockholders.
Base Salary
During fiscal 1999, the base salaries for the executive officers were
intended to be competitive with salaries of similar executive positions in
comparable companies in the Company's industry. Annual adjustments in base
salaries are made effective at the beginning of the fiscal year for which they
are intended to apply and therefore reflect in large part the prior year's
business and individual performance achievements. The Chief Executive Officer's
base salary for fiscal 1999 was determined in this manner to be $201,100. See
"Summary Compensation Table."
Bonus
Annual incentive bonuses are intended to reflect the Board's belief that a
significant portion of the annual compensation of each executive officer should
be contingent upon the performance of the Company, as well as the individual
contribution of each officer. Accordingly, the executive officers of the
Company, including the Chief Executive Officer, participate in an annual
executive incentive bonus plan ("Incentive Plan") which provides for cash
bonuses based upon the Company's overall financial performance and the
achievement of certain specified levels of profitability and certain other
financial and non-financial objectives and milestones for the fiscal year.
Awards are made by the Board upon receiving the Compensation Committee's
recommendations. The Compensation Committee annually establishes targeted
profitability levels for the ensuing fiscal year in conjunction with the
Company's annual operating plan. Upon the achievement of various increasing
levels of profitability above the minimum target level and based on the timing
and the degree to which certain other financial and non-financial objectives and
milestones are met or exceeded, the Compensation Committee may choose to
increase bonuses accrued to the Incentive Plan. The purpose of the Incentive
Plan is to reward and reinforce executive management's commitment to achieve
levels of profitability and return consistent with increasing stockholder value.
Cash bonuses earned under the Incentive Plan are paid each year upon completion
of the Company's annual audit of the results of operations for the previous
fiscal year by the Company's independent auditors. The Company paid a cash
bonus in fiscal year 1999 to each of Dick Sharman and Thomas Brawley in the
amounts of $6,600 and $26,500, respectively.
Long Term Incentives
The final portion of the executive officers' compensation during fiscal
1999 consisted of stock options as listed in this Proxy Statement in the table
entitled "Option Grants in Last Fiscal Year". It is this award that the Company
has utilized to provide long term incentives.
- ------------------
/1/ The material in this report and under the caption "Performance Measurement
Comparison" are not "soliciting material," are not deemed filed with the SEC
and are not to be incorporated by reference in any filing of the Company
under the Securities Act of 1933, as amended (the "Securities Act"), or the
Exchange Act whether made before or after the date of this proxy statement
and irrespective of any general incorporation language therein.
10.
<PAGE>
Chief Executive Officer Compensation
Dick Sharman was appointed by the Board of Directors of the Company as the
Company's Chief Executive Officer on December 4, 1998. During fiscal 1999, the
Company's Chief Executive Officer was eligible to participate in the same
executive compensation plans as were available to other executive officers of
the Company, including the Incentive Plan and the 1997 Plan. Based on the
performance of the Company in 1998 and 1999 and the Board's assessment of Mr.
Sharman's ongoing personal performance in the position of Chief Executive
Officer, Mr. Sharman's base salary for fiscal 1999 was determined to be
$201,100. Among the factors considered by the Board in its consideration of Mr.
Sharman's performance were progress in the development of the Company's
technologies and product lines and the further strengthening of the Company's
infrastructures.
On December 4, 1998, Dr. Glenn H. Sherman tendered his resignation as Chief
Executive Officer, Chairman of the Board and director and all other positions he
held with the Company or any of its subsidiaries. The Company has entered into
a Separation Agreement with Dr. Sherman pursuant to which Dr. Sherman receives
$17,333 per month and certain other benefits until December 4, 2000 for his
services to the Company as a consultant. In the event the Company materially
breaches this Separation Agreement, Dr. Sherman is entitled to accelerate the
payments of all amounts to be paid to him pursuant to the Separation Agreement.
The Board has elected Dick Sharman to succeed Glenn Sherman as the Company's
Chief Executive Officer and Robert Klimasewski to succeed Dr. Sherman as
Chairman of the Company's Board of Directors.
Section 162(m) of the Internal Revenue Code
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), limits the Company to a deduction for federal income tax purposes of no
more than $1 million of compensation paid to certain executive officers in a
taxable year. At this time, the amount of compensation (as defined for Code
Section 162(m) purposes) paid to the Company's executive officers does not
exceed the $1 million pay limit and will most likely not be affected by the
statute and regulations in the near future. Compensation above $1 million may
be deducted if it is "performance-based compensation" within the meaning of the
Code.
