<PAGE>
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
THERMOTREX 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 filing 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>
[LOGO OF THERMOTREX CORPORATION APPEARS HERE]
10455 PACIFIC CENTER COURT, SAN DIEGO, CA 92121
AA970440053
February 14, 1997
Dear Stockholder:
The enclosed Notice calls the 1997 Annual Meeting of the Stockholders of
ThermoTrex Corporation. I respectfully request all Stockholders attend this
Meeting, if possible.
Our Annual Report for the fiscal year ended September 28, 1996, is
enclosed. I hope you will read it carefully. Feel free to forward any questions
you may have if you are unable to be present at the Meeting.
Enclosed with this letter is a Proxy authorizing three officers of the
Corporation to vote your shares for you if you do not attend the Meeting.
Whether or not you are able to attend the Meeting, I urge you to complete your
Proxy and return it to our transfer agent, American Stock Transfer and Trust
Company, in the enclosed addressed, postage-paid envelope, as a quorum of the
Stockholders must be present at the Meeting, either in person or by Proxy.
I would appreciate your immediate attention to the mailing of this Proxy.
Yours very truly,
Gary S. Weinstein
Chairman and Chief Executive Officer
<PAGE>
[LOGO OF THERMOTREX CORPORATION APPEARS HERE]
10455 PACIFIC CENTER COURT, SAN DIEGO, CA 92121
February 14, 1997
To the Holders of the Common Stock of
THERMOTREX CORPORATION
NOTICE OF ANNUAL MEETING
The 1997 Annual Meeting of the Stockholders of ThermoTrex Corporation (the
"Corporation") will be held on Wednesday, March 12, 1997, at 11:00 a.m. at the
Westin Hotel, 70 Third Avenue, Waltham, Massachusetts 02154. The purpose of the
Meeting is to consider and take action upon the following matters:
1. Election of nine Directors.
2. A proposal recommended by the Board of Directors to increase the
number of shares available for issuance under the Corporation's
nonqualified stock option plan by 500,000 shares.
3. Such other business as may properly be brought before the Meeting and
any adjournment thereof.
The transfer books of the Corporation will not be closed prior to the
Meeting, but, pursuant to appropriate action by the Board of Directors, the
record date for the determination of the Stockholders entitled to notice of and
vote at the Meeting is January 30, 1997.
The By-laws require that the holders of a majority of the stock issued and
outstanding and entitled to vote be present or represented by Proxy at the
Meeting in order to constitute a quorum for the transaction of business. It is
important that your stock be represented at the Meeting regardless of the number
of shares you may hold. Whether or not you are able to be present in person,
please sign and return promptly the enclosed Proxy in the accompanying envelope,
which requires no postage if mailed in the United States.
This Notice, the Proxy and Proxy Statement enclosed herewith are sent to
you by order of the Board of Directors.
Sandra L. Lambert
Secretary
<PAGE>
PROXY STATEMENT
The enclosed Proxy is solicited by the Board of Directors of ThermoTrex
Corporation (the "Corporation") for use at the 1997 Annual Meeting of the
Stockholders (the "Meeting") to be held on Wednesday, March 12, 1997, at 11:00
a.m. at the Westin Hotel, 70 Third Avenue Waltham, Massachusetts 02154, and any
adjournment thereof. The mailing address of the executive offices of the
Corporation is 10455 Pacific Center Court, San Diego, CA 92121. This Proxy
Statement and the enclosed Proxy were first furnished to Stockholders of the
Corporation on or about February 18, 1997.
VOTING PROCEDURES
The Board of Directors intends to present to the Meeting the election of
nine Directors, constituting the entire Board of Directors as well as one other
matter: a proposal to increase the number of shares available for issuance
under the Corporation's nonqualified stock option plan by 500,000 shares.
The representation in person or by proxy of a majority of the outstanding
shares of common stock of the Corporation, $.01 par value ("Common Stock"),
entitled to vote at the Meeting is necessary to provide a quorum for the
transaction of business at the Meeting. Shares can only be voted if the
Stockholder is present in person or is represented by returning a properly
signed proxy. Each Stockholder's vote is very important. Whether or not you plan
to attend the Meeting in person, please sign and promptly return the enclosed
proxy card, which requires no postage if mailed in the United States. All
signed and returned proxies will be counted towards establishing a quorum for
the Meeting, regardless of how the shares are voted.
Shares represented by proxy will be voted in accordance with your
instructions. You may specify your choice by marking the appropriate box on the
proxy card. If your proxy card is signed and returned without specifying
choices, your shares will be voted for the management nominees for Directors,
for the management proposal, and as the individuals named as proxy holders on
the proxy deem advisable on all other matters as may properly come before the
Meeting.
In order to be elected a Director, a nominee must receive the affirmative
vote of a majority of the shares of Common Stock present and entitled to vote on
the election. For the management proposal to increase the number of shares
available for issuance under the Corporation's nonqualified stock option plan,
the affirmative vote of a majority of shares present in person or represented by
proxy, and entitled to vote on the matter, is necessary for approval.
Withholding authority to vote for a nominee for Director or an instruction to
abstain from voting on the management proposal will be treated as shares
present and entitled to vote and, for purposes of determining the outcome of the
vote, will have the same effect as a vote against the nominee or a proposal.
With respect to the election of Directors and the proposal to increase the
number of shares available for issuance under the Corporation's nonqualified
stock option plan, broker "non-votes" will not be treated as shares present and
entitled to vote on a voting matter and will have no effect on the outcome of
the vote. A broker "non-vote" occurs when a nominee holding shares for a
beneficial holder does not have discretionary voting power and does not receive
voting instructions from the beneficial owner.
A Stockholder who returns a proxy may revoke it at any time before the
Stockholder's shares are voted at the Meeting by written notice to the Secretary
of the Corporation received prior to the Meeting, by executing and returning a
later-dated proxy or by voting by ballot at the Meeting.
The outstanding stock of the Corporation entitled to vote (excluding shares
held in treasury by the Corporation) as of January 30, 1997, consisted of
19,199,656 shares of Common Stock. Only Stockholders of record at the close of
business on January 30, 1997, are entitled to vote at the Meeting. Each share is
entitled to one vote.
1
<PAGE>
--PROPOSAL 1--
ELECTION OF DIRECTORS
Nine Directors are to be elected at the Meeting, each to hold office until
his successor is chosen and qualified or until his earlier resignation, death or
removal.
NOMINEES FOR DIRECTORS
Set forth below are the names of the persons nominated as Directors, their
ages, their offices in the Corporation, if any, their principal occupation or
employment for the past five years, the length of their tenure as Directors and
the names of other public companies in which such persons hold directorships.
Information regarding their beneficial ownership of the Corporation's Common
Stock and of the common stock of its parent corporation, Thermo Electron, is
reported under the caption "Stock Ownership." All of the nominees are currently
Directors of the Corporation.
- --------------------------------------------------------------------------------
MORTON COLLINS Mr. Collins, 61, has been a Director of the
Corporation since 1991. Mr. Collins has been a
General Partner of DSV Partners III, a venture
capital limited partnership, since 1981 and a
General Partner of DSV Management, Ltd. since
1982. Since 1985, DSV Management, Ltd. has been a
General Partner of DSV Partners IV, a venture
capital limited partnership. Mr. Collins is also
a director of Kopin Corporation, The Liposome
Company and Tandem Computers, Inc.
- --------------------------------------------------------------------------------
PETER O. CRISP Mr. Crisp, 64, has been a Director of the
Corporation since 1991. Mr. Crisp has been a
General Partner of Venrock Associates, a venture
capital investment firm, for more than five years.
Mr. Crisp is also a Director of American
Superconductor Corporation, Evans & Sutherland
Computer Corporation, Long Island Lighting
Company, Thermedics Inc., Thermo Electron, Thermo
Power Corporation and United States Trust
Corporation.
- --------------------------------------------------------------------------------
PAUL F. FERRARI Mr. Ferrari, 66, a Director of the Corporation
since 1990, has been a consultant to Thermo
Electron since 1991. Mr. Ferrari was a Vice
President of Thermo Electron from 1988 until his
retirement at the end of 1990; its Secretary from
1981 to 1990; and its Treasurer from 1967 to 1988.
Mr. Ferrari is also a director of General
Scanning Inc. and Thermedics Inc.
- --------------------------------------------------------------------------------
GEORGE N. HATSOPOULOS Dr. Hatsopoulos, 70, has been a Director of the
Corporation since 1988. Dr. Hatsopoulos has been
the Chairman of the Board and Chief Executive
Officer of Thermo Electron since 1956 and its
President from 1956 until January 1997. Dr.
Hatsopoulos is also a director of Thermedics Inc.,
Thermo Ecotek Corporation, Thermo Electron, Thermo
Fibertek Inc., Thermo Instrument Systems Inc.,
Thermo Optek Corporation and ThermoQuest
Corporation. Dr. Hatsopoulos is the brother of
Mr. John N. Hatsopoulos, a Director and Vice
President and Chief Financial Officer of the
Corporation.
- --------------------------------------------------------------------------------
2
<PAGE>
- --------------------------------------------------------------------------------
JOHN N. HATSOPOULOS Mr. Hatsopoulos, 62, has been a Director of the
Corporation and its Vice President and Chief
Financial Officer since 1990. Mr. Hatsopoulos has
been President and Chief Financial Officer of
Thermo Electron since January 1997 and 1988,
respectively. Prior to his appointment as
President of Thermo Electron, he was an Executive
Vice President from 1986 to 1997. Mr. Hatsopoulos
is also a director of Thermedics Inc., Thermo
Ecotek Corporation, Thermo Fibergen Inc., Thermo
Fibertek Inc., Thermo Instrument Systems Inc.,
Thermo Power Corporation and Thermo TerraTech Inc.
Mr. Hatsopoulos is the brother of Dr. George N.
Hatsopoulos, a Director of the Corporation.
- --------------------------------------------------------------------------------
ROBERT C. HOWARD Mr. Howard, 66, has been a Director of the
Corporation since 1988 and was Chairman of the
Board from 1988 to February 1996. Mr. Howard was
an Executive Vice President of Thermo Electron
since 1986 until his retirement in January 1997.
Mr. Howard currently serves as a consultant to
Thermo Electron. He is also a Director of
Thermedics Inc., Thermo Cardiosystems Inc.,
ThermoLase Corporation, Thermo Power Corporation
and Trex Medical Corporation.
- --------------------------------------------------------------------------------
FIROOZ RUFEH Mr. Rufeh, 59, has been a Director of the
Corporation since 1988. Mr. Rufeh was President of
the Corporation from 1988 until February 1997, and
Chairman of the Board and Chief Executive Officer
from 1988 to February 1996. Mr. Rufeh was also a
Vice President of Thermo Electron from 1986 until
February 1997. Beginning February 15, 1997, Mr.
Rufeh will be a consultant to Thermo Electron. Mr.
Rufeh is also a director of ThermoLase Corporation
and Trex Medical Corporation.
