<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (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
[X] Definitive Proxy Statement by Rule 14a-6(e)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
Thermo Fibertek Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Thermo Fibertek Inc.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(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:
-------------------------------------------------------------------------
Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
[THERMO FIBERTEK LOGO APPEARS HERE]
245 Winter Street
Waltham, MA 02451
April 14, 1999
Dear Stockholder:
The enclosed Notice calls the 1999 Annual Meeting of the Stockholders of
Thermo Fibertek Inc. I respectfully request that all Stockholders attend this
meeting, if possible.
Our Annual Report for the year ended January 2, 1999 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 & 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,
/s/ William A. Rainville
William A. Rainville
President and Chief Executive
Officer
<PAGE>
[THERMO FIBERTEK LOGO APPEARS HERE]
245 Winter Street
Waltham, MA 02451
April 14, 1999
To the Holders of the Common Stock of
THERMO FIBERTEK INC.
NOTICE OF ANNUAL MEETING
The 1999 Annual Meeting of the Stockholders of Thermo Fibertek Inc. (the
"Corporation") will be held on Thursday, May 27, 1999 at 9:00 a.m. at The
Westin Hotel, 70 Third Avenue, Waltham, Massachusetts. The purpose of the
meeting is to consider and take action upon the following matters:
1. Election of six directors.
2. 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 receive
notice of and to vote at the meeting is March 30, 1999.
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 shares 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 Thermo Fibertek
Inc. (the "Corporation") for use at the 1999 Annual Meeting of the
Stockholders to be held on Thursday, May 27, 1999 at 9:00 a.m. at The Westin
Hotel, 70 Third Avenue, Waltham, Massachusetts and any adjournment thereof.
The mailing address of the executive office of the Corporation is 245 Winter
Street, Waltham, Massachusetts 02451. This proxy statement and the enclosed
proxy were first furnished to Stockholders of the Corporation on or about
April 16, 1999.
VOTING PROCEDURES
The board of directors intends to present to the meeting the election of six
directors, constituting the entire board of directors.
The representation in person or by proxy of a majority of the outstanding
shares of the common stock of the Corporation, $.01 par value, (the "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.
Votes of Stockholders of record who are present at the meeting in person or by
proxy, abstentions and broker non-votes (as defined below) are counted as
present or represented at the meeting for purposes of determining whether a
quorum exists.
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,
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 the holders of a majority of the shares of Common Stock voting,
present in person or represented by proxy at the meeting. If you hold your
shares of Common Stock through a broker, bank or other nominee, generally the
nominee may only vote the Common Stock that it holds for you in accordance
with your instructions. However, if it has not timely received your
instructions, the nominee may vote on certain matters for which it has
discretionary voting authority. If a nominee cannot vote on a particular
matter because it does not have discretionary voting authority, this is a
"broker non-vote" on that matter. With regard to the election of directors,
broker non-votes and withholdings of authority to vote will have no effect on
the outcome of the vote.
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 March 30, 1999, consisted of
61,190,629 shares of Common Stock. Only Stockholders of record at the close of
business on March 30, 1999, are entitled to vote at the meeting. Each share is
entitled to one vote.
1
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
Six directors are to be elected at the meeting, each to hold office until
his successor is elected 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 majority-owned
subsidiary, Thermo Fibergen Inc. ("Thermo Fibergen"), and of its parent
company, Thermo Electron Corporation ("Thermo Electron"), a provider of
products and services in measurement instrumentation, biomedical devices,
energy, resource recovery, and emerging technologies, is reported under the
caption "Stock Ownership." All of the nominees are currently directors of the
Corporation.
- -------------------------------------------------------------------------------
Walter J. Bornhorst Dr. Bornhorst, 58, has been a director of the
Corporation since its inception in 1991. Since
1994, Dr. Bornhorst has been the chairman of Z
Corporation, a developer of rapid prototyping
equipment. From the inception of the Corporation
to December 1992, Dr. Bornhorst was chairman of
the board. Dr. Bornhorst is also a director of
Thermo Cardiosystems Inc. Dr. Bornhorst is the
son-in-law of Dr. George N. Hatsopoulos, a
director of the Corporation.
- -------------------------------------------------------------------------------
George N. Hatsopoulos Dr. Hatsopoulos, 72, has been a director of the
Corporation since its inception. Dr. Hatsopoulos
has been the chairman of the board and chief
executive officer of Thermo Electron since he
founded the company in 1956 and was president of
Thermo Electron from 1956 to January 1997.
Effective June 1, 1999, Dr. Hatsopoulos will step
down as the chief executive officer of Thermo
Electron and remain as non-executive chairman of
the board. Dr. Hatsopoulos is also a director of
Photoelectron Corporation, Thermedics Inc.,
Thermo Ecotek Corporation, Thermo Electron,
Thermo Instrument Systems Inc., Thermo Optek
Corporation, ThermoQuest Corporation and
ThermoTrex Corporation. Dr. Hatsopoulos is the
brother of Mr. John N. Hatsopoulos, a director of
the Corporation, and is the father-in-law of Dr.
Walter J. Bornhorst, a director of the
Corporation.
- -------------------------------------------------------------------------------
John N. Hatsopoulos Mr. Hatsopoulos, 64, has been a director of the
Corporation since its inception. He served as the
vice president of the Corporation and chief
financial officer from its inception until
December 1997 and December 1998, respectively.
Mr. Hatsopoulos was the senior vice president of
the Corporation from December 1997 until his
retirement in December 1998. Mr. Hatsopoulos has
been the vice chairman of the board of directors
of Thermo Electron since September 1998. Mr.
Hatsopoulos was the president of Thermo Electron
from 1997 to 1998 and its chief financial officer
from 1988 to 1998. Mr. Hatsopoulos is also a
director of LOIS/USA Inc., Thermedics Inc.,
Thermo Ecotek Corporation, Thermo Electron,
Thermo Instrument Systems Inc., Thermo Power
Corporation, Thermo TerraTech Inc. and US Liquids
Inc. Mr. Hatsopoulos is the brother of Dr. George
N. Hatsopoulos, a director of the Corporation.
2
<PAGE>
- -------------------------------------------------------------------------------
Francis L. McKone Mr. McKone, 64, has been a director of the
Corporation since March 1998. Mr. McKone is the
chief executive officer and chairman of the board
of Albany International Corp., a worldwide
supplier of paper machine fabrics, positions he
has held since 1993 and 1998, respectively. From
1984 to 1998, he was also president of Albany
International Corp. and from 1984 to 1993 he was
that company's co-chief executive officer. He is
also a director of Albany International Corp. and
Thermo Fibergen Inc.
- -------------------------------------------------------------------------------
Donald E. Noble Mr. Noble, 84, has been a director of the
Corporation since January 1992 and chairman of
the board since December 1992. For more than 20
years, from 1959 to 1980, Mr. Noble served as the
chief executive officer of Rubbermaid
Incorporated, first with the title of president
and then as the chairman of the board. Mr. Noble
is also a director of Thermo Electron, Thermo
Power Corporation, Thermo Sentron Inc. and Thermo
TerraTech Inc.