The Compensation Committee has determined that stock options granted under
the 1997 Plan with an exercise price at least equal to the fair market value of
the Company's Common Stock on the date of grant will be treated as "performance-
based compensation."
The Board of Directors:
Robert G. Klimasewski
Dick Sharman
William G. Fredrick, Jr.
John C. Stiska
Robert P. Perkins
Compensation Committee Interlocks and Insider Participation
The Company's Compensation Committee currently consists of Messrs.
Klimasewski and Fredrick. No member of the Compensation Committee has at any
time been an officer or employee of the Company; however, Mr. Klimasewski serves
as Chairman of the Board of the Company. LMI, a company of which Mr. Fredrick
is a director and officer, has engaged in certain transactions with the Company.
The Company purchases a number of products for resale from LMI. In addition,
LMI purchases laser optics from the Company. LMI's sales to Laser Power in
fiscal 1999 were approximately $327,000. The Company's sales to LMI in fiscal
1999 were approximately $143,000. The Company believes that such transactions
between the Company and LMI are on terms as favorable to the Company as such
terms would have been if negotiated between the Company and unaffiliated
persons.
In September 1, 1991, the Company acquired substantially all of the assets
of Burleigh Northwest Optical, Inc. In consideration for the assets acquired,
the Company executed a secured promissory note in the amount of $150,000 payable
to Burleigh Instruments, Inc., an entity of which Robert G. Klimasewski is a
director and 50% stockholder. The note bears interest at 8.25% per annum and is
payable in 120 equal monthly installments. As of September 30, 1999, the
outstanding balance on such note was approximately $39,015.
11.
<PAGE>
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Common Stock of the Company as of December 1, 1999
by (i) each person (or group of affiliated persons) who is known by the Company
to own beneficially more than 5% of the Company's Common Stock, (ii) the Named
Executive Officers, (iii) each of the Company's directors, and (iv) all
directors and executive officers as a group:
<TABLE>
<CAPTION>
Shares Beneficially
Owned(1)
-----------------------------------------------------
Number of Percent of
Directors, Officers and 5% Stockholders Shares Total
- ----------------------------------------------------------------- ------------------------------ ---------------------
<S> <C> <C>
Union Miniere USA, Inc. (2)...................................... 1,316,713 14.7%
13135 West Second Place, No. 521
Lakewood, CO 80228
II-VI Incorporated............................................... 1,250,100 14.6%
375 Saxonburg Boulevard
Saxonburg, PA 16056
Glenn H. Sherman, Ph.D. (3)...................................... 667,831 7.7%
1103 Luneta Drive
Del Mar, CA 92014
Wellington Management Company, LLP (4)........................... 603,000 7.0%
75 State Street
Boston, MA 02109
Dick Sharman (5)................................................. 424,836 5.0%
12777 High Bluff Drive
San Diego, CA 92130
William G. Fredrick, Jr. (6)..................................... 375,422 4.4%
Douglas H. Tanimoto, Ph.D. (7)................................... 307,487 3.5%
Robert P. Perkins (8)............................................ 211,062 2.5%
Dean T. Hodges, Ph.D. (9)........................................ 200,000 2.3%
John C. Stiska (10).............................................. 147,564 1.7%
Thomas J. Brawley (11)........................................... 140,966 1.6%
Paul P. Wickman (12)............................................. 109,890 1.3%
Robert G. Klimasewski (13)....................................... 79,491 *
All directors and officers as a group (8 persons) (14)........... 1,855,752 20.2%
</TABLE>
__________________
* Less than one percent.
(1) This table is based upon information supplied by executive officers,
directors and principal stockholders and Schedules 13D and 13G filed with
the Securities and Exchange Commission (the "SEC"). Unless otherwise
indicated in the footnotes to this table and subject to community property
laws where applicable, the Company believes that each of the stockholders
named in this table has sole voting and investment power with respect to the
shares indicated as beneficially owned. Applicable percentages of
beneficial ownership are based on 8,579,987 shares of Common Stock
outstanding on December 1, 1999, adjusted as required by rules promulgated
by the SEC.