- --------------------------------------------------------------------------------
GARY S. WEINSTEIN Mr. Weinstein, 39, has been Chairman of the
Board, Chief Executive Officer and a Director of
the Corporation since February 1996. Mr.
Weinstein has been a Managing Director of Lehman
Brothers Inc. from 1992 until February 1996,
serving from March 1995 until leaving the firm as
Managing Director, head of Global Syndicate and
Equity Capital Markets. Mr. Weinstein joined
Lehman Brothers in 1988 and served in various
positions, including head of Equities in Europe,
head of Equity New Issues in North and South
America and head of Global Convertible Securities.
Mr. Weinstein is also a director of ThermoLase
Corporation and Trex Medical Corporation.
- --------------------------------------------------------------------------------
NICHOLAS T. ZERVAS Dr. Zervas, 67, has been a Director of the
Corporation since 1992. Dr. Zervas has been Chief
of Neurological Service at Massachusetts General
Hospital since 1977. Dr. Zervas is also a
director of Thermedics Inc., Thermo Cardiosystems
Inc. and ThermoLase Corporation.
- --------------------------------------------------------------------------------
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETINGS
The Board of Directors has established an Audit Committee and a Human
Resources Committee, each consisting solely of outside Directors. The present
members of the Audit Committee are Mr. Collins (Chairman), Mr. Crisp and Mr.
Ferrari. The Audit Committee reviews the scope of the audit with the
Corporation's independent public accountants and meets with them for the purpose
of reviewing the results of the audit subsequent to its completion. The present
members of the Human Resources Committee are Mr. Crisp (Chairman), Mr. Collins
and Dr. Zervas. The Human Resources Committee reviews the performance of senior
members of management, recommends executive compensation and administers the
Corporation's stock-based compensation plans. The Corporation does not have a
nominating committee of the Board of Directors. The Board of Directors met
eleven times, the Audit Committee met three times and the Human Resources
Committee met five times during fiscal 1996. Each Director attended at least 75%
of all meetings of the Board of Directors and Committees on which he served held
during fiscal 1996.
3
<PAGE>
COMPENSATION OF DIRECTORS
CASH COMPENSATION
Directors who are not employees of the Corporation, of Thermo Electron or
of any other companies affiliated with Thermo Electron (also referred to as
"outside Directors") receive an annual retainer of $4,000 and a fee of $1,000
per day for attending regular meetings of the Board of Directors and $500 per
day for participating in meetings of the Board of Directors held by means of
conference telephone and for participating in certain meetings of committees of
the Board of Directors. Payment of outside Directors' fees is made quarterly.
Dr. G. Hatsopoulos, Mr. J. Hatsopoulos and Mr. Weinstein are all employees of
Thermo Electron and do not receive any cash compensation from the Corporation
for their services as Directors. Directors are also reimbursed for out-of-
pocket expenses incurred in attending meetings.
DEFERRED COMPENSATION PLAN FOR DIRECTORS
Under the Deferred Compensation Plan for Directors (the "Deferred
Compensation Plan"), a Director has the right to defer receipt of his cash fees
until he ceases to serve as a Director, dies or retires from his principal
occupation. In the event of a change in control or proposed change in control of
the Corporation that is not approved by the Board of Directors, deferred amounts
become payable immediately. Either of the following is deemed to be a change of
control: (a) the occurrence, without the prior approval of the Board of
Directors, of the acquisition, directly or indirectly, by any person of 50% or
more of the outstanding Common Stock or the outstanding common stock of Thermo
Electron; or (b) the failure of the persons serving on the Board of Directors
immediately prior to any contested election of directors or any exchange offer
or tender offer for the Common Stock or the common stock of Thermo Electron to
constitute a majority of the Board of Directors at any time within two years
following any such event. Amounts deferred pursuant to the Deferred
Compensation Plan are valued at the end of each quarter as units of the
Corporation's Common Stock. When payable, amounts deferred may be disbursed
solely in shares of Common Stock accumulated under the Deferred Compensation
Plan. A total of 22,500 shares of Common Stock have been reserved for issuance
under the Deferred Compensation Plan. As of December 28, 1996, deferred units
equal to 4,252.72 shares of Common Stock were accumulated under the Deferred
Compensation Plan.
DIRECTORS STOCK OPTION PLAN
In 1991, the Corporation adopted a directors stock option plan (the
"Directors Plan"), which was amended in 1995. The Directors Plan provides for
the grant of stock options to purchase shares of Common Stock to outside
Directors as additional compensation for their service as Directors. Under the
Directors Plan, outside Directors are automatically granted options to purchase
1,000 shares of Common Stock annually. In addition, the Directors Plan
provides for the automatic grant every five years of options to purchase 1,500
shares of the common stock of a majority-owned subsidiary of the Corporation
that is "spun out" to outside investors.
Prior to January 1, 1996, the Directors Plan provided for the grant of
stock options upon a Director's initial appointment. Outside Directors
appointed before the amendment of the plan received an option to purchase 21,600
shares of Common Stock upon their initial appointment or election. Options
granted prior to 1996 are currently exercisable, subject to restrictions upon
transfer and the right of the Corporation to repurchase such shares at the
exercise price in the event the Director ceases to serve as a Director of the
Corporation or another Thermo Electron company. Such repurchase rights lapse
ratably over a five-year period, commencing with the first anniversary of the
grant date. These options expire on the seventh anniversary of the grant date,
unless the Director dies or otherwise ceases to serve as a Director of the
Corporation or any other Thermo Electron company prior to that date. The grant
of options upon a Director's appointment was discontinued on December 31, 1995,
pursuant to the terms of the plan, as amended.
Pursuant to the amended Directors Plan, outside Directors receive an annual
grant of options to purchase 1,000 shares of Common Stock at the close of
business on the date of each Annual Meeting of Stockholders of the Corporation
to each outside Director then holding office. Options evidencing annual grants
may be exercised at any time from and after the six-month anniversary of the
grant date of the option and prior to the expiration of the option on the third
anniversary of the grant date. Shares acquired upon exercise of the options are
subject to
4
<PAGE>
repurchase by the Corporation at the exercise price if the recipient ceases to
serve as a Director of the Corporation or another Thermo Electron company prior
to the first anniversary of the grant date.
In addition, under the amended Directors Plan, outside Directors are
automatically granted options to purchase 1,500 shares of common stock of each
majority-owned subsidiary that is "spun out" to outside investors. The grant
occurs on the close of business on the date of the first Annual Meeting of
Stockholders next following the subsidiary's spinout, which is the first to
occur of either an initial public offering of the subsidiary's common stock or a
sale of such stock to third parties in an arms-length transaction. The options
granted vest and become exercisable on the fourth anniversary of the date of
grant, unless prior to such date the subsidiary's common stock is registered
under Section 12 of the Securities Exchange Act of 1934, as amended ("Section 12
Registration"). In the event that the effective date of Section 12 Registration
occurs before the fourth anniversary of the grant date, the option will become
exercisable 90 days after the effective date and the shares acquired upon
exercise will be subject to restrictions on transfer and the right of the
Corporation to repurchase such shares at the exercise price in the event the
Director ceases to serve as a Director of the Corporation or another Thermo
Electron company. In the event of Section 12 Registration, the restrictions and
repurchase rights shall lapse or be deemed to lapse at the rate of 25% per year,
starting with the first anniversary of the grant date. These options expire
after five years.
The exercise price for options granted under the Directors Plan is the
average of the closing prices of the common stock as reported on the American
Stock Exchange (or other principal market on which the common stock is then
traded) for the five trading days preceding and including the date of grant, or,
if the shares are not then traded, at the last price paid per share by third
parties in an arms-length transaction prior to the option grant. An aggregate
of 225,000 shares of Common Stock has been reserved for issuance under the
Directors Plan.
STOCK OWNERSHIP POLICIES FOR DIRECTORS
During fiscal 1996, the Human Resources Committee of the Board of Directors
(the "Committee") established a stock holding policy for Directors. The stock
holding policy requires each Director to hold a minimum of 1,000 shares of
Common Stock. Directors are requested to achieve this ownership level by the
1998 Annual Meeting of Stockholders. Directors who are also executive officers
of the Corporation are required to comply with a separate stock holding policy
established by the Committee in fiscal 1996, which is described in the Committee
Report on Executive Compensation - Stock Ownership Policies.
In addition, the Committee adopted a policy requiring Directors to hold a
certain number of shares of the Corporation's Common Stock acquired upon the
exercise of stock options. Under this policy, Directors are required to hold
shares of Common Stock equal to one-half of their net option exercises over a
period of five years. The net option exercise is determined by calculating the
number of shares acquired upon exercise of a stock option, after deducting the
number of shares that could have been traded to exercise the option and the
number of shares that could have been surrendered to satisfy tax withholding
obligations attributable to the exercise of the option. This policy is also
applicable to executive officers and is described in the Committee Report on
Executive Compensation - Stock Ownership Policies.
STOCK OWNERSHIP
The following table sets forth the beneficial ownership of Common Stock, as
well as the common stock of Thermo Electron, and ThermoLase Corporation
("ThermoLase") and Trex Medical Corporation ("Trex Medical"), each a majority-
owned subsidiary of the Corporation, as of December 28, 1996, with respect to
(i) each person who was known by the Corporation to own beneficially more than
5% of the outstanding shares of Common Stock, (ii) each Director and nominee for
Director, (iii) each executive officer named in the summary compensation table
under the heading "Executive Compensation" and (iv) all Directors and executive
officers as a group.
While certain Directors and executive officers of the Corporation are also
Directors and executive officers of Thermo Electron or its subsidiaries other
than the Corporation, all such persons disclaim beneficial ownership of the
shares of Common Stock owned by Thermo Electron.
5
<PAGE>
<TABLE>
<CAPTION>
THERMOTREX THERMO ELECTRON
NAME (1) CORPORATION (2) CORPORATION (3) THERMOLASE (4) TREX MEDICAL (5)
--------- --------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C>
Thermo Electron Corporation (6)...... 9,847,540 N/A N/A N/A
Morton Collins....................... 24,513 0 13,504 2,164
Peter O. Crisp....................... 43,094 98,696 68,889 14,845
Paul F. Ferrari...................... 28,400 25,229 24,623 3,075
George N. Hatsopoulos................ 48,746 3,538,079 31,125 41,188
John N. Hatsopoulos.................. 23,844 566,768 63,503 40,983
Robert C. Howard..................... 35,554 194,493 70,181 43,174
Hal Kirshner......................... 93,321 117,824 62,086 285,000
Anthony J. Pellegrino................ 807,021 115,875 408,582 147,513
Firooz Rufeh......................... 100,541 133,286 260,694 93,600
Brett A. Spivey...................... 70,932 19,548 41,749 21,810
Kenneth Y. Tang...................... 79,516 26,033 354,318 48,706
Gary S. Weinstein.................... 110,000 160,412 168,044 315,000
Nicholas T. Zervas................... 28,156 0 87,020 3,000
All Directors and current executive
officers as a group (15 persons)..... 1,514,319 5,151,241 1,742,618 1,071,058
</TABLE>
(1) Except as reflected in the footnotes to this table, shares of Common Stock
of the Corporation and of the common stock of Thermo Electron, ThermoLase
and Trex Medical beneficially owned consist of shares owned by the
indicated person, and all share ownership includes sole voting and
investment power.