- -------------------------------------------------------------------------------
William A. Rainville Mr. Rainville, 57, has been president and chief
executive officer of the Corporation since its
inception and a director since January 1992. Mr.
Rainville has been the chief operating officer,
recycling and resource recovery, of Thermo
Electron since September 1998. He served as
senior vice president of Thermo Electron from
March 1993 until September 1998 and a vice
president from 1986 to 1993. Mr. Rainville is
also a director of Thermo Ecotek Corporation,
Thermo Fibergen, ThermoRetec Corporation and
Thermo TerraTech Inc.
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 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"). The current
members of the audit committee are Mr. McKone (Chairman) and Mr. Noble. 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 current
members of the human resources committee are Mr. Noble (Chairman) and Mr.
McKone. The human resources committee reviews the performance of senior
members of management, approves executive compensation and administers the
Corporation's stock option and other stock-based compensation plans. The
Corporation does not have a nominating committee of the board of directors.
The board of directors met six times, the audit committee met twice and the
human resources committee met six times during fiscal 1998. Each director
attended at least 75% of all meetings of the board of directors and committees
on which he served that were held during fiscal 1998.
Compensation of Directors
Cash Compensation
Outside directors receive an annual retainer of $5,000 and a fee of $1,000
per meeting for attending regular meetings of the board of directors and $500
per meeting 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 directors' fees is made
quarterly. Dr. G. Hatsopoulos and Mr. Rainville are both employees of Thermo
Electron or its subsidiaries and do not receive any cash compensation from the
Corporation for their services as directors. Mr. J. Hatsopoulos, who is a
consultant to Thermo Electron, does not receive any cash compensation from the
Corporation for his services as a director during the term of his consulting
agreement, which terminates in December 2003. Directors are also reimbursed
for out-of-pocket expenses incurred in attending such meetings.
3
<PAGE>
Deferred Compensation Plan
Under the Corporation's 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 of control or proposed change
of 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 acquisition, without the prior approval of
the board of directors, directly or indirectly, by any person of 50% or more
of the outstanding Common Stock or 25% or more of 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
Common Stock. When payable, amounts deferred may be disbursed solely in shares
of Common Stock accumulated under the Deferred Compensation Plan. A total of
100,000 shares of Common Stock is currently reserved for issuance under the
Deferred Compensation Plan. As of January 2, 1999, deferred units equal to
approximately 10,513 shares of Common Stock were accumulated under the
Deferred Compensation Plan.
Directors Stock Option Plan
The Corporation's directors stock option plan (the "Directors Plan")
provides for the grant of stock options to purchase shares of Common Stock and
shares of common stock of the Corporation's majority-owned subsidiaries to
outside directors as additional compensation for their service as directors.
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.
Outside directors currently receive an annual grant of options to purchase
1,000 shares of Common Stock pursuant to the Directors Plan at the close of
business on the date of each Annual Meeting of the Stockholders of the
Corporation. 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 repurchase
by the Corporation at the exercise price if the recipient ceases to serve as a
director of the Corporation or any other Thermo Electron company prior to the
first anniversary of the grant date.
In addition, under the Directors Plan, outside directors are automatically
granted every five years options to purchase 1,500 shares of common stock of
each majority-owned subsidiary of the Corporation that is "spun out" to
outside investors. The grant occurs on the close of business on the date of
the first Annual Meeting of the 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, and also as of the close of business on the date of
every fifth Annual Meeting of the Stockholders of the Corporation that occurs
thereafter during the duration of the Plan. 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 immediately exercisable 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 any other 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.
4
<PAGE>
The exercise price for options granted under the Directors Plan is the
average of the closing prices of Common Stock as reported on the American
Stock Exchange (or other principal market on which Common Stock is then
traded) for the five trading days immediately preceding and including the date
of grant, or, if the shares are not then traded, at the last price per share
paid by third parties in an arms-length transaction prior to the option grant.
As of January 31, 1999, options to purchase 14,675 shares of Common Stock were
outstanding under the Directors Plan, options to purchase 275,850 shares had
been exercised, no options had lapsed and options to purchase 384,475 shares
of Common Stock were available for future grant.
Compensation of the Chairman of the Board
Mr. Noble has served as the non-executive chairman of the board of the
Corporation since December 1992. Mr. Noble is not an employee of the
Corporation or of any other company affiliated with Thermo Electron. For his
service as chairman of the board, Mr. Noble receives an additional fee equal
to $1,000 per meeting for attending regular meetings of the board of directors
and $500 per meeting for participating in meetings of the board of directors
held by means of conference telephone. He receives an additional option each
year to purchase 1,000 shares of Common Stock at an exercise price equal to
the average closing price for the five days immediately preceding and
including the date of grant, which is awarded at the first regular meeting of
the board of directors following the Annual Meeting of the Stockholders in
conjunction with his annual appointment as chairman of the board.
Stock Ownership Policies for Directors
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 within a three-year
period. The chief executive officer of the Corporation is required to comply
with a separate stock holding policy established by the Committee, which is
described in "Committee Report on Executive Compensation--Stock Ownership
Policies."
In addition, the Committee has a policy requiring directors 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 "Committee Report on Executive
Compensation--Stock Ownership Policies."
5
<PAGE>
STOCK OWNERSHIP
The following table sets forth the beneficial ownership of Common Stock, as
well as the common stock of Thermo Electron and the Corporation's majority-
owned subsidiary, Thermo Fibergen, as of January 31, 1999, with respect to (i)
each director, (ii) each executive officer named in the summary compensation
table under the heading "Executive Compensation" (collectively the "named
executive officers") and (iii) all directors and current executive officers as
a group. In addition, the following table sets forth the beneficial ownership
of Common Stock as of January 31, 1999, with respect to each person who was
known by the Corporation to own beneficially more than 5% of the outstanding
shares of Common Stock
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.
<TABLE>
<CAPTION>
Thermo Thermo Thermo
Name(1) Fibertek(2) Electron(3) Fibergen(4)
------- ----------- ----------- -----------
<S> <C> <C> <C>
Thermo Electron Corporation(5)............ 55,869,678 N/A N/A
Jan-Eric Bergstedt(6)..................... 188,149 22,834 21,000
Walter J. Bornhorst....................... 83,325 9,415 1,500
George N. Hatsopoulos..................... 170,494 3,600,811 20,000
John N. Hatsopoulos....................... 127,220 873,854 20,000
Francis L. McKone......................... 2,311 0 16,018
Donald E. Noble(6)........................ 120,737 59,751 7,500
Thomas M. O'Brien......................... 167,781 62,210 10,000
Jonathan W. Painter....................... 115,594 29,437 20,000
William A. Rainville(6)................... 690,777 359,409 43,000
Edward J. Sindoni......................... 297,209 45,684 10,000
All directors and current executive
officers as a group (13 persons)......... 2,227,490 5,599,705 186,018
</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 and
Thermo Fibergen beneficially owned consist of shares owned by the
indicated person or by that person for the benefit of minor children, and
all share ownership includes sole voting and investment power.
(2) Shares of Common Stock beneficially owned by Mr. Bergstedt, Dr.