(2) Includes 358,918 shares issuable upon conversion of debentures. Union
Miniere, s.a., a Belgian public company, owns approximately 75% of the
shares of Union Miniere USA, Inc. Sogem, s.a., owns the remaining shares of
Union Miniere USA, Inc. Union Miniere, s.a. owns virtually all the shares
of Sogem, s.a.
12.
<PAGE>
(3) Includes 82 shares held by Inamaria Sherman, Dr. Sherman's wife, 1,333
shares held by Martina Sherman, Dr. Sherman's daughter, 103,332 shares
subject to options exercisable within 60 days of December 1, 1999. Excludes
150 shares held by Mrs. Sherman, for the benefit of Margoth Klein, Mrs.
Sherman's mother and 1,333 shares held by Thomas Sherman, Dr. Sherman's
son.
(4) Includes 603,000 shares held by Wellington Management Company in its
capacity as an investment advisor and owner of record by clients of
Wellington Management Company. Those clients have the right to receive, or
the power to direct the receipt of, dividends from, or the proceeds from
the sale of, such shares. No such client of Wellington Management Company
is known to have such right or power with respect to more than 5% of the
Company's common stock.
(5) Includes 391,805 shares held by Sharman Family Trust U/A Dated 12/18/97 of
which Mr. Sharman is Trustee.
(6) Includes 10,666 shares held of record by LMI of which Mr. Fredrick is the
President, 23,332 shares subject to warrants exercisable within 60 days of
December 1, 1999 and 10,000 shares subject to options exercisable within 60
days of December 1, 1999.
(7) Includes 6,084 shares owned by Janis Cullinan, Dr. Tanimoto's daughter,
6,084 shares owned by Craig Tanimoto, Dr. Tanimoto's son and 205,333 shares
subject to options exercisable within 60 days of December 1, 1999.
(8) Includes 206,062 shares held jointly by Mr. Perkins and Gail A. Perkins,
Mr. Perkin's wife, and 5,000 shares subject to options exercisable within
60 days of December 1, 1999.
(9) Includes 200,000 shares subject to options exercisable within 60 days of
December 1, 1999.
(10) Includes 23,332 shares subject to warrants exercisable within 60 days of
December 1, 1999 and 10,000 shares subject to options exercisable within 60
days of December 1, 1999.
(11) Includes 116,541 shares subject to options exercisable within 60 days of
December 1, 1999.
(12) Includes 94,352 shares subject to options exercisable within 60 days of
December 1, 1999.
(13) Includes 23,332 shares subject to warrants exercisable within 60 days of
December 1, 1999 and 10,000 shares subject to warrants exercisable within
60 days of December 1, 1999.
(14) Includes 534,685 shares issuable upon exercise of options exercisable
within 60 days of December 1, 1999 and 69,996 shares issuable upon exercise
of warrants exercisable within 60 days of December 1, 1999.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended ("Exchange
Act"), requires the Company's directors and executive officers, and persons who
own more than 10% of a registered class of the Company's equity securities, to
file with the SEC initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Officers,
directors and greater than 10% stockholders are required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended September 30, 1999, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than 10% beneficial owners were complied with.
13.
<PAGE>
PERFORMANCE MEASUREMENT COMPARISON(1)
The following graph shows a comparison of cumulative total returns for the
Company, the SIC Code Index for companies listed with SIC Code 3827 "Optical
Instruments and Lenses" and the Nasdaq Market Index for the period that
commenced June 19, 1997 (the date on which the Company's Common Stock was first
traded on the Nasdaq National Market) and ended on September 30, 1999. The
graph assumes that all dividends have been reinvested.
COMPARISON CUMULATIVE TOTAL RETURN
(Laser Power Corporation, SIC Code Index, Nasdaq Market Index)
[CHART APPEARS HERE]
ASSUMES $100 INVESTED ON JUNE 19, 1997
<TABLE>
<CAPTION>
6/19/97 9/30/97 3/31/98 9/30/98 3/31/99 9/30/99
<S> <C> <C> <C> <C> <C> <C>
Laser Power Corp. 100 127.47 87.91 30.77 16.48 53.30
SIC Code Index 100 119.95 95.57 53.47 85.05 153.88
NASDAQ Market Index 100 116.59 128.03 118.37 171.92 190.12
</TABLE>
_______________________________
(1) This Section is not "soliciting material," is not deemed "filed" with the
SEC and is not to be incorporated by reference in any filing of the Company
under the Securities Act or the Exchange Act whether made before or after
the date hereof and irrespective of any general incorporation language in
any such filing.