(2) Shares of the Common Stock beneficially owned by each Director and
executive officer and by all Directors and executive officers as a group
exclude 9,847,540 shares beneficially owned by Thermo Electron, as to which
shares each Director and executive officer and all members of such group
disclaim beneficial ownership. Shares of the Common Stock beneficially
owned by Mr. Collins, Mr. Crisp, Mr. Ferrari, Dr. G. Hatsopoulos, Mr. J.
Hatsopoulos, Mr. Howard, Mr. Kirshner, Mr. Pellegrino, Mr. Rufeh, Dr.
Spivey, Dr. Tang, Mr. Weinstein, Dr. Zervas and all Directors and executive
officers as a group include 17,710, 27,800, 27,650, 36,600, 21,000, 31,320,
73,000, 134,500, 66,000, 67,969, 63,318, 100,000, 26,200 and 713,467
shares, respectively, that such person or group has the right to acquire
within 60 days of December 28, 1996 through the exercise of stock options.
Shares beneficially owned by Mr. Collins, Mr. Crisp, Dr. Zervas and all
Directors and executive officers as a group include 269, 1,921, 2,061 and
4,251 full shares, respectively, that had been allocated through December
28, 1996, to their respective accounts maintained under the Corporation's
Deferred Compensation Plan for Directors. Shares beneficially owned by
Mr. Ferrari include 750 shares held in a trust of which Mr. Ferrari is the
trustee. Shares beneficially owned by Dr. G. Hatsopoulos include 160
shares held by Dr. G. Hatsopoulos' spouse and 270 shares that Dr. G.
Hatsopoulos' spouse has the right to acquire within 60 days of December 28,
1996 through the exercise of stock options. Shares beneficially owned by
Mr. Pellegrino include 10,408 shares held in a trust of which Mr.
Pellegrino's spouse is the trustee for the benefit of Mr. Pellegrino's
minor child. Shares beneficially owned by Dr. Tang include 2,025 shares
held by Dr. Tang's daughter. As of December 28, 1996, no Director or
executive officer beneficially owned more than 1.0% of the Common Stock
outstanding as of December 28, 1996, other than Mr. Pellegrino, who
beneficially owned approximately 4.1% of the Common Stock; all Directors
and executive officers as a group beneficially owned 7.6% of the Common
Stock outstanding as of such date.
(3) The shares of the common stock of Thermo Electron shown in the table
reflect a three-for-two split of such stock distributed in June 1996 in the
form of a 50% stock dividend. Shares of the common stock of Thermo
Electron beneficially owned by Mr. Crisp, Dr. G. Hatsopoulos, Mr. J.
Hatsopoulos, Mr. Howard, Mr. Kirshner, Mr. Pellegrino, Mr. Rufeh, Dr.
Spivey, Dr. Tang, Mr. Weinstein and all Directors and
6
<PAGE>
executive officers as a group include 9,375, 1,499,500, 429,685, 47,361,
116,025, 115,875, 90,560, 13,853, 23,850, 160,075 and 2,613,733 shares,
respectively, that such person or group has the right to acquire within 60
days of December 28, 1996 through the exercise of stock options. Shares
beneficially owned by Dr. G. Hatsopoulos, Mr. J. Hatsopoulos, Mr. Howard
and all Directors and executive officers as a group include 2,164, 1,934,
3,040 and 8,615 full shares, respectively, allocated to their respective
accounts maintained pursuant to Thermo Electron's employee stock ownership
plan, of which the trustees, who have investment power over its assets
were, as of December 28, 1996, executive officers of Thermo Electron.
Shares beneficially owned by Mr. Crisp and all Directors and executive
officers as a group include 44,677 full shares, allocated through December
28, 1996 to Mr. Crisp's account maintained pursuant to Thermo Electron's
deferred compensation plan for directors. Shares beneficially owned by Mr.
Ferrari include 7,312 shares held in a trust of which Mr. Ferrari is the
trustee and 13,062 shares held in a trust for the benefit of Mr. Ferrari's
spouse. Shares beneficially owned by Dr. G. Hatsopoulos include 89,601
shares held by Dr. G. Hatsopoulos' spouse, 168,750 shares held by a QTIP
Trust for Dr. G. Hatsopoulos' spouse, 39,937 shares held by a family trust
of which Dr. G. Hatsopoulos' spouse is trustee, and 153 shares allocated to
the account of Dr. G. Hatsopoulos' spouse maintained pursuant to Thermo
Electron's employee stock ownership plan. Shares beneficially owned by Dr.
G. Hatsopoulos also include 50,000 and 10,800 shares that a family trust,
of which Dr. G. Hatsopoulos' spouse is the trustee, and Dr. G. Hatsopoulos'
spouse, respectively, has the right to acquire within 60 days of December
28, 1996 through the exercise of stock options. As of December 28, 1996, no
Director or executive officer beneficially owned more than 1% of the
outstanding Thermo Electron common stock, other than Dr. G. Hatsopoulos,
who beneficially owned 2.3% of such common stock; all directors and
executive officers as a group beneficially owned approximately 3.4% of the
Thermo Electron common stock outstanding as of December 28, 1996.
(4) Shares of the common stock of ThermoLase beneficially owned by Mr. Collins,
Mr. Crisp, Mr. Ferrari, Dr. G. Hatsopoulos, Mr. J. Hatsopoulos, Mr.
Howard, Mr. Kirshner, Mr. Pellegrino, Mr. Rufeh, Dr. Spivey, Dr. Tang, Mr.
Weinstein, Dr. Zervas and all Directors and executive officers as a group
include 13,504, 22,508, 22,508, 28,800, 53,800, 43,200, 36,400, 72,000,
44,240, 32,000, 304,000, 100,000, 67,068 and 922,028 shares, respectively,
that such person or group has the right to acquire within 60 days of
December 28, 1996 through the exercise of stock options. Shares
beneficially owned by Dr. Zervas and all Directors and executive officers
as a group include 796 full shares, allocated through December 28, 1996 to
Dr. Zervas' account maintained pursuant to ThermoLase's deferred
compensation plan for directors shares beneficially owned by Mr. Ferrari
include 2,115 shares held in a trust of which Mr. Ferrari is the trustee.
Shares beneficially owned by Mr. Crisp include 11,446 shares owned by
Mr. Crisp's spouse, as to which shares Mr. Crisp disclaims beneficial
ownership. Shares beneficially owned by Dr. G. Hatsopoulos include 32
shares held by his spouse. Shares beneficially owned by Mr. Pellegrino
include 2,082 shares held in a trust of which Mr. Pellegrino's spouse is
the trustee for the benefit of his minor child. Shares beneficially owned
by Dr. Tang include 3,878 shares held by Dr. Tang's daughter. As of
December 28, 1996, no Director or executive officer beneficially owned more
than 1% of the common stock outstanding of ThermoLase, other than Mr.
Pellegrino, who beneficially owned 1.0% of such common stock; all Directors
and executive officers as a group beneficially owned approximately 4.2% of
the ThermoLase common stock outstanding as of such date.
(5) Shares of the common stock of Trex Medical beneficially owned by Mr.
Collins, Mr. Crisp, Mr. Ferrari, Dr. G. Hatsopoulos, Mr. J. Hatsopoulos,
Mr. Howard, Mr. Kirshner, Mr. Pellegrino, Mr. Rufeh, Dr. Spivey, Dr. Tang,
Mr. Weinstein, Dr. Zervas and all Directors and executive officers as a
group include 1,500, 2,500, 1,500, 40,000, 40,000, 40,000, 150,000, 40,000,
40,000, 15,000, 40,000, 300,000, 1,500 and 723,000 shares, respectively,
that such person or group has the right to acquire within 60 days of
December 28, 1996 through the exercise of stock options. Shares
beneficially owned by Mr. Ferrari consist of 1,075 shares held in a trust
of which Mr. Ferrari is the trustee. Shares beneficially owned by Mr.
Pellegrino include 1,041 shares held in a trust of which Mr. Pellegrino's
spouse is the trustee for the benefit of his minor child. Shares
beneficially owned by Mr. Rufeh include 53,600 shares owned by the Rufeh
Family Trust of which Mr. Rufeh is the trustee. As of December 28, 1996,
no Director or executive officer beneficially owned more than 1% of the
outstanding common stock of Trex Medical, other than Mr.
7
<PAGE>
Weinstein, who beneficially owned 1.07% of such common stock; all Directors
and executive officers as a group owned 3.6% of such outstanding common
stock as of such date.
(6) Thermo Electron beneficially owned 51.3 % of the Common Stock outstanding
as of December 28, 1996. Thermo Electron's address is 81 Wyman Street,
Waltham, Massachusetts 02254-9046. As of December 28, 1996, Thermo Electron
had the power to elect all of the members of the Corporation's Board of
Directors.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's Directors and executive officers, and beneficial owners of more
than 10% of the Common Stock, such as Thermo Electron, to file with the
Securities and Exchange commission initial reports of ownership and periodic
reports of changes in ownership of the Corporation's securities. Based upon a
review of such filings, all Section 16(a) filing requirements applicable to such
persons were complied with during fiscal 1996, except in the following
instances. Mr. Anthony J. Pellegrino failed to report a charitable gift of
2,500 shares on July 9, 1996 on his Form 5 for the fiscal year ended September
28, 1996. In addition, Thermo Electron, the beneficial owner of more than 10%
of the Common Stock, filed four Forms 4 late for the months of March 1996, May
1996, July 1996 and August 1996, reporting a total of 23 transactions consisting
of the exercise of options to purchase shares of Common Stock from Thermo
Electron by its employees in transactions ranging in size from 85 to 900 shares,
and two transactions consisting of the lapse of such options to purchase 180 and
135 shares without exercise. Thermo Electron also filed a fifth Form 4 late for
the month of July 1996 by eight days, reporting one transaction.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes compensation for services to the Corporation
in all capacities awarded to, earned by or paid to the Corporation's chief
executive officer, its former chief executive officer, and its four other most
highly compensated executive officers (the "named executive officers") for the
last full fiscal year from October 1, 1995 to September 28, 1996 ("fiscal 1996")
and for the nine-month period from January 1, 1995 to September 30, 1995
("fiscal 1995"), reflecting a change in the Corporation's fiscal year-end to the
52 or 53 week period ending on the Saturday nearest September 30, and for two
preceding full fiscal years ("fiscal 1994" and "fiscal 1993").
The Corporation is required to appoint certain executive officers and full-
time employees of Thermo Electron as executive officers of the Corporation, in
accordance with the Thermo Electron Corporate Charter. The compensation for
these executive officers is determined and paid entirely by Thermo Electron. The
time and effort devoted by these individuals to the Corporation's affairs is
provided to the Corporation under the Corporate Services Agreement between the
Corporation and Thermo Electron. Accordingly, the compensation for these
individuals is not reported in the following table.