Bornhorst, Dr. G. Hatsopoulos, Mr. J. Hatsopoulos, Mr. McKone, Mr. Noble,
Mr. O'Brien, Mr. Painter, Mr. Rainville, Mr. Sindoni and all directors
and current executive officers as a group include and 183,500, 25,325,
139,910, 57,600, 1,000, 8,850, 143,500, 98,900, 550,000, 266,600 and
1,707,685 shares, respectively, that such person or group had the right
to acquire within 60 days of January 31, 1999, through the exercise of
stock options. Shares beneficially owned by Mr. McKone, Mr. Noble and all
directors and current executive officers as a group include 1,311, 9,202,
and 10,513 shares, respectively, that had been allocated through January
2, 1999, to their respective accounts maintained under the Deferred
Compensation Plan. Shares beneficially owned by Mr. J. Hatsopoulos
include 2900 shares held by his spouse. Shares beneficially owned by Mr.
Painter include 15 shares held in a custodial account for the benefit of
his minor child. Except for Mr. Rainville, who beneficially owned 1.12%
of the Corporation's Common Stock outstanding as of January 31, 1999, no
director or named executive officer beneficially owned more than 1% of
the Common Stock outstanding as of January 31, 1999; all directors and
current executive officers as a group beneficially owned 3.62% of the
Common Stock outstanding as of such date.
(3) Shares of the common stock of Thermo Electron beneficially owned by Mr.
Bergstedt, Dr. G. Hatsopoulos, Mr. J. Hatsopoulos, Mr. Noble, Mr.
O'Brien, Mr. Painter, Mr. Rainville, Mr. Sindoni and all directors and
current executive officers as a group include 21,450, 1,899,500, 812,735,
9,125, 55,450, 23,675, 293,287, 32,700 and 3,610,694 shares,
respectively, that such person or members of the group had the right to
6
<PAGE>
acquire within 60 days of January 31, 1999, through the exercise of stock
options. Shares beneficially owned by Dr. G. Hatsopoulos, Mr. J.
Hatsopoulos, Mr. Painter and all directors and current executive officers
as a group include 2,266, 2,036, 590 and 7,389 shares, respectively,
allocated through January 31, 1999, to accounts maintained pursuant to
Thermo Electron's employee stock ownership plan, of which the trustees, who
have investment power over its assets, are executive officers of Thermo
Electron (the "ESOP"). Shares beneficially owned by Mr. Noble and all
directors and current executive officers as a group each include 44,961
shares allocated through January 2, 1999, to Mr. Noble's account maintained
pursuant to Thermo Electron's deferred compensation plan for directors.
Shares beneficially owned by Dr. G. Hatsopoulos include 158,351 shares held
by his spouse, 408,664 shares held by a family trust of which his spouse is
the trustee, 500,000 shares held by a trust of which Dr. G. Hatsopoulos is
the trustee and 153 shares allocated to the account of his spouse
maintained pursuant to the ESOP. Shares beneficially owned by
Dr. G. Hatsopoulos also include 50,000 shares that a family trust, of which
Dr. G. Hatsopoulos' spouse is the trustee, had the right to acquire within
60 days of January 31, 1999, through the exercise of stock options. Except
for Dr. G. Hatsopoulos, who beneficially owned 2.25% of the Thermo Electron
common stock outstanding as of January 31, 1999, no director or named
executive officer beneficially owned more than 1% of such common stock
outstanding as of such date; all directors and current executive officers
as a group beneficially owned 3.51% of the Thermo Electron common stock
outstanding as of January 31, 1999.
(4) Shares of the common stock of Thermo Fibergen beneficially owned by Mr.
Bergstedt, Dr. Bornhorst, Dr. G. Hatsopoulos, Mr. J. Hatsopoulos, Mr.
McKone, Mr. Noble, Mr. O'Brien, Mr. Painter, Mr. Rainville, Mr. Sindoni
and all directors and current executive officers as a group include
19,500, 1,500, 20,000, 20,000, 15,000, 1,500, 10,000, 20,000, 40,000,
10,000, and 174,500 shares, respectively, that such person or members of
the group had the right to acquire within 60 days of January 31, 1999,
through the exercise of stock options. Shares beneficially owned by Mr.
McKone and all directors and current executive officers as a group
include 1,018 shares that had been allocated through January 2, 1999, to
Mr. McKone's account maintained under Thermo Fibergen's deferred
compensation plan for directors. Shares beneficially owned by Mr.
Bergstedt include 1,500 shares held by his spouse. No director or named
executive officer beneficially owned more than 1% of such common stock
outstanding as of January 31, 1999; all directors and current executive
officers as a group beneficially owned 1.26% of the Thermo Fibergen
common stock outstanding as of such date.
(5) Thermo Electron beneficially owned 91.17% of the Common Stock outstanding
as of January 31, 1999. Thermo Electron's address is 81 Wyman Street,
Waltham, Massachusetts 02454-9046.
(6) As of January 31, 1999, Mr. Bergstedt, Mr. Noble and Mr. Rainville
beneficially owned 750, 3,000 and 1,500 redemption rights, respectively,
issued by Thermo Fibergen. The redemption rights beneficially owned by
Mr. Bergstedt are held by his spouse. Each of these rights, issued in a
public offering in September 1996, permits the holder to sell one share
of Thermo Fibergen common stock back to Thermo Fibergen during certain
periods in the future at a price of $12.75 per share.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, (the
"Exchange Act") 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 1998, except
in the following instances: Thermo Electron filed six Form 4s late, reporting
a total of 99 transactions, including 87 open market purchases of shares of
Common Stock and 12 transactions associated with the grant, exercise and lapse
of options to purchase Common Stock granted to employees under its stock
option program.
7
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table summarizes compensation during the last three fiscal
years for services to the Corporation in all capacities awarded to, earned by
or paid to the Corporation's chief executive officer and the four other most
highly compensated executive officers. These executive officers are
collectively referred to as the "named executive officers."
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 a corporate services agreement between
the Corporation and Thermo Electron. See "Relationship with Affiliates."
Accordingly, the compensation for these individuals is not reported in the
following table.
Summary Compensation Table
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Long Term
Compensation
-----------------------
Annual Compensation Securities Underlying
Name and Fiscal ------------------- Options (No. of Shares All Other
Principal Position Year Salary Bonus and Company)(1) Compensation(2)
------------------ ------ ------------------- ----------------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
William A.
Rainville(3).......... 1998 $ 156,000 $ 84,000 -- $28,922(4)
President and Chief
Executive Officer 1997 $ 110,000 $ 100,000 240,000 (TFT) $28,340(4)
1996 $ 102,500 $ 95,500 40,000 (TFG) $17,558(4)
- -------------------------------------------------------------------------------------------
Jan-Eric O. Bergstedt.. 1998 $ 166,000 $ 87,000 24,000 (TFT) $ 7,200
Vice President 1,600 (TMO)
1997 $ 159,000 $ 91,350 95,000 (TFT) $ 5,344
200 (TMO)
1996 $ 145,000 $ 76,500 15,000 (TFT) $ 5,344
7,650 (TMO)
19,500 (TFG)
- -------------------------------------------------------------------------------------------
Edward J. Sindoni...... 1998 $ 166,000 $ 90,000 131,600 (TFT) $24,284
Vice President 4,700 (TMO)
1997 $ 159,000 $ 86,000 45,000 (TFT) $22,417
1,900 (TMO)
1996 $ 151,500 $ 68,700 2,250 (TMO) $15,997
10,000 (TFG)
- -------------------------------------------------------------------------------------------
Jonathan W.