CERTAIN TRANSACTIONS
The Company has entered into indemnity agreements with certain officers and
directors which provide, among other things, that the Company will indemnify
such officer or director, under the circumstances and to the extent provided for
therein, for expenses, damages, judgments, fines and settlements he may be
required to pay in actions or proceedings which he is or may be made a party by
reason of his position as a director, officer or other agent of the Company, and
otherwise to the full extent permitted under Delaware law and the Company's
Bylaws.
The Company has entered into certain additional transactions with its
directors and officers, as described under the caption "Executive Compensation."
In September 1, 1991, the Company acquired substantially all of the assets
of Burleigh Northwest Optical, Inc. In consideration for the assets acquired,
the Company executed a secured promissory note in the amount of $150,000 payable
to Burleigh Instruments, Inc., an entity of which Robert G. Klimasewski is a
director and 50% stockholder. The note bears interest at 8.25% per annum and is
payable in 120 equal monthly installments. As of September 30, 1999, the
outstanding balance on such note was approximately $39,015.
14.
<PAGE>
LMI, a company of which Mr. Fredrick is a director and officer, has engaged
in certain transactions with the Company, as described under the caption
"Compensation Committee Interlocks and Insider Participation."
On December 4, 1998, the Board of Directors approved a repricing of certain
stock options held by Mr. Wickman. See "Executive Compensation - Compensation
of Executive Officers."
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the meeting, it is the intention of the persons named in the accompanying
proxy to vote on such matters in accordance with their best judgment.
By Order of the Board of Directors
/s/ PAUL P. WICKMAN
Paul P. Wickman
Secretary
January 28, 2000
A copy of the Company's Annual Report to the Securities and Exchange Commission
on Form 10-K for the fiscal year ended September 30, 1999 is available without
charge upon written request to: Paul P. Wickman, Secretary, Laser Power
Corporation, 12777 High Bluff Drive, San Diego, California 92130.
15.
<PAGE>
LASER POWER CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 25, 1999
The undersigned hereby appoints DICK SHARMAN and PAUL P. WICKMAN, and each
of them, as attorneys and proxies of the undersigned, with full power of
substitution, to vote all of the shares of stock of Laser Power Corporation
which the undersigned may be entitled to vote at the Annual Meeting of
Stockholders of Laser Power Corporation to be held at the Doubletree Hotel,
11915 El Camino Real, San Diego, California, on Friday, February 25, 2000 at
9:00 a.m. (local time), and at any and all postponements, continuations and
adjournments thereof, with all powers that the undersigned would possess if
personally present, upon and in respect of the following matters and in
accordance with the following instructions, with discretionary authority as to
any and all other matters that may properly come before the meeting.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR THE
NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2, AS MORE SPECIFICALLY
DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE INDICATED, THIS
PROXY WILL BE VOTED IN ACCORDANCE THEREWITH.
[X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
PROPOSAL 1: To elect the following nominees as directors to hold office until
the 2001 Annnual Meeting of Stockholders.
[_] FOR ALL NOMINEEES.
[_] WITHHELD FROM ALL NOMINEES.
NOMINEES: Robert G. Klimasewski, Dick Sharman, William G. Fredrick,
Jr., Robert P. Perkins, and John C. Stiska
FOR ALL NOMINEES EXCEPT AS NOTED ABOVE:
------------------------------------------------------
MANAGEMENT RECOMMENDS A VOTE FOR THE NOMINEES FOR EACH NOMINEE LISTED ABOVE
<PAGE>
(Continued from other side)
PROPOSAL 2: To ratify the selection of ERNST & YOUNG LLP as independent
auditors of the Company for its fiscal year ending September 30, 2000.
[_] FOR [_] AGAINST [_] ABSTAIN
MANAGEMENT RECOMMENDS A VOTE FOR PROPOSAL 2.
DATED _______________ , 2000
----------------------------
----------------------------
SIGNATURE(S)
Please sign exactly as your
name appears hereon. If the
stock is registered in the
names of two or more
persons, each should sign.
Executors, administrators,
trustees, guardians and
attorneys-in-fact should
add their titles. If signer
is a corporation, please
give full corporate name
and have a duly authorized
officer sign, stating
title. If signer is a
partnership, please sign in
partnership name by
authorized person.
PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN
ENVELOPE WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.