8
<PAGE>
Summary Compensation Table
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
SECURITIES
ANNUAL COMPENSATION UNDERLYING OPTIONS
NAME AND PRINCIPAL FISCAL ------------------- (NO. OF SHARES AND ALL OTHER
POSITION YEAR SALARY BONUS COMPANY) (3) COMPENSATION (4)
-------- ---- ------ ----- ------------ ----------------
<S> <C> <C> <C> <C> <C>
Gary S. Weinstein (5) 1996 $72,916 $100,000 (2) 100,000 (TKN) $10,256 (6)
Chief Executive Officer 100,000 (TLZ)
300,000 (TXM)
- -------------------------------------------------------------------------------------------------------------------
Firooz Rufeh (7) 1996 $167,175 $90,000 (2) 40,000 (TXM) $6,750
President and Former 1995 $122,850 (1) $144,000 -- $7,058
Chief Executive Officer 1994 $157,500 $137,700 -- $6,423
1993 $137,052 $93,960 30,000 (TKN) $6,746
480,000 (TLZ)
- -------------------------------------------------------------------------------------------------------------------
Anthony J. Pellegrino (8) 1996 $223,750 $150,000 (2) 40,000 (TXM) $5,344
Senior Vice President 1995 $187,500 (1) $200,000 -- -- $6,750
1994 $250,000 $180,000 22,500 (TMO) $6,750
1993 $250,000 $175,000 22,000 (TKN) $2,249
72,000 (TLZ)
9,000 (TMO)
- -------------------------------------------------------------------------------------------------------------------
Hal Kirshner (8) 1996 $192,500 $200,000 (2) 150,000 (TXM) $9,958 (9)
President and Chief 150 (TMO)
Executive, Officer, Trex 2,000 (TBA)
Medical Corporation 2,000 (TFG)
2,000 (TLT)
6,000 (TOC)
6,000 (TMQ)
2,000 (TSR)
1995 $150,000 (1) $200,000 -- $7,005
1994 $200,000 $180,000 22,500 (TMO) $6,750
1993 $200,000 $175,000 22,000 (TKN) $2,249
36,400 (TLZ)
9,000 (TMO)
- -------------------------------------------------------------------------------------------------------------------
Kenneth Y. Tang (9) 1996 $156,500 $50,000 (2) 40,000 (TXM) $6,975
Senior Vice President 1995 $114,000 (1) $49,000 -- $6,578
1994 $145,000 $50,000 -- $6,750
1993 $138,000 $38,000 15,000 (TKN) $6,868
304,000 (TLZ)
10,350 (TMO)
- -------------------------------------------------------------------------------------------------------------------
Brett A. Spivey 1996 $123,750 $42,000 (2) 15,000 (TXM) $7,094
Vice President 1995 $90,000 (1) $40,000 -- $6,968
1994 $116,000 $36,000 -- $6,701
1993 $111,000 $33,000 30,000 (TKN) $6,208
32,000 (TLZ)
6,750 (TMO)
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
(1) Annual compensation for executive officers is reviewed and determined on a
calendar year basis, even though the Corporation's fiscal year ends in
September. The Corporation changed its fiscal year-end to September from
December in 1995, and as a consequence, the salary data for fiscal 1995
reflects salary paid during the nine-month period from January 1, 1995 to
September 30, 1995. Salary data for subsequent fiscal years represents
salary paid during the Corporation's full fiscal year.
(2) The bonus amount presented for fiscal 1995 represents the bonus paid for
performance during calendar 1995. Bonuses have not yet been determined for
calendar 1996; therefore, the bonus amounts shown for fiscal 1996 are
estimates.
(3) Options to purchase Common Stock of the Corporation awarded to the named
executive officers are followed by the designation "TKN." Mr. Weinstein
and Mr. Rufeh have been granted certain options to purchase common stock of
Thermo Electron and certain of its subsidiaries other than the Corporation
and its subsidiaries, ThermoLase (designated in the table as "TLZ") and
Trex Medical (designated in the table as "TXM"), from time to time by
Thermo Electron or its other subsidiaries. These options are not reported
here as they were granted as compensation for service to the other Thermo
Electron companies in capacities other than in their capacities as officers
of the Corporation. The named executive officers of the Corporation have
been granted options to purchase common stock of Thermo Electron and
certain its other subsidiaries as part of Thermo Electron's stock option
program in their capacities as officers of the Corporation. Options have
been granted during the period covered by the table to the named executive
officers in the following Thermo Electron companies: Thermo Electron
(designated in the table as TMO), Thermo BioAnalysis Corporation
(designated in the table as TBA), Thermo Fibergen Inc. (designated in the
table as TFG), ThermoLyte Corporation (designated in the table as TLT),
Thermo Optek Corporation (designated in the table as TOC), ThermoQuest
Corporation (designated in the table as TMQ) and Thermo Sentron Inc.
(designated in the table as TSR). The shares of common stock of Thermo
Electron reported in the table reflect a three-for-two stock split
distributed in June 1996 in the form of a 50% stock dividend.
(4) Represents the amount of matching contributions made by the individual's
employer on behalf of executive officers participating in the Thermo
Electron 401(k) plan or, as to Mr. Pellegrino and Mr. Kirshner for fiscal
1993, the LORAD 401(k) plan.
(5) Mr. Weinstein was appointed the Corporation's Chief Executive Officer
effective as of February 26, 1996. He was also appointed a vice president
of Thermo Electron effective as of February 26, 1996, and a portion of his
annual cash compensation (salary and bonus) has been allocated to and paid
by Thermo Electron since the commencement of his employment for the time he
devoted to his responsibilities in that capacity. The annual cash
compensation (salary and bonus) reported in the table for Mr. Weinstein
represents the amount paid by the Corporation and all other sources for Mr.
Weinstein's services as its chief executive officer. For fiscal 1996,
approximately 50% of Mr. Weinstein's aggregate salary and bonus earned in
all capacities throughout the Thermo Electron organization was paid by the
Corporation for his services as chief executive officer.
(6) Represents the amount of compensation attributable to an interest-free loan
provided to Mr. Weinstein pursuant to the Corporation's Stock Holding
Assistance Plan. See "Relationship with Affiliates - Stock Holding
Assistance Plan."
(7) Prior to February 1997, Mr. Rufeh served as a vice president of Thermo
Electron, as well as the president of the Corporation. He also served as
the chief executive officer of the Corporation until February 1996. A
portion of Mr. Rufeh's annual cash compensation (salary and bonus) has been
allocated to and paid by Thermo Electron for the time he devoted to his
responsibilities as a vice president of Thermo Electron. The annual cash
compensation (salary and bonus) reported in the table for Mr. Rufeh
represents the amount paid by the Corporation and all other sources for Mr.
Rufeh's services to the Corporation and its subsidiaries.
10
<PAGE>
For 1996, 1995, 1994 and 1993, 90%, 90%, 90% and 81%, respectively, of Mr.
Rufeh's aggregate salary and bonus earned in all capacities throughout the
Thermo Electron organization was paid by the Corporation for his services
in all capacities to the Corporation and its subsidiaries.
(8) Mr. Pellegrino and Mr. Kirshner were first appointed executive officers of
the Corporation in November 1992 in connection with the acquisition of
LORAD Corporation by the Corporation. The salary and bonus for each of Mr.
Pellegrino and Mr. Kirshner are determined by employment agreements entered
into with the Corporation at the time LORAD Corporation was acquired. Mr.
Pellegrino also serves as a Director of ThermoQuest Corporation, a majority
owned subsidiary of Thermo Electron. Options granted to Mr. Pellegrino in
his capacity as a Director of ThermoQuest are not included in the table as
they were granted for service in a capacity other than in his capacity as
an officer of the Corporation.
(9) In addition to the matching contribution referred to in footnote (4), such
amount includes $4,614, representing the market value of 115 shares of
Thermo Electron common stock received by Mr. Kirshner in May 1996 at Thermo
Electron's Annual Management Conference in recognition of his managerial
achievements.
STOCK OPTIONS GRANTED DURING FISCAL 1996
Mr. Weinstein and Mr. Rufeh have been granted options to purchase common
stock of Thermo Electron and certain of its subsidiaries from time to time as
compensation for service to other Thermo Electron companies in capacities other
than in his capacity as chief executive officer of the Corporation.
Accordingly, options granted by Thermo Electron companies other than the
Corporation and its subsidiaries have not been reported here. It has not been
the Corporation's policy in the past to grant stock appreciation rights, and no
such rights were granted during fiscal 1996.
11
<PAGE>
OPTIONS GRANTS IN FISCAL 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF POTENTIAL REALIZABLE
TOTAL VALUE AT ASSUMED
OPTIONS ANNUAL RATES OF STOCK
NUMBER OF GRANTED TO EXERCISE PRICE APPRECIATION FOR
SECURITIES EMPLOYEES PRICE OPTION TERM (2)
UNDERLYING OPTIONS IN FISCAL PER EXPIRATION ---------------
NAME GRANTED (1) YEAR SHARE DATE 5% 10%
---- ----------- ---- ----- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Gary S. Weinstein. 100,000 (TKN) 73.6% $41.98 3/29/03 $1,709,000 $3,983,000
100,000 (TLZ) 21.3% (3) $26.95 2/23/03 $1,097,000 $2,557,000
100,000 (TXM) 5.7% (3) $11.00 3/26/08 $875,000 $2,352,000
100,000 (TXM) 5.7% (3) $11.00 2/28/08 $875,000 $2,352,000
100,000 (TXM) 5.7% (3) $11.00 3/11/08 $875,000 $2,352,000
- ---------------------------------------------------------------------------------------------------------------
Firooz Rufeh ..... 40,000 (TXM) 2.3% (3) $11.00 3/26/08 $350,000 $940,800
- ---------------------------------------------------------------------------------------------------------------
Anthony J. 40,000 (TXM) 2.3% (3) $11.00 3/26/08 $350,000 $940,800
Pellegino.........