Painter(5)............ 1998 $ 150,000 $ 86,000 11,600 (TFT) $16,056
Executive Vice
President 900 (TMO)
1997 $ 140,000 $ 25,000 -- $ 9,294
- -------------------------------------------------------------------------------------------
Thomas M. O'Brien...... 1998 $ 150,000 $ 63,000 40,000 (TFT) $22,046
Executive Vice
President, Finance 30,900 (TMO)
1997 $ 144,500 $ 39,000 1,000 (TMO) $20,680
1996 $ 139,000 $ 55,500 1,050 (TMO) $12,940
10,000 (TFG)
- -------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
(1) Options to purchase Common Stock awarded to executive officers are
followed by the designation "TFT." In addition, the named executive
officers of the Corporation have also been granted options to purchase
the common stock of the following Thermo Electron companies during the
last three fiscal years as part of Thermo Electron's stock option
program: Thermo Electron (designated in the table as TMO) and Thermo
Fibergen (designated in the table as TFG).
(2) Represents, for Mr. O'Brien, Mr. Rainville and Mr. Sindoni, amounts
contributed to their respective accounts under the Corporation's profit-
sharing plan. Represents, for Mr. Bergstedt and Mr. Painter, the amount
of matching contributions made by his employer to his account under the
Thermo Electron 401(k) plan.
(3) Mr. Rainville is a chief operating officer of Thermo Electron, as well as
the president and chief executive officer of the Corporation. A portion
of Mr. Rainville's annual cash compensation (salary and bonus) has been
paid by Thermo Electron in each of the last three fiscal years as
compensation for the services provided to Thermo Electron based on the
time he devoted to his responsibilities as an executive officer of Thermo
Electron. The annual cash compensation (salary and bonus) reported in the
table for Mr. Rainville represents the amount paid by the Corporation and
its subsidiaries solely for Mr. Rainville's services as chief executive
officer of the Corporation. For each of 1998, 1997, and 1996, 60%, 50%
and 50% of Mr. Rainville's annual cash compensation (salary and bonus)
was paid by the Corporation for his services as the Corporation's chief
executive officer. From time to time, Mr. Rainville has been, and in the
future may be, granted options to purchase shares of the common stock of
Thermo Electron and certain of its subsidiaries other than the
Corporation from time to time by Thermo Electron or such other
subsidiaries. These options are not reported in this table as they were
granted as compensation for service to other Thermo Electron companies in
capacities other than in his capacity as president and chief executive
officer of the Corporation.
(4) In addition to the matching contribution referred to in footnote (2),
such amount includes $5,319, $5,741 and $1,313 of compensation
attributable to interest-free loans provided to Mr. Rainville in 1998,
1997 and 1996, respectively, pursuant to the Corporation's stock holding
assistance plan. See "Relationship with Affiliates--Stock Holding
Assistance Plan."
(5) Mr. Painter was appointed an executive officer of the Corporation on
September 23, 1997. Mr. Painter has been granted options to purchase
shares of the common stock of Thermo Electron and certain of its
subsidiaries other than the Corporation from time to time by Thermo
Electron or such other subsidiaries. These options are not reported in
this table as they were granted as compensation for services to other
Thermo Electron companies in capacities other than in his capacity as an
executive officer of the Corporation.
9
<PAGE>
Stock Options Granted During Fiscal Year 1998
The following table sets forth information concerning individual grants of
stock options made during fiscal 1998 to the Corporation's named executive
officers. It has not been the Corporation's policy in the past to grant stock
appreciation rights, and no such rights were granted during fiscal 1998.
Mr. Rainville is a chief operating officer of Thermo Electron and from time
to time has been, and in the future may be, granted options to purchase common
stock of Thermo Electron and certain of its subsidiaries other than the
Corporation. These options are not reported in this table as they were granted
as compensation for service to other Thermo Electron companies in capacities
other than in his capacity as the president and chief executive officer of the
Corporation.
Option Grants in Fiscal 1998
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Percent of Annual Rates of Stock
Total Options Price Appreciation for
Number of Securities Granted to Exercise Option Term (2)
Underlying Options Employees in Price Per Expiration -----------------------
Name Granted and Company(1) Fiscal Year Share Date 5% 10%
- ---- ---------------------- ------------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
William A. Rainville.... -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------
Jan-Eric O. Bergstedt... 24,000 (TFT) 2.5% $ 5.83 12/01/03 $ 38,640 $ 85,440
200 (TMO) 0.01%(3) $34.50 06/02/03 $ 1,906 $ 4,212
1,400 (TMO) 0.04%(3) $16.20 09/23/03 $ 6,272 $ 13,846
- -----------------------------------------------------------------------------------------------------------
Edward J. Sindoni....... 11,600 (TFT) 1.2% $ 7.95 09/22/03 $ 25,520 $ 56,260
120,000 (TFT) 12.7% $ 5.83 12/01/05 $ 284,400 $ 663,600
1,800 (TMO) 0.05%(3) $34.50 06/02/03 $ 17,154 $ 37,908
2,900 (TMO) 0.09%(3) $16.20 09/23/03 $ 12,992 $ 28,681
- -----------------------------------------------------------------------------------------------------------
Jonathan W. Painter..... 11,600 (TFT) 1.2% $ 7.95 09/22/03 $ 25,520 $ 56,260
900 (TMO) 0.0%(3) $34.50 06/02/03 $ 8,577 $ 18,954
- -----------------------------------------------------------------------------------------------------------
Thomas M. O'Brien....... 40,000 (TFT) 4.2% $ 7.95 09/22/05 $ 129,600 $ 301,600
900 (TMO) 0.03%(3) $34.50 06/02/03 $ 8,577 $ 18,954
30,000 (TMO) 0.9%(3) $16.20 09/23/05 $ 198,000 $ 461,100
</TABLE>
- --------
(1) All of the options granted during the fiscal year are immediately
exercisable. In all cases, the shares acquired upon exercise are subject
to repurchase by the granting company at the exercise price if the
optionee ceases to be employed by, or serve as a director of, the
granting company or another Thermo Electron company. The granting company
may exercise its repurchase rights within six months after the
termination of the optionee's employment or the cessation of
directorship, as the case may be. For publicly-traded companies, the
repurchase rights generally lapse ratably over a one-to five-year period,
depending on the option term, which may vary from five to ten years,
provided that the optionee continues to be employed by or serve as a
director of 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 date. The granting company may
permit the holders of 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. Please see foonote (1)
on page 9 for the company abbreviations used in this table.
(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 applicable company, the optionee's continued employment or
service as a director 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 companies other than the Corporation and accordingly are
reported as a percentage of total options granted to employees of Thermo
Electron and its subsidiaries.