- ---------------------------------------------------------------------------------------------------------------
Hal Kirshner...... 150,000 (TXM) 8.5% (3) $11.00 3/26/08 $1,312,500 $3,528,000
150 (TMO) 0.01% (3) $42.79 5/22/99 $1,011 $2,124
2,000 (TBA) 0.2% (3) $10.00 3/11/08 $15,920 $42,760
2,000 (TFG) 0.4% (3) $10.00 9/12/08 $15,920 $42,760
2,000 (TLT) 0.6% (3) $10.00 3/11/08 $15,920 $42,760
6,000 (TOC) 0.2% (3) $12.00 4/9/08 $57,300 $153,960
6,000 (TMQ) 0.2% (3) $13.00 3/11/08 $62,100 $166,800
2,000 (TSR) 0.4% (3) $14.00 3/11/08 $22,280 $59,880
- ---------------------------------------------------------------------------------------------------------------
Kenneth Y. Tang... 40,000 (TXM) 2.3% (3) $11.00 3/26/08 $350,000 $940,800
- ---------------------------------------------------------------------------------------------------------------
Brent A. Spivey... 15,000 (TXM) 0.9% (3) $11.00 2/28/08 $131,250 $352,800
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The shares of common stock of Thermo Electron shown in the table reflect a
three-for-two stock split distributed in June 1996 in the form of a 50%
stock dividend. All of the options granted during the fiscal year are
immediately exercisable, except options to purchase ThermoLyte Corporation
(designated in the table as TLT), which are not exercisable until the
earlier of (i) 90 days after the effective date of the registration of that
company's common stock under Section 12 of the Securities Exchange Act of
1934 (the "Exchange Act") and (ii) nine years after the grant date. In all
cases, the shares acquired upon exercise are subject to repurchase by the
granting corporation at the exercise price if the optionee ceases to be
employed by the Corporation or another Thermo Electron company. The
granting corporation may exercise its repurchase rights within six months
after the termination of the optionee's employment. For publicly traded
companies, the repurchase rights generally lapse ratably over a five- to
ten-year period, depending on the option term, which may vary from seven to
twelve years, provided that the optionee continues to be employed by the
Corporation or another Thermo Electron company. For companies that are not
publicly traded, the repurchase rights lapse in their entirety on the ninth
anniversary of the grant date. As to the options to purchase shares of the
common stock of Trex Medical Corporation granted to Mr. Rufeh, Mr.
Pellegrino, Mr. Kirshner and Dr. Tang, the repurchase rights are deemed to
lapse 20% per year commencing on the sixth anniversary of the grant date.
Certain options granted as part of Thermo Electron's stock option program
have three-year terms, and the repurchase rights lapse in their entirety on
the second anniversary of the grant date. The granting corporation may
permit the holders of such options to exercise options and to satisfy tax
withholding obligations by surrendering shares equal in fair market value
to the exercise price or withholding obligation.
12
<PAGE>
(2) The amounts shown on this table represent hypothetical gains that could be
achieved for the respective options if exercised at the end of the option
term. These gains are based on assumed rates of stock appreciation of 5%
and 10% compounded annually from the date the respective options were
granted to their expiration date. The gains shown are net of the option
exercise price, but do not include deductions for taxes or other expenses
associated with the exercise. Actual gains, if any, on stock option
exercises will depend on the future performance of the common stock of the
granting corporation, the optionee's continued employment through the
option period and the date on which the options are exercised.
(3) These options were granted under stock option plans maintained by Thermo
Electron and accordingly are reported as a percentage to total options
granted to employees of Thermo Electron and its public subsidiaries.
STOCK OPTIONS EXERCISED DURING FISCAL 1996 AND FISCAL YEAR-END VALUES
The following table reports certain information regarding stock option
exercises during fiscal 1996 and outstanding stock options of the Thermo
Electron companies held at the end of fiscal 1996 by the named executive
officers. No stock appreciation rights were exercised or were outstanding
during fiscal 1996.
AGGREGATED OPTION EXERCISES IN FISCAL 1996 AND FISCAL 1996 Year-END OPTION
VALUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NO. OF UNEXERCISED
SHARES OPTIONS AT FISCAL VALUE OF
ACQUIRED YEAR-END UNEXERCISED
ON VALUE (EXERCISABLE/ IN-THE-MONEY
NAME COMPANY EXERCISE REALIZED UNEXERCISABLE) (1) OPTIONS
---- ------- -------- -------- ------------------ -------
<S> <C> <C> <C> <C> <C>
Gary S. Weinstein .....ThermoTrex -- -- 100,000 /0 $0 /--
ThermoLase -- -- 100,000 /0 $0 /--
Trex Medical -- -- 300,000 /0 $2,775,000 /--
- ----------------------------------------------------------------------------------------------------------
Firooz Rufeh (2) ......ThermoTrex -- -- 66,000 /0 $1,760,550 /--
ThermoLase 435,760 $13,167,520 44,240 /0 $923,510 /--
Trex Medical -- -- 40,000 /0 $370,000 /--
- ----------------------------------------------------------------------------------------------------------
Anthony J. Pellegrino ThermoTrex -- -- 134,500 /0 $3,442,288 /--
ThermoLase -- -- 72,000 /0 $1,557,000 /--
Trex Medical -- -- 40,000 /0 $370,000 /--
Thermo Electron -- -- 115,875 (3) $2,953,132 /--
- ----------------------------------------------------------------------------------------------------------
Hal Kirshner ..........ThermoTrex 76,500 $ 2,079,270 73,000 /0 $1,809,155 /--
ThermoLase -- -- 36,400 /0 $787,150 /--
Trex Medical -- -- 150,000 /0 $1,387,500 /--
Thermo Electron -- -- 116,025 /0 (3) $2,953,132 /--
Thermo BioAnalysis -- -- 2,000 /0 $7,750 /--
Thermo Fibergen -- -- 2,000 /0 $5,250 /--
ThermoLyte -- -- 0 /2000 --/ $0 (4)
Thermo Optek -- -- 6,000 /0 $18,000 /--
ThermoQuest -- -- 6,000 /0 $3,000 /--
Thermo Sentron -- -- 2,000 /0 $0 /--
- ----------------------------------------------------------------------------------------------------------
Kenneth Y. Tang .......ThermoTrex -- -- 63,318 /0 $1,840,598 /--
ThermoLase -- -- 304,000 /0 $6,490,000 /--
Trex Medical 40,000 /0 $370,000 /--
Thermo Electron 19,125 $ 595,419 23,850 /0 $674,004 /--
- ----------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Thermo Ecotek -- -- 3,000 /0 $33,501 /--
Thermo Fibertek -- -- 4,500 /0 $45,563 /--
- ----------------------------------------------------------------------------------------------------------
Brett A. Spivey .......ThermoTrex -- -- 67,969 /0 $1,822,918 /--
ThermoLase -- -- 32,000 /0 $692,000 /--
Trex Medical 15,000 /0 $138,750 /--
Thermedics -- -- 2,250 /0 $36,574 /--
Thermo Ecotek -- -- 1,500 /0 $16,751 /--
Thermo Electron 6,147 $ 39,6728 13,853 /0 $381,413 /--
Thermo Fibertek -- -- 4,500 /0 $45,563 /--
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(1) The shares of the common stock shown in the table have been adjusted to
reflect three-for-two stock splits, each in the form of a 50% stock
dividend, distributed by Thermo Electron in June 1996 and Thermo Fibertek
Inc. in June 1996. All of the options reported outstanding at the end of
the fiscal year are immediately exercisable as of fiscal year-end, except
ThermoLyte Corporation (designated in the table as TLT), which are not
exercisable until the earlier of (i) 90 days after the effective date of
the registration of that company's common stock under Section 12 of the
Exchange Act and (ii) nine years after the grant date. In all cases, the
shares acquired upon exercise of the options reported in the table are
subject to repurchase by the granting corporation at the exercise price if
the optionee ceases to be employed by such corporation or another Thermo
Electron company. The granting corporation may exercise its repurchase
rights within six months after the termination of the optionee's
employment. For publicly traded companies, the repurchase rights generally
lapse ratably over a five- to ten-year period, depending on the option
term, which may vary from seven to twelve years, provided that the optionee
continues to be employed by the Corporation or another Thermo Electron
company. For companies that are not publicly traded, the repurchase rights
lapse in their entirety on the ninth anniversary of the grant date. As to
the options to purchase shares of the common stock of Trex Medical
Corporation granted to Mr. Rufeh, Mr. Pellegrino, Mr. Kirshner and Dr.
Tang, the repurchase rights are deemed to lapse 20% per year commencing on
the sixth anniversary of the grant date. Certain options granted as part
of Thermo Electron's stock option program have three-year terms, and the
repurchase rights lapse in their entirety on the second anniversary of the
grant date.
(2) As officers of Thermo Electron, Mr. Weinstein and Mr. Rufeh also hold
unexercised options to purchase common stock of Thermo Electron and its
subsidiaries other than the Corporation. These options are not reported in
the table as they were granted as compensation for service to other Thermo
Electron companies in capacities other than in their capacities as
officers of the Corporation.
(3) Options to purchase 22,500 shares of the common stock of Thermo Electron
granted to each of Mr. Kirshner and Mr. Pellegrino are subject to the same
terms described in footnote (1), except that the repurchase rights of the
granting corporation generally do not lapse until the tenth anniversary of
the grant date. In the event of the employee's death or involuntary
termination prior to the tenth anniversary of the grant date, the
repurchase rights of the granting corporation shall be deemed to have
lapsed ratably over a five-year period commencing with the fifth
anniversary of the grant date.
(4) No public market existed for the shares as of December 28, 1996.
Accordingly, no value in excess of the exercise price has attributed to
these options.
EMPLOYMENT AGREEMENTS
In connection with the acquisition of the LORAD Corporation ("LORAD") in
November 1992, the Corporation entered into an employment agreement with each of
Mr. Anthony J. Pellegrino and Mr. Hal Kirshner. Mr. Pellegrino's agreement
calls for Mr. Pellegrino to serve as Chairman of the Board and Chief Executive
Officer of LORAD until December 31, 1995, at a base salary of $250,000 per year
plus bonus. Mr. Kirshner's agreement
14
<PAGE>
calls for Mr. Kirshner to serve as President and Chief Operating Officer of
LORAD until December 31, 1995, at a base salary of $200,000 per year plus bonus.
These agreements expired on December 31, 1995.
SEVERANCE AGREEMENTS
In 1988, Thermo Electron entered into severance agreements with several of
its key employees, including key employees of the Corporation and other
majority-owned subsidiaries. These agreements provide severance benefits if
there is a change of control of Thermo Electron that is not approved by the
Board of Directors of Thermo Electron and the employee's employment with Thermo
Electron or the majority-owned subsidiary is terminated, for whatever reason,
within one year thereafter. For purposes of the agreement, a change of control
exists upon (i) the acquisition of 50% or more of the outstanding common stock
of Thermo Electron by any person without the prior approval of the Board of
Directors of Thermo Electron, (ii) the failure of the Board of Directors of
Thermo Electron, within two years after any contested election of directors or
tender or exchange offer not approved by the board of directors, to be
constituted of a majority of directors holding office prior to such event or
(iii) any other event that the Board of Directors of Thermo Electron determines
constitutes an effective change of control of Thermo Electron. Each of the
recipients of these agreements would receive a lump-sum benefit at the time of a
qualifying severance (as defined below) equal to the highest total cash
compensation paid to the employee by Thermo Electron or the majority-owned
subsidiary in any 12-month period during the three years preceding the
qualifying severance. A qualifying severance exists (i) if the employment of the
executive officer is terminated for any reason within one year after a change in
control of Thermo Electron or (ii) a group of directors of Thermo Electron
consisting of directors of Thermo Electron on the date of the severance
agreement or, if an election contest or tender or exchange offer for Thermo
Electron's common stock has occurred, the directors of Thermo Electron
immediately prior to such election contest or tender or exchange offer, and any
future directors who are nominated or elected by such directors, determines that
any other termination of the executive officer's employment should be treated as
a qualifying severance. The benefits to be provided are limited so that the
payments would not constitute so-called "excess parachute payments" under
applicable provisions of the Internal Revenue Code of 1986. Assuming that
severance benefits would have been payable under these agreements as of
September 28, 1996, Mr. Rufeh would have received approximately $335,000.
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
All decisions on compensation for the Corporation's executive officers are
made by the Human Resources Committee of the Board of Directors (the
"Committee"). In reviewing and establishing total cash compensation and stock-
based compensation for executives, the Committee follows guidelines established
by the Human Resources Committee of the Board of Directors of its parent
corporation, Thermo Electron. The executive compensation program presently
consists of annual base salary ("salary"), short-term incentives in the form of
annual cash bonuses, and long-term incentives in the form of stock options.
The Committee believes that the compensation of executive officers should
reflect the scope of their responsibilities, the success of the Corporation, and
the contributions of each executive to that success. In addition, the Committee
believes that base salaries should approximate the mid-point of competitive
salaries derived from market surveys and that short-term and long-term incentive
compensation should reflect the performance of the Corporation and the
contributions of each executive.
External competitiveness is an important element of the Committee's
compensation policy. The competitiveness of the Corporation's compensation for
its executives is assessed by comparing it to market data provided by its
compensation consultant and by participating in annual executive compensation
surveys, primarily "Project 777", an executive compensation survey prepared by
Management Compensation Services, a division of Hewitt Associates. The majority
of firms represented in the Project 777 survey are included in the Standard &
Poor's Index, but do not necessarily correspond to the companies included in the
Corporation's peer group index, the Dow Jones Total Return Index for the
Diversified Technology Industry Group.
15
<PAGE>
Principles of internal equity are also central to the Committee's
compensation policies. Compensation considered for the Corporation's officers,
whether cash or stock-based incentives, is also evaluated by comparing it to
compensation of other executives within the Thermo Electron organization with
comparable levels of responsibility for comparably sized business units.
The Committee changed its fiscal year to end on the Saturday nearest
September 30 in 1995. Because the compensation practices of the Corporation are
guided by the policies of its parent corporation, Thermo Electron, the Committee
has continued to conduct cash compensation reviews on a calendar-year basis in
order to coincide with the compensation reviews conducted by the human resources
committee of the board of directors of Thermo Electron. Thermo Electron operates
on a fiscal year that ends on the Saturday nearest December 31.
The process for determining each of these elements for the Corporation's
officers is outlined below.
BASE SALARY
Base salaries are intended to approximate the mid-point of competitive
salaries for similar organizations of comparable size and complexity to the
Corporation. Executive salaries are adjusted gradually over time and only as
necessary to meet this objective. Increases in base salary may be moderated by
other considerations, such as geographic or regional market data, industry
trends or internal fairness within the Corporation and Thermo Electron. It is
the Committee's intention that over time the base salaries for the chief
executive officer and the other named executive officers will approach the mid-
point of competitive data. The salary increases in calendar 1996 for the chief
executive officer and the other named executive officers generally reflect this
practice of gradual increases and moderation. Until the end of calendar 1995,
the base salary of Mr. Pellegrino, the senior vice president of the Corporation,
and Mr. Kirshner, the president and the chief executive officer of Trex Medical
Corporation, was determined under employment agreements entered into with each
executive officer in connection with the acquisition of LORAD Corporation in
November 1992 by the Corporation. Mr. Pellegrino's agreement provided for the
payment of a minimum annual base salary of $250,000 until December 31, 1995. Mr.
Kirshner's agreement provided for the payment of a minimum annual base salary of
$200,000 until December 31, 1995. In each case, these were the annual base
salaries in effect at the time of the acquisition. These employment agreements
expired at the end of 1995, and since that date, the salaries of Mr. Pellegrino
and Mr. Kirshner have been reviewed and determined using the same principles as
for the other executive officers of the Corporation.
CASH BONUS
The Committee establishes a median potential bonus for each executive by
using the market data on total cash compensation from the same executive
compensation surveys as used to determine salaries. Specifically, the median
potential bonus plus the salary of an executive officer is approximately equal
to the mid-point of competitive total cash compensation for a similar position
and leve l of responsibility in businesses having comparable sales and
complexity to the Corporation. The actual bonus awarded to an executive officer
may range from zero to three times the median potential bonus. The value within
the range (the bonus multiplier) is determined at the end of each year by the
Committee in its discretion. The Committee exercises its discretion by
evaluating each executive's performance using a methodology developed by its
parent corporation, Thermo Electron, and applied throughout the Thermo Electron
organization. The methodology incorporates measures of operating returns,
designed to measure profitability and contributions to shareholder value, and
are measures of corporate and divisional performance that are evaluated using
graphs developed by Thermo Electron intended to reward performance that is
perceived as above average and to penalize performance that is perceived below
average. The measures of operating returns used in the Committee's
determinations in fiscal 1996 measured return on net assets, growth in income,
and return on sales, and the Committee's determinations also included a
subjective evaluation of the contributions of each executive that are not
captured by operating measures but are considered important to the creation of
long-term value for the Stockholders. These measures of achievements are not
financial targets that are met, not met or exceeded. The relative weighting of
the operating measures and subjective evaluation varies among the executives,
depending on their roles and responsibilities.
The bonuses for named executive officers approved by the Committee with
respect to calendar 1996 performance in each instance exceeded the median
potential bonus.
16
<PAGE>
STOCK OPTION PROGRAM
The primary goal of the Corporation is to excel in the creation of long-
term value for the Stockholders. The principal incentive tool used to achieve
this goal is the periodic award to key employees of options to purchase common
stock of the Corporation and other Thermo Electron companies.
The Committee and management believe that awards of stock options to
purchase the shares of both the Corporation and other companies within the
Thermo Electron group of companies accomplish many objectives. The grant of
options to key employees encourages equity ownership in the Corporation, and
closely aligns management's interests to the interests of all the Stockholders.
The emphasis on stock options also results in management's compensation being
closely linked to stock performance. In addition, because they are subject to
vesting periods of varying durations and to forfeiture if the employee leaves
the Corporation prematurely, stock options are an incentive for key employees to
remain with the Corporation long-term. The Committee believes stock option
awards in its parent corporation, Thermo Electron, and its majority-owned
subsidiaries, ThermoLase Corporation and Trex Medical Corporation, and the other
majority-owned subsidiaries of Thermo Electron, are an important tool in
providing incentives for performance within the entire organization.
In determining awards, the Committee considers the average annual value of
all options to purchase shares of the Corporation and other companies within the
Thermo Electron organization that vest in the next five years. (Values are
established using a modified Black-Scholes option pricing model.) As a
guideline, the Committee strives to maintain the aggregate amount of net awards
to all employees over a five-year period below 12% of the Corporation's
outstanding common stock, although other factors such as unusual transactions
and acquisitions and standards for awards of comparably situated companies may
affect the number of awards granted.
Awards are not made annually in conjunction with the annual review of cash
compensation, but are made periodically. The Committee considers total
compensation of executives, actual and anticipated contributions of each
executive (which includes a subjective assessment by the Committee of the value
of the executive's future potential within the organization), as well as the
value of previously awarded options as described above, in determining option
awards. The option awards made with respect to the common stock of subsidiaries
of Thermo Electron and the Corporation were determined by the human resources
committee of the board of directors of the applicable company using a similar
analysis.
STOCK OWNERSHIP POLICIES
During fiscal 1996, the Committee established a stock holding policy for
executive officers of the Corporation. The stock holding policy specifies an
appropriate level of ownership of the Corporation's Common Stock as a multiple
of the officer's compensation. For the chief executive officer, the multiple is
one times his base salary and reference bonus for the calendar year. For all
other officers, the multiple is one times the officer's base salary. The
Committee deeded it appropriate to permit officers to achieve these ownership
levels over a three-year period.
In order to assist officers in complying with the policy, the Committee
also adopted a stock holding assistance plan under which the Corporation is
authorized to make interest-free loans to officers to enable them to purchase
shares of the Common Stock in the open market. The loans are required be repaid
ratably to the Corporation over a five-year period. During 1996, Mr. Weinstein,
the Corporation's chief executive officer, received a loan in the principal
amount of $375,003.85 under this program. See Relationship with Affiliates -
Stock Holding Assistance Plan.
The Committee also adopted a policy requiring its executive officers to
hold a certain number of shares of the Corporation's Common Stock acquired upon
the exercise of stock options granted by the Corporation. Under this policy,
executive officers are required to hold one-half of their net option exercises
for a period of five years. The net option exercise is determined by calculating
the number of shares acquired upon exercise of a stock option, after deducting
the number of shares that could have been traded to exercise the option and the
number of shares that could have been surrendered to satisfy tax withholding
obligations attributable to the exercise of the option.
17
<PAGE>
POLICY ON DEDUCTIBILITY OF COMPENSATION
The Committee has also considered the application of Section 162(m) of the
Internal Revenue Code to the Corporation's compensation practices. Section
162(m) limits the tax deduction available to public companies for annual
compensation paid to senior executives in excess of $1 million unless the
compensation qualifies as "performance based." The annual cash compensation paid
to individual executives does not approach the $1 million threshold, and it is
believed that the stock incentive plans of the Corporation qualify as
"performance based." Therefore, the Committee does not believe any further
action is necessary in order to comply with Section 162(m). From time to time,
the Committee will reexamine the Corporation's compensation practices and the
effect of Section 162(m).
1996 CEO COMPENSATION
Mr. Gary S. Weinstein was appointed the Corporation's chief executive
officer in February 1996. His salary, bonus potential and awards of stock
options in the Corporation and its majority owned subsidiaries were the subject
of arms-length negotiations between Mr. Weinstein and Thermo Electron as an
inducement for him to accept the position of Vice President of Thermo Electron
and as Chief Executive Officer of the Corporation. Future decisions relating to
cash compensation for Mr. Weinstein are made by both the Committee and the human
resources committee of the board of directors of Thermo Electron, due to his
responsibilities as both the Corporation's chief executive officer and as a vice
president of Thermo Electron, the Corporation's parent company. Each committee
evaluates Mr. Weinstein's performance and proposed compensation using a process
similar to that used for the other executive officers of the Corporation. At the
Thermo Electron level, Mr. Weinstein is evaluated on his performance related to
the Corporation, as well as on his performance of other responsibilities within
Thermo Electron, weighted in accordance with the amount of time and effort
devoted to each operation or function. The Corporation's Committee then reviews
the analysis and determinations of the Thermo Electron committee, makes an
independent assessment of Mr. Weinstein's performance as it relates to the
Corporation using criteria similar to that used for the other executive officers
of the Corporation, and then agrees to an appropriate allocation of Mr.
Weinstein's compensation to be paid by the Corporation.
In December 1996, the Committee conducted its review of Mr. Weinstein's
proposed salary for 1997 and bonus for 1996 performance. The Committee concurred
in the recommendation made by the Thermo Electron committee and agreed to an
allocation of 50% of Mr. Weinstein's total cash compensation for 1996 to the
Corporation, based on his relative responsibilities at the Corporation and
Thermo Electron.