10
<PAGE>
Stock Options Exercised During Fiscal 1998 and Fiscal Year-End Option Values
The following table reports certain information regarding stock option
exercises during fiscal 1998 and outstanding stock options held at the end of
fiscal 1998 by the Corporation's named executive officers. No stock
appreciation rights were exercised or were outstanding during fiscal 1998.
Aggregated Option Exercises In Fiscal 1998 And Fiscal 1998 Year-End Option
Values
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of Value of
Securities Unexercised
Underlying In-the-Money
Unexercised Options at
Options at Fiscal Fiscal
Shares Year-End Year - End
Acquired on Value (Exercisable/ (Exercisable/
Name Company(2) Exercise Realized(1) Unexercisable)(2) Unexercisable)
---- ---------- ----------- ----------- ----------------- --------------
<S> <C> <C> <C> <C> <C>
William A. Rainville
(3).................... (TFT) 70,000 $ 529,410 665,000/0(4) $1,443,275/--
(TFG) -- -- 40,000/0(5) $ 0/--
- --------------------------------------------------------------------------------------------
Jan-Eric O. Bergstedt... (TFT) -- -- 183,500/0 $ 54,243/--
(TMO) -- -- 21,450/0 $ 683/--
(TFG) -- -- 19,500/0 $ 0/--
- --------------------------------------------------------------------------------------------
Edward J. Sindoni....... (TFT) 112,500 $1,068,750 266,600/0(4) $ 371,880/--
(TMO) 2,250 $ 33,667 32,700/0(6) $ 1,415/--
(TFG) -- -- 10,000/0 $ 0/--
- --------------------------------------------------------------------------------------------
Jonathan W. Painter
(7).................... (TFT) -- -- 11,600/0(4) $ 0/--
(TMO) -- -- 900/0 $ 0/--
- --------------------------------------------------------------------------------------------
Thomas M. O'Brien....... (TFT) 28,350 $ 256,936 227,650/0(4) $ 578,147/--
(TMO) 3,404 $ 79,807 55,450/0(6) $ 14,640/--
(TFG) -- -- 10,000/0 $ 0/--
</TABLE>
- --------
(1) Amounts shown in this column do not necessarily represent actual value
realized from the sale of the shares acquired upon exercise of the option
because in many cases the shares are not sold on exercise but continue to
be held be the executive officer exercising the option. The amounts shown
represent the difference between the option exercise price and the market
price on the date of exercise, which is the amount that would have been
realized if the shares had been sold immediately upon exercise.
(2) All of the options reported outstanding at the end of the fiscal year
were immediately exercisable as of fiscal year-end. In all cases, the
shares acquired upon exercise of the options reported in the table are
subject to repurchase by the granting company at the exercise price if
the optionee ceases to be employed by or serve as a director of such
company or another Thermo Electron company. The granting company may
exercise its repurchase rights within six months after the termination of
the optionee's employment or cessation of directorship, as the case may
be. For publicly-traded companies, the repurchase rights generally lapse
ratably over a one-to ten-year period, depending on the option term,
which may vary from two to twelve years, provided that the optionee
continues to be employed by or serve as a director of the granting
company or another Thermo Electron company. For companies that are not
publicly-traded, the repurchase rights lapse in their entirety on the
month anniversary of the grant date. Certain options have three-year
terms and the repurchase rights lapse in their entirety on the second
anniversary of the grant date. The granting company may permit the
holders of 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.
(3) Mr. Rainville has served as an officer of Thermo Electron in various
capacities since 1986 and holds other unexercised options to purchase
common stock of Thermo Electron and certain of its subsidiaries other
than the Corporation. These options are not reported here as they were
granted as compensation for service to other Thermo Electron companies in
capacities other than in his capacity as the president and chief
executive officer of the Corporation. Please see footnote (1) on page 9
for the company abbreviations used in this table.
11
<PAGE>
(4) Options to purchase 108,000, 27,000, 10,800 and 127,000 shares of the
Corporation's Common Stock held by Mr. Rainville, Mr. Sindoni, Mr.
Painter and Mr. O'Brien, respectively, are subject to the same terms
described in footnote (2), except that the repurchase rights of the
Corporation lapse ratably on the second through sixth anniversaries of
the option grant date and shares purchased upon exercise thereof are
further restricted from resale until such executive officer's retirement.
(5) Options to purchase 20,000 shares of the common stock of Thermo Fibergen
granted to Mr. Rainville are subject to the same terms described in
footnote (2), except that the repurchase rights of the granting company
are deemed to lapse 20% per year commencing on the sixth anniversary of
the grant date.
(6) Options to purchase 22,500 and 22,500 shares, respectively, of the common
stock of Thermo Electron granted to Mr. Sindoni and Mr. O'Brien are
subject to the same terms as described in footnote (2), except that the
repurchase rights of the granting company 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 company shall be deemed
to have lapsed ratably over a five-year period commencing with the fifth
anniversary of the grant date.
(7) Prior to September 1997, Mr Painter served as an officer of Thermo
Electron and he holds other unexercised options to purchase common stock
of Thermo Electron and its subsidiaries other than the Corporation. These
options are not reported here as they were granted as compensation for
services to other Thermo Electron companies in capacities other than in
his capacity as an executive officer of the Corporation.
Defined Benefit Retirement Plan
The Corporation's subsidiary, Thermo Web Systems, Inc., maintains a defined
benefit retirement plan (the "Retirement Plan") for eligible U.S. employees.
The following table sets forth the estimated annual benefits payable under the
Retirement Plan upon retirement to employees of the subsidiary in specified
compensation and years-of-service classifications. The estimated benefits at
certain compensation levels reflect the statutory limits on compensation that
can be recognized for plan purposes. This limit is currently $160,000 per
year.
<TABLE>
<CAPTION>
Annual Compensation Years of Service
------------------- ------------------------------------------------
15 20 25 30 35
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$100,000 $26,250 $35,000 $43,750 $48,125 $48,125
$125,000 $32,813 $43,750 $54,688 $60,156 $60,156
$150,000 $39,375 $52,500 $65,625 $72,188 $72,188
$160,000 $42,000 $56,000 $70,000 $84,000 $84,000
</TABLE>
Each eligible employee receives a monthly retirement benefit, beginning at
normal retirement age (65), based on a percentage (1.75%) of the average
monthly compensation of such employee before retirement, multiplied by his
years of service (up to a maximum of 30 years). Full credit is given for the
first 25 years of service, and half credit is given for years over 25 and less
than 30. Benefits are reduced for retirement before normal retirement age.
Average monthly compensation is generally defined as average monthly base
salary over the five years of highest compensation in the ten-year period
preceding retirement. For 1998, the compensation recognized for plan purposes
for Mr. Rainville, Mr. Sindoni and Mr. O'Brien was $160,000, $160,000 and
$160,000, respectively. The estimated credited years of service recognized
under the Retirement Plan for Mr. Rainville, Mr. Sindoni and Mr. O'Brien is
30, 23 and 25, respectively, assuming retirement at age 65. Mr. Bergstedt and
Mr. Painter are not entitled to receive any benefits under the Retirement
Plan. No benefits under the Retirement Plan vest for an employee until after
five years of participation, at which time they become fully vested. The
benefits shown in the above table are subject to reduction for Social Security
benefits. The plan benefits shown are payable during the employee's lifetime
unless the employee elects another form of benefit that provides death benefit
protection.
Executive Retention Agreements
Thermo Electron has entered into agreements with certain executive officers
and key employees of Thermo Electron and its subsidiaries that provide
severance benefits if there is a change in control of Thermo Electron
12
<PAGE>
and their employment is terminated for any reason, by Thermo Electron "without
cause" or by the individual "for good reason," as these terms are defined
therein, within 18 months thereafter. For purposes of these agreements, a
change in control exists upon (i) the acquisition by any person of 40% or more
of the outstanding common stock or voting securities of Thermo Electron; (ii)
the failure of the Thermo Electron board of directors to include a majority of
directors who are "continuing directors," which term is defined to include
directors who were members of Thermo Electron's board on the date of the
agreement or who subsequent to the date of the agreement were nominated or
elected by a majority of directors who were "continuing directors" at the time
of such nomination or election; (iii) the consummation of a merger,
consolidation, reorganization, recapitalization or statutory share exchange
involving Thermo Electron or the sale or other disposition of all or
substantially all of the assets of Thermo Electron unless immediately after
such transaction (a) all holders of Thermo Electron common stock immediately
prior to such transaction own more than 60% of the outstanding voting
securities of the resulting or acquiring corporation in substantially the same
proportions as their ownership immediately prior to such transaction and (b)
no person after the transaction owns 40% or more of the outstanding voting
securities of the resulting or acquiring corporation; or (iv) approval by
stockholders of a complete liquidation or dissolution of Thermo Electron.
In 1998, Thermo Electron authorized an executive retention agreement with
each of Mr. William A. Rainville, Mr. Edward J. Sindoni, Mr. Jonathan W.
Painter and Mr. Thomas M. O'Brien. These agreements provide that in the event
the individual's employment is terminated under the circumstances described
above, the individual would be entitled to a lump sum payment equal to the sum
of (a) in the case of Mr. Rainville, two times, and in the case of Messrs.
Sindoni, Painter and O'Brien, one times, the individual's highest annual base
salary in any 12 month period during the prior five-year period, plus (b) in
the case of Mr. Rainville, two times, and in the case of Messrs. Sindoni,
Painter and O'Brien, one times, the individual's highest annual bonus in any
12 month period during the prior five-year period. In addition, the individual
would be provided benefits for a period of, in the case of Mr. Rainville, two
years, and in the case of Messrs. Sindoni, Painter and O'Brien, one year,
after such termination substantially equivalent to the benefits package the
individual would have been otherwise entitled to receive if the individual was
not terminated. Further, all repurchase rights of Thermo Electron and its
subsidiaries shall lapse in their entirety with respect to all options that
the individual holds in Thermo Electron and its subsidiaries, including the
Corporation, as of the date of the change in control. Finally, the individual
would be entitled to a cash payment equal to, in the case of Mr. Rainville,
$20,000, and in the case of Messrs. Sindoni, Painter and O'Brien, $15,000, to
be used toward outplacement services. These executive retention agreements
supersede and replace any and all prior severance arrangements which these
individuals had with Thermo Electron.
Assuming that the severance benefits would have been payable as of January
1, 1999, the lump sum salary and bonus payment under such agreement to Messrs.
Rainville, Sindoni, Painter and O'Brien would have been approximately
$960,000, $ 259,000, $258,000 and $241,200, respectively. In the event that
payments under these agreements are deemed to be so called "excess parachute
payments" under the applicable provisions of the Internal Revenue Code of
1986, as amended, (the "Internal Revenue Code") the individuals would be
entitled to receive a gross-up payment equal to the amount of any excise tax
payable by such individual with respect to such payment plus the amount of all
other additional taxes imposed on such individual attributable to the receipt
of such gross-up payment.
13
<PAGE>
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Compensation Philosophy
Decisions on compensation for the Corporation's executive officers are made
by the human resources committee of the board of directors (the "Committee").
The Committee follows guidelines established by the human resources committee
of the board of directors of its parent company, Thermo Electron. The
compensation policies followed by the Committee are designed to reward and
motivate executives in achieving long-term value for Stockholders and other
business objectives, to attract and retain dedicated, talented individuals to
accomplish the Corporation's objectives, to recognize individual contributions
as well as the performance of the Corporation and its subsidiaries, and to
encourage stock ownership by executives through stock-based compensation and
stock retention programs in order to link executive and Stockholder interests.
The Committee evaluates the competitiveness of its compensation practices
through the use of market surveys and competitive analyses prepared by its
outside compensation consultants and by participating in annual 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 500 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 Paper Products Industry Group. Internal fairness of compensation
within the organization is also an important element of the Committee's
compensation philosophy. Compensation of executives is evaluated by comparing
it to the compensation of other executives within the Thermo Electron
organization who have responsibility to manage businesses of comparable size
and complexity.
The compensation program of the Corporation consists of annual cash
compensation and long-term incentive compensation. Annual cash compensation is
composed of base salary and performance-based incentive compensation, which is
reviewed and determined annually. Long-term incentive compensation is in the
form of stock-based compensation such as stock options and restricted stock
awards. The process for determining the components of executive compensation
for the executive officers is described below.
Components of Executive Compensation
Annual Cash Compensation
Annual cash compensation consists of base salary and performance-based
incentive compensation. The cash incentive compensation paid to an executive
varies from year to year based on the performance of the Corporation and the
executive.
The Committee assesses the competitiveness of annual cash compensation by
establishing for each executive position at the beginning of each fiscal year
a salary and reference incentive compensation for the position that together
are intended to approximate the mid-point of competitive total annual cash
compensation for organizations that are of comparable size and complexity as
the Corporation.
Base Salary. Generally, executive salaries are adjusted gradually over time
to reflect competitive salary levels or other considerations, such as
geographic or regional market data, industry trends or internal fairness
within the Corporation. The Committee may also adjust individual salaries to
reflect the assumption of increased responsibilities. The salary increases in
fiscal 1998 for the named executive officers generally reflect this practice
of gradual adjustment and moderation.
Performance-based Incentive Compensation. The amount of incentive
compensation actually earned by an executive from year to year varies with the
performance of the Corporation and the executive. The Committee evaluates
performance (1) by formulae using financial measures of profitability and
contribution to Stockholder value and (2) by subjectively evaluating the
executive's contribution to the achievement of the Corporation's long-term
objectives. In fiscal 1998, the formulae used by the Committee measured return
on net assets, return
14
<PAGE>
on sales, earnings improvement over a three-year period for the Corporation
and, to a lesser extent, the Corporation's parent company, and three-year
growth in earnings per share for the same companies. The financial measures
are not financial targets that are met, not met or exceeded, but assess the
financial performance relative to the financial performance of comparable
companies and are designed to penalize below-average performance and reward
above-average performance. The relative weighting of the financial measures
and subjective evaluation varies depending on the executive's role and
responsibilities within the organization.