Mr. Peter O. Crisp (Chairman)
Mr. Morton Collins
Dr. Nicholas T. Zervas
18
<PAGE>
COMPARATIVE PERFORMANCE GRAPH
The Securities and Exchange Commission requires that the Corporation
include in this Proxy Statement a line-graph presentation comparing cumulative,
five-year shareholder returns for the Corporation's Common Stock with a broad-
based market index and either a nationally recognized industry standard or an
index of peer companies selected by the Corporation. The Corporation has
compared its performance with the American Stock Exchange Market Value Index and
the Dow Jones Total Return Index for the Diversified Technology Industry Group.
COMPARISON OF TOTAL RETURN AMONG THERMOTREX CORPORATION,
THE AMERICAN STOCK EXCHANGE MARKET VALUE INDEX AND THE
DOW JONES TOTAL RETURN INDEX FOR THE DIVERSIFIED TECHNOLOGY INDUSTRY GROUP
FROM DECEMBER 31, 1991 TO SEPTEMBER 27, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
12/31/91 12/31/92 12/31/93 12/31/94 9/30/95 9/27/96
- -----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
TKN 100 115 159 140 353 372
- -----------------------------------------------------------------
AMEX 100 101 121 110 138 144
- -----------------------------------------------------------------
DJDIV 100 110 129 133 175 208
- -----------------------------------------------------------------
</TABLE>
The total return for the Corporation's Common Stock (TKN), the American
Stock Exchange Market Value Index (AMEX) and the Dow Jones Total Return for the
Diversified Technology Industry Group (DJDIV) assumes the reinvestment of
dividends, although dividends have not been declared on the Corporation's Common
Stock. The American Stock Exchange Market Value Index tracks the aggregate
performance of equity securities of companies listed on the American Stock
Exchange. The Corporation's Common Stock is traded on the American Stock
Exchange under the ticker symbol "TKN."
19
<PAGE>
RELATIONSHIP WITH AFFILIATES
Thermo Electron has adopted a strategy of selling a minority interest in
subsidiary companies to outside investors as an important tool in its future
development. As part of this strategy, Thermo Electron and certain of its
subsidiaries have created several privately and publicly held majority-owned
subsidiaries. The Corporation has created ThermoLase Corporation ("ThermoLase")
and Trex Medical Corporation ("Trex Medical") as publicly held, majority-owned
subsidiaries. From time to time, Thermo Electron and its subsidiaries will
create other majority-owned subsidiaries as part of its spinout strategy. (The
Corporation and the other Thermo Electron subsidiaries are hereinafter referred
to as the "Thermo Subsidiaries.")
Thermo Electron and each of the Thermo Subsidiaries recognize that the
benefits and support that derive from their affiliation are essential elements
of their individual performance. Accordingly, Thermo Electron and each of the
Thermo Subsidiaries have adopted the Thermo Electron Corporate Charter (the
"Charter") to define the relationships and delineate the nature of such
cooperation among themselves. The purpose of the Charter is to ensure that (1)
all of the companies and their stockholders are treated consistently and fairly,
(2) the scope and nature of the cooperation among the companies, and each
company's responsibilities, are adequately defined, (3) each company has access
to the combined resources and financial, managerial and technological strengths
of the others, and (4) Thermo Electron and the Thermo Subsidiaries, in the
aggregate, are able to obtain the most favorable terms from outside parties.
To achieve these ends, the Charter identifies the general principles to be
followed by the companies, addresses the role and responsibilities of the
management of each company, provides for the sharing of group resources by the
companies and provides for centralized administrative, banking and credit
services to be performed by Thermo Electron. The services provided by Thermo
Electron include collecting and managing cash generated by members, coordinating
the access of Thermo Electron and the Thermo Subsidiaries (the "Thermo Group")
to external financing sources, ensuring compliance with external financial
covenants and internal financial policies, assisting in the formulation of long-
range planning and providing other banking and credit services. Pursuant to the
Charter, Thermo Electron may also provide guarantees of debt or other
obligations of the Thermo Subsidiaries or may obtain external financing at the
parent level for the benefit of the Thermo Subsidiaries. In certain instances,
the Thermo Subsidiaries may provide credit support to, or on behalf of, the
consolidated entity or may obtain financing directly from external financing
sources. Under the Charter, Thermo Electron is responsible for determining that
the Thermo Group remains in compliance with all covenants imposed by external
financing sources, including covenants related to borrowings of Thermo Electron
or other members of the Thermo Group, and for apportioning such constraints
within the Thermo Group. In addition, Thermo Electron establishes certain
internal policies and procedures applicable to members of the Thermo Group. The
cost of the services provided by Thermo Electron to the Thermo Subsidiaries is
covered under existing corporate services agreements between Thermo Electron and
each of the Thermo Subsidiaries.
The Charter presently provides that it shall continue in effect so long as
Thermo Electron and at least one Thermo Subsidiary participate. The Charter may
be amended at any time by agreement of the participants. Any Thermo Subsidiary,
including the Corporation, can withdraw from participation in the Charter upon
30 days' prior notice. In addition, Thermo Electron may terminate a subsidiary's
participation in the Charter in the event the subsidiary ceases to be controlled
by Thermo Electron or ceases to comply with the Charter or the policies and
procedures applicable to the Thermo Group. A withdrawal from the Charter
automatically terminates the corporate services agreement and tax allocation
agreement (if any) in effect between the withdrawing company and Thermo
Electron. The withdrawal from participation does not terminate outstanding
commitments to third parties made by the withdrawing company, or by Thermo
Electron or other members of the Thermo Group, prior to the withdrawal. However,
a withdrawing company is required to continue to comply with all policies and
procedures applicable to the Thermo Group and to provide certain administrative
functions mandated by Thermo Electron so long as the withdrawing company is
controlled by or affiliated with Thermo Electron.
As provided in the Charter, the Corporation and Thermo Electron have
entered into a Corporate Services Agreement (the "Services Agreement") under
which Thermo Electron's corporate staff provides certain
20
<PAGE>
administrative services, including certain legal advice and services, risk
management, certain employee benefit administration, tax advice and preparation
of tax returns, centralized cash management and financial and other services to
the Corporation. Thermo Electron assessed the Corporation an annual fee equal to
1.2% and 1.25% of the Corporation's revenues for these services in calendar 1995
and for periods prior to calendar 1995, respectively. Effective January 1, 1996,
the fee was reduced to 1.0% of the Corporation's revenues. The fee may be
changed by mutual agreement of the Corporation and Thermo Electron. During
fiscal 1996, Thermo Electron assessed the Corporation $1,906,000 in fees under
the Services Agreement. Management believes that the charges under the Services
Agreement are reasonable and that such fees are representative of the expense
the Corporation would have incurred on a stand-alone basis. For additional items
such as employee benefit plans, insurance coverage and other identifiable costs,
Thermo Electron charges the Corporation based on costs attributable to the
Corporation. The Services Agreement automatically renews for successive one-year
terms, unless canceled by the Corporation upon 30 days' prior notice. In
addition, the Services Agreement terminates automatically in the event the
Corporation ceases to be a member of the Thermo Group or ceases to be a
participant in the Charter. In the event of a termination of the Services
Agreement, the Corporation will be required to pay a termination fee equal to
the fee that was paid by the Corporation for services under the Services
Agreement for the nine-month period prior to termination. Following termination,
Thermo Electron may provide certain administrative services on an as-requested
basis by the Corporation or as required in order to meet the Corporation's
obligations under Thermo Electron's policies and procedures. Thermo Electron
will charge the Corporation a fee equal to the market rate for comparable
services if such services are provided to the Corporation following termination.
From time to time, the Corporation may transact business with other
companies in the Thermo Group. In fiscal 1996, such transactions included the
following. A majority-owned subsidiary of Thermo Electron provides contract
administration and data processing services to the Corporation. The Corporation
was charged $90,000 for such services for fiscal 1996.
The Corporation leased two office and research facilities from Thermo
Electron under an agreement that was terminated in June 1996. The rental
payments made to Thermo Electron during fiscal 1996 were $89,000. In connection
with the Corporation's decision to close its Waltham facilities and because
Thermo Electron desires to sell these facilities, the Corporation vacated these
facilities in June 1996.
Trex Medical has an arrangement with the Tecomet division of Thermo
Electron for the manufacture of Trex Medical's proprietary HTC grid. Under this
arrangement Tecomet manufactures the grid for Trex Medical pursuant to written
purchase orders. During fiscal 1996, Trex Medical purchased 331 grids for an
aggregate purchase price of $397,000 under this arrangement. In addition, Trex
Medical paid Tecomet $250,000 during fiscal 1996 for research and development
provided by Tecomet in connection with this project. Trex Medical owns the
intellectual property rights to the grid.
Under an arrangement with Thermedics Detection Inc., a subsidiary of
Thermedics Inc., a majority-owned subsidiary of Thermo Electron, Trex Medical
manufactures an X-ray source that is used as a component to a fill-measuring
device produced by Thermedics Detection. Trex Medical manufactures these X-ray
sources for Thermedics Detection pursuant to written purchase orders. During
fiscal 1996, Thermedics Detection purchased 100 units from Trex Medical for an
aggregate purchase price of $361,000 under this arrangement.
In September 1995, the Corporation borrowed $8,000,000 from Thermo Electron
pursuant to a promissory note, due September 1996, and bearing interest at the
90-day Commercial Paper Composite Rate plus 25 basis points. This note was
repaid in September 1996. In September 1996, the Corporation borrowed $2,000,000
from Thermo Electron pursuant to a promissory note, due April 1997, and bearing
interest at the 90-day Commercial Paper Composite Rate plus 25 basis points.
The Corporation sold its thermo electrics and thermionics businesses to two
subsidiaries of Thermo Electron, for approximately $860,000, which represents
the net book value of the net assets transferred.
As of September 28, 1996, $40,727,000 of the Corporation's cash equivalents
were invested in a repurchase agreement with Thermo Electron. Under this
agreement, the Corporation in effect lends excess cash to
21
<PAGE>
Thermo Electron, which Thermo Electron collateralizes with investments
principally consisting of corporate notes, U.S. government agency securities,
money market funds, commercial paper and other marketable securities, in the
amount of at least 103% of such obligation. The Corporation's funds subject to
the repurchase agreement are readily convertible into cash by the Corporation.
The repurchase agreement earns a rate based on the 90-day Commercial Paper
Composite Rate plus 25 basis points, set at the beginning of each quarter.
Thermo Electron owned approximately 51% of the Corporation's outstanding
Common Stock on December 28, 1996. Thermo Electron intends for the foreseeable
future to maintain at least 50% ownership of the Corporation. This may require
the purchase by Thermo Electron of additional shares of the Corporation's Common
Stock from time to time as the number of outstanding shares issued by the
Corporation increases. These and other purchases may be made either in the open
market or directly from the Corporation.