The incentive compensation awarded to the named executive officers (other
than the chief executive officer, which is discussed below under the caption
"1998 CEO Compensation") for fiscal 1998 reflected the financial performance
of the businesses of the Corporation for which they were responsible, as well
as the Corporation as a whole.
Long-Term Incentive Compensation
The primary goal of the Corporation and its parent company 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
stock-based compensation in shares of Common Stock of the Corporation and the
common stock of other Thermo Electron companies.
The Committee and management believe that awards of stock-based compensation
of both the Corporation and other companies within the Thermo Electron group
of companies accomplish many objectives. The award of stock-based compensation
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-based compensation also results in management's compensation
being closely linked to stock performance. In addition, because the employee's
rights in the stock-based compensation vest over periods of varying durations
and are subject to forfeiture if the employee leaves the Corporation
prematurely, stock-based compensation is an incentive for key employees to
remain with the Corporation long-term. The Committee believes stock-based
compensation awards in its parent company, Thermo Electron, its majority-owned
subsidiary, Thermo Fibergen, 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 for each officer the annual
value of stock-based compensation in the Corporation and other companies
within the Thermo Electron organization that vest in the next year and
compares the individual's total compensation using this value to competitive
data. The Committee uses a modified Black-Scholes option pricing model to
determine the value of an award. In addition, the Committee considers the
aggregate amount of outstanding awards of stock-based compensation granted to
all employees to monitor the number of outstanding awards under the
Corporation's stock-based compensation programs. In determinimg the
appropriate number of outstanding awards, the Committee considers such factors
as the size of the company, its stage of development, and its growth strategy,
as well as the aggregate awards and compensation practices of comparable
companies.
The Committee periodically awards stock-based compensation in the form of
stock options and restricted stock based on an assessment of the total
compensation of the executive, the actual and anticipated contributions of the
executive (which include a subjective assessment by the Committee of the
executive's future potential with the organization), as well as the value of
previously awarded stock-based compensation as described above. In addition,
the options awarded in 1998 to the named executive officers with respect to
the common stock of the Corporation's parent company, Thermo Electron, were
made pursuant to a program that awards options to certain eligible employees
annually based on the number of shares of Thermo Electron common stock held by
the employee, as an incentive to buy and hold shares of Thermo Electron common
stock.
15
<PAGE>
Stock Ownership Policies
The Corporation's compensation program is also designed to encourage
executives to own shares of Common Stock. The Committee believes that
encouraging executives to own and retain stock acquired through its stock-
based compensation program or otherwise provides additional incentive for
executive officers to follow strategies designed to maximize long-term value
to Stockholders.
The Committee established a stock holding policy for executive officers of
the Corporation that required executive officers to own a multiple of their
compensation in shares of the Corporation's Common Stock. For the chief
executive officer, the multiple is one times his base salary and reference
bonus for the fiscal year. For all other officers, the multiple was one times
the officer's base salary. The Committee deemed it appropriate to permit
officers to achieve these ownership levels over a three-year period. The
policy has been amended to apply only to the chief executive officer.
In order to assist officers in complying with the policy, the Committee also
adopted a stock holding assistance plan under which the Corporation was
authorized to make interest-free loans to executive officers to enable them to
purchase shares of Common Stock in the open market. This plan was also amended
to apply only to the chief executive officer. See "Relationship with
Affiliates--Stock Holding Assistance Plan." The loans are required to be
repaid upon the earlier of demand or the fifth anniversary of the date of the
loan, unless otherwise determined by the Committee. In 1996, Mr. Rainville,
the Corporation's chief executive officer, received a loan in the principal
amount of $118,104 under this plan, of which $94,483 remained outstanding as
of January 31, 1999. In 1997, Mr. Jonathan W. Painter, an executive vice
president of the Corporation, received a loan in the principal amount of
$157,304 under the plan, of which $135,304 remained outstanding as of January
31, 1999.
The Committee also has a policy requiring its executive officers 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.
Policy on Deductibility of Compensation
Section 162(m) of the Internal Revenue Code limits the tax deduction
available to public companies for annual compensation paid to senior executive
in excess of $1 million, unless the compensation qualified as "performance-
based" or is otherwise exempt from Section 162(m). The Committee considers the
potential effect of Section 162(m) in designing its compensation program, but
reserves the right to use its independent judgment to approve nondeductible
compensation, while taking into account the financial effects such action may
have on the Corporation. From time to time, the Committee reexamines the
Corporation's compensation practices and the effect of Section 162(m).
1998 CEO Compensation
Annual cash compensation for Mr. William A. Rainville is reviewed by both
the Committee and the human resources committee of the board of directors of
Thermo Electron, due to Mr. Rainville's responsibilities as both the
Corporation's chief executive officer and as the chief operating officer,
recycling and resource recovery, of Thermo Electron, the Corporation's parent
company. Each committee evaluates Mr. Rainville's performance and proposed
compensation using the same process as that described above for the other
executive officers of the Corporation. At the Thermo Electron level, Mr.
Rainville is evaluated on his performance related to the Corporation as well
as other operating units of Thermo Electron for which he is responsible,
weighted in accordance with the amount of time and effort devoted to each
operation. The Corporation's Committee then reviews the analysis and
determinations of the Thermo Electron committee, and determines an appropriate
allocation of Mr. Rainville's compensation to be paid by the Corporation,
based on his relative responsibilities at the Corporation and Thermo Electron.
16
<PAGE>
In December 1997, the Committee reviewed and approved a salary increase for
Mr. Rainville for fiscal 1998, which reflected his assumption of increased
responsibilities within the Thermo Electron organization as a whole as well as
an assessment of the internal fairness of his base salary as compared to other
executives within the Thermo Electron organization managing comparable
businesses. In March 1999, the Committee conducted its review of Mr.
Rainville's proposed cash incentive compensation based on fiscal 1998
performance. Mr. Rainville's performance-based incentive compensation was
weighted 80% upon the financial performance of the Corporation and its parent
company, Thermo Electron, using the measures described above for all executive
officers under "Components of Executive Compensation--Annual Cash
Compensation--Performance-based Incentive Compensation," and 20% upon a
subjective evaluation of his performance. The incentive compensation paid to
Mr. Rainville for fiscal 1998 was substantially lower than incentive
compensation paid in the prior year and reflected the financial performance of
the Corporation and Thermo Electron in fiscal 1998. The Committee concurred in
the recommendations made by the Thermo Electron committee and agreed to an
allocation of 60% of Mr. Rainville's annual cash compensation for 1998 to the
Corporation.
Awards to Mr. Rainville of stock-based compensation in Common Stock are
reviewed and determined periodically by the Committee using the criteria
described above under the caption "Components of Executive Compensation--Long-
Term Incentive Compensation". No awards of stock-based compensation in Common
Stock were made to Mr. Rainville in fiscal 1998.
Mr. Donald E. Noble (Chairman)
Mr. Francis L. McKone
17
<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 Paper Products Industry Group ("DJ
PAPER") as of the last trading day of the Corporation's fiscal year.
Comparison of Total Returns Among Thermo Fibertek Inc., the American Stock
Exchange Market Value Index and the Dow Jones Total Returns Index for the
Paper Products Industry Groups from December 31, 1993 to December 31 1998.