In November 1995, Mr. Crisp and Mr. Rufeh, Directors of the Corporation,
and Mr. Kirshner, Mr. Pellegrino and Dr. Spivey, executive officers of the
Corporation, purchased from Trex Medical 10,000, 19,600, 100,000, 20,000 and
9,800 shares of Trex Medical common stock, respectively, for an aggregate
purchase price of $102,500, $200,900, $1,025,000, $205,000 and $100,450,
respectively, in a private placement of 1,852,000 shares of common stock by Trex
Medical at $10.25 per share.
STOCK HOLDING ASSISTANCE PLAN
In 1996, the Corporation adopted a stock holding policy which requires its
executive officers to acquire and hold a minimum number of shares of Common
Stock. In order to assist the executive officers in complying with the policy,
the Corporation also adopted a Stock Holding Assistance Plan under which it may
make interest-free loans to certain key employees, including its executive
officers, to enable such employees to purchase the Common Stock in the open
market. During 1996, Mr. Weinstein received a loan in the principal amount of
$375,003.85 under this plan to purchase 10,000 shares. The loan to Mr. Weinstein
is payable on demand and requires that 20% of the principal amount of the loan
be repaid from the bonus payable to Mr. Weinstein in each of the next five
years, commencing with the bonus payment in 1997 for calendar 1996 performance,
until the loan is repaid in full.
-- PROPOSAL 2 --
PROPOSAL TO INCREASE SHARES AVAILABLE FOR ISSUANCE UNDER THE CORPORATION'S
NONQUALIFIED STOCK OPTION PLAN
The Board of Directors has approved an increase of 500,000 shares in the
number of shares of Common Stock available for issuance under the Corporation's
nonqualified stock option plan (the "Plan"), and is recommending the increase to
the Stockholders for their approval. If approved by the Stockholders, the
aggregate number of shares available for issuance under the Plan would increase
from 1,945,000 shares to 2,445,000 shares.
By early 1996, the Corporation had depleted nearly all of the available
shares under its existing stock option plans, comprised of its nonqualified and
incentive stock option plans (the "Plans"). The Board of Directors acted to
increase the available shares, subject to Stockholder approval, in order to
grant options to key employees, including its newly hired chief executive
officer, of the Corporation. Since the adoption of the Stock Option Plans in
1990 and after giving effect to the proposed increase, net options to purchase a
total of 2,042,355 shares of Common Stock of the Corporation had been granted,
representing approximately 10.6% of the Corporation's outstanding Common Stock.
It is the Corporation's objective to award net options to purchase not more than
12% of its Common Stock over a five-year period. As of December 28, 1996 and
after giving effect to the proposed increase, options to purchase 1,289,452
shares were outstanding under the Stock Option Plans. If the increase is
approved, the number of shares of Common Stock currently remaining available for
grant under the Stock Option Plans would be 402,645 shares.
22
<PAGE>
The Plan is administered by the Human Resources Committee of the Board of
Directors ("the Committee"), which has the authority to determine, among other
things, which persons will receive options, the number of shares subject to
options, the option price and the option period. Options granted under the Plan
are non-statutory options and, may be granted at any price under the
Nonqualified Plan as determined by the Committee in its discretion although it
has been the Committee's practice to grant options at the fair market value of
the underlying Common Stock on the date of grant.
The exercisability provisions of options, their vesting schedules, their
terms and other provisions are established by the Committee. The Committee may
also determine at what time each option may be exercised. Options may be made
exercisable in installments, and the exercisability of options may be
accelerated by the Committee. Generally, options are granted for terms ranging
from seven to 12 years and are exercisable immediately, subject to the right of
the Corporation to repurchase the shares issued upon exercise at the exercise
price. This right generally lapses in increments over a five-to-ten year period,
depending on the option term, commencing one year after the date of grant.
Options may be exercised for cash or by tendering shares of Common Stock having
a fair market value equal to the aggregate exercise price, or by a combination
of cash and such stock. Generally, option holders are permitted to tender shares
of Common Stock to satisfy certain withholding tax obligations on exercise of
options.
Generally, options granted under the Plan are nontransferable and may be
exercised only if the optionee has remained continuously employed by the
Corporation from the time the option was granted until at least three months
before the option is exercised. If an optionee dies before exercising an option,
the option may be exercised within six months from the optionee's death by the
executor or beneficiary of the optionee's estate. In December 1996, the
Committee amended the Plan to permit Directors and executive officers to
transfer options to their immediate family members, family trusts or family
partnerships.
The Plan remains in full force and effect until terminated by the Board of
Directors. The Board of Directors may at any time or times amend or review the
Plan or any outstanding award for any purpose which may at the time be permitted
by law, or may at any time terminate the plan as to any further grants of
awards. No amendment of the Plan or any outstanding award may adversely affect
the rights of a participant as to any previously granted award without his or
her consent. Stockholder approval of amendments shall be required only as is
necessary to satisfy the then-applicable requirements of Rule 16b-3 (or any
successor rule), of stock exchanges or of any federal tax law or regulation
relating to incentive stock options.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the principal current federal income tax
consequences of stock options of transactions under the Plan. It does not
describe all federal tax consequences under the Plan, nor does it describe
state, local or foreign tax consequences.
With respect to non-statutory stock options granted under the Plan, no
income is realized by the optionee at the time the option is granted. Generally,
at exercise, ordinary income is realized by the optionee in an amount equal to
the difference between the option price and the fair market value of the shares
on the date of exercise, and the Corporation receives a tax deduction for the
same amount, and at disposition, appreciation or depreciation after the date of
exercise, and the Corporation receives a tax deduction for the same amount, and
at disposition, appreciation or depreciation after the date of exercise is
treated as either short- or long-term capital gain or loss depending on how long
the shares have been held.
NEW PLAN BENEFITS
The following table sets forth the number of shares of the Corporation's
Common Stock for which options to purchase have been granted over the last 12
months, subject to Stockholder approval, to the chief executive officer, the
other named executive officers named in the Summary Compensation Table, all
current executive officers together as a group, all current directors who are
not executive officers as a group and all employees, including all current
officers who are not executive officers, as a group.
23
<PAGE>
<TABLE>
<CAPTION>
NAME DOLLAR VALUE ($) NUMBER OF SHARES
<S> <C> <C>
Gary S. Weinstein.......................... $4,148,000 100,000
Firooz Rufeh .............................. --- ---
Anthony J. Pellegrino ..................... --- ---
Hal Kirshner .............................. --- ---
Kenneth Y. Tang ........................... --- ---
Brett A. Spivey ........................... --- ---
Executive Group ........................... $4,566,500 110,000
Non-Executive Director Group .............. --- ---
Non-Executive Officer Employee Group ..... --- ---
</TABLE>
RECOMMENDATION
The Board of Directors believes that the proposal to increase the number of
shares of Common Stock available for issuance under the Plan will continue to
provide the Corporation with the opportunity to reward employees and others who
are expected to make significant contributions to the future growth and success
of the Corporation, and to encourage such individuals to take into account the
long-term interests of the Corporation and its Stockholders through ownership of
the Corporation's Common Stock. Accordingly, the Board of Directors believes
that the proposal is in the best interests of the Corporation and its
Stockholders and recommends that the Stockholders vote "FOR" the approval of the
increase in the number of shares available for issuance under the Plans. If not
otherwise specified, Proxies will be voted FOR approval of the proposal. Thermo
Electron, which beneficially owned approximately 51% of the outstanding voting
stock of the Corporation on January 30, 1997, has sufficient votes to approve
the proposal and has indicated its intention to vote for the approval of the
proposal.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Arthur Andersen LLP as independent
public accountants for fiscal 1997. Arthur Andersen LLP has acted as independent
public accountants for the Corporation since 1990. Representatives of that firm
are expected to be present at the Meeting, will have the opportunity to make a
statement if they desire to do so and will be available to respond to questions.
The Board of Directors has established an Audit Committee, presently consisting
of three outside Directors, the purpose of which is to review the scope and
results of the audit.
OTHER ACTION
Management is not aware at this time of any other matters that will be
presented for action at the Meeting. Should any such matters be presented, the
Proxies grant power to the Proxy holders to vote shares represented by the
Proxies in the discretion of such Proxy holders.
STOCKHOLDER PROPOSALS
Proposals of Stockholders intended to be presented at the 1997 Annual
Meeting of the Stockholders of the Corporation must be received by the
Corporation for inclusion in the Proxy Statement and form of Proxy relating to
that meeting no later than October 20, 1997.
SOLICITATION STATEMENT
The cost of this solicitation of Proxies will be borne by the Corporation.
Solicitation will be made primarily by mail, but regular employees of the
Corporation may solicit Proxies personally, by telephone or telegram. Brokers,
nominees, custodians and fiduciaries are requested to forward solicitation
materials to obtain voting instructions from beneficial owners of stock
registered in their names, and the Corporation will reimburse such parties for
their reasonable charges and expenses in connection therewith.
San Diego, California
February 14, 1997
24
<PAGE>
FORM OF PROXY
THERMOTREX CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MARCH 12, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints John N. Hatsopoulos, Jonathan W. Painter
and Gary S. Weinstein, or any one of them in the absence of the others, as
attorneys and proxies of the undersigned, with full power of substitution, for
and in the name of the undersigned, to represent the undersigned at the Annual
Meeting of the Stockholders of ThermoTrex Corporation, a Delaware corporation
(the "Company"), to be held on Wednesday, March 12, 1997, at 11:00 a.m. at the
Westin Hotel, 70 Third Avenue, Waltham, Massachusetts 02154, and at any
adjournment or postponement thereof, and to vote all shares of common stock of
the Company standing in the name of the undersigned on January 30, 1997, with
all of the powers the undersigned would possess if personally present at such
meeting:
(IMPORTANT - TO BE SIGNED AND DATED ON THE REVERSE SIDE.)
Please mark your
[ x ] votes as in this
example.
1. ELECTION OF DIRECTORS OF THE COMPANY (see reverse).
FOR [ ] WITHHELD [ ]
______________________________________
FOR all nominees listed at right, except authority to vote withheld for the
following nominees (if any)
NOMINEES: Morton Collins, Peter O. Crisp, Paul F. Ferrari, George N.
Hatsopoulos, John N. Hatsopoulos, Robert C. Howard, Firooz Rufeh, Gary S.
Weinstein and Nicholas T. Zervas.
FOR AGAINST ABSTAIN
2. Approve proposal to increase the number [ ] [ ] [ ]
of shares of Common Stock available for
issuance under the Corporation's nonqualified
stock option plan by 500,000 shares.
3. In their discretion on such other matters as may properly come before the
Meeting.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED "FOR" THE PROPOSALS SET FORTH
ABOVE IF NO INSTRUCTION TO THE CONTRARY IS INDICATED OR IF NO INSTRUCTION IS
GIVEN.
Copies of the Notice of Meeting and of the Proxy Statement have been received
by the undersigned.
SIGNATURE(S)_______________________________________ DATE_________________
NOTE: This proxy should be dated, signed by the shareholder(s) exactly as his
or her name appears hereon, and returned promptly in the enclosed
envelope. Persons signing in a fiduciary capacity should so indicate. If
shares are held by joint tenants or as community property, both should
sign.