[GRAPH APPEARS HERE]
12/31/93 12/30/94 12/29/95 12/27/96 1/2/98 12/31/98
- --------------------------------------------------------------------------------
TFT 100 101 214 129 174 102
- --------------------------------------------------------------------------------
AMEX 100 91 115 122 148 151
- --------------------------------------------------------------------------------
DJ Paper 100 111 127 135 150 152
- --------------------------------------------------------------------------------
The total return for the Common Stock (TMD), the American Stock Exchange
Market Value Index (AMEX) and the Dow Jones Total Return Index for the
Diversified Technology Industry Group (DJ DIV) assumes the reinvestment of
dividends, although dividends have not been declared on the 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
Common Stock is traded on the American Stock Exchange under the ticker symbol
"TMD."
RELATIONSHIP WITH AFFILIATES
Thermo Electron has, from time to time, caused certain subsidiaries to sell
minority interests to investors, resulting in several majority-owned private
and publicly-held subsidiaries. Thermo Electron has created the Corporation as
a publicly-held, majority owned subsidiary. The Corporation and such other
majority-owned Thermo Electron subsidiaries are hereinafter referred to as the
"Thermo Subsidiaries."
20
The total return for the Corporation's Common Stock (TFT), the American
Stock Exchange Market Value Index (AMEX) and the Dow Jones Total Return Index
for the Paper Products Industry Group (DJ PAPER) 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 "TFT."
18
<PAGE>
RELATIONSHIP WITH AFFILIATES
Thermo Electron has, from time to time, caused certain subsidiaries to sell
minority interests to investors resulting in several majority-owned, private
and publicly-held subsidiaries. The Corporation and such other majority-owned
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, including the Corporation, 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 the Thermo Subsidiaries.
The Charter currently 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. In addition, 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 administrative services,
including certain legal advice and services, risk management, employee benefit
administration, tax advice and preparation of tax returns, centralized cash
management and financial and other services to the Corporation. The
Corporation was assessed an annual fee equal to 0.8% of the Corporation's
revenues for these services in fiscal 1998. The annual fee will remain at 0.8%
of the Corporation's revenues
19
<PAGE>
for fiscal 1999. The fee is reviewed annually and may be changed by mutual
agreement of the Corporation and Thermo Electron. During fiscal 1998, Thermo
Electron assessed the Corporation $1,979,000 in fees under the Services
Agreement. Management believes that the charges under the Services Agreement
are reasonable and that the terms of the Services Agreement are fair to the
Corporation. In fiscal 1998, the Corporation was billed an additional $17,000
by Thermo Electron for certain administrative services required by the
Corporation that were not covered by the Services Agreement. 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.
The Corporation and Thermo Electron have entered into a Tax Allocation
Agreement under which the Corporation and its subsidiaries are included in the
consolidated federal and state income tax returns filed by Thermo Electron.
The Tax Allocation Agreement provides that in years in which these entities
have taxable income, the Corporation will pay to Thermo Electron amounts
comparable to the taxes it would have paid if the Corporation had filed
separate tax returns. In years in which these entities include a loss, Thermo
Electron will reimburse the Corporation the amount that the Corporation would
have received if it had filed separate tax returns. If Thermo Electron's
equity ownership of the Corporation were to drop below 80%, the Corporation
would be required to file its own income tax returns. In 1998, the Corporation
was assessed approximately $4,217,000 by Thermo Electron under the Tax
Allocation Agreement. At January 2, 1999, the Corporation owed Thermo Electron
$1,600,000 under the Tax Allocation Agreement.
From time to time, the Corporation may transact business with other
companies in the Thermo Group.
The Corporation, along with certain other Thermo Subsidiaries, participates
in a notional pool arrangement with Barclays Bank, which includes a
$71,017,000 credit facility. The Corporation has access to $1,838,000 under
this credit facility. Only U.K.-based Thermo Subsidiaries participate in this
arrangement. Under this arrangement the Bank notionally combines the positive
and negative cash balances held by the participants to calculate the net
interest yield/expense for the group. The benefit derived from this
arrangement is then allocated based on balances attributable to the respective
participants. Thermo Electron guarantees all of the obligations of each
participant in this arrangement. As of January 2, 1999, the Corporation had a
positive cash balance of approximately $24,000, based on an exchange rate of
$1.6708/GBP 1.00. For 1998, the average annual interest rate earned on GBP
deposits by participants in this credit arrangement was approximately 7.7225%
and the average annual interest rate paid on overdrafts was approximately
7.485%.
At January 2, 1999, the Corporation owed Thermo Electron and its other
subsidiaries an aggregate of $1,279,000 for amounts due under the Corporate
Services Agreement and related administrative charges, for other products and
services, and for miscellaneous items, excluding amounts owed by the
Corporation to Thermo Electron under the Tax Allocation Agreement. The largest
amount of such net indebtedness owed by the Corporation to Thermo Electron and
its other subsidiaries since January 3, 1998 was $1,470,000. These amounts do
not bear interest and are expected to be paid in the normal course of
business.
As of January 2, 1999, $74,447,000 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 Thermo Electron,
which Thermo Electron collateralizes with investments principally consisting
of corporate notes, U.S. government agency securities, commercial paper, money
market funds and other marketable securities, in the amount of at least 103%
of such obligation. The Corporation's funds subject to the repurchase
agreement are
20
<PAGE>
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.
In March 1999, the Corporation's majority-owned subsidiary, Thermo Fibergen,
purchased 250,000 shares of Thermo Fibergen common stock from Thermo Electron
for an aggregate of $2,227,000. As authorized by Thermo Fibergen's board of
directors, the purchase price was the fair market value of the shares of
common stock. The fair market value of such shares was determined based on the
average of the closing prices of Thermo Fibergen common stock as reported on
the American Stock Exchange, Inc. for the five trading days preceding March
18, 1999, the date the parties entered into a definitive stock purchase
agreement. Thermo Electron had previously purchased the shares in open market
transactions for an aggregate purchase price of approximately $1,970,000.
Stock Holding Assistance Plan
The human resources committee of the Corporation's board of directors (the
"Committee") established a stock holding policy that required 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
Committee also adopted a stock holding assistance plan under which the
Corporation may make interest-free loans to executive officers, to enable them
to purchase Common Stock in the open market. The stock holding policy and the
stock holding assistance plan were both subsequently amended to apply only to
the chief executive officer. In 1996, Mr. Rainville received a loan in the
principal amount of $118,104 under this plan to purchase 10,000 shares, of
which amount $94,483 remained outstanding as of January 31, 1999. In 1997, Mr.
Jonathan W. Painter, an executive vice president of the Corporation, received
a loan in the principal amount of $157,304 under the plan to purchase 13,000
shares of Common Stock, of which $135,304 remained outstanding as of January
31, 1999. The loans to Mr. Rainville and Mr. Painter are repayable upon the
earlier of demand or the fifth anniversary of the date of the loan, unless
otherwise determined by the Committee.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The board of directors has appointed Arthur Andersen LLP as independent
public accountants for fiscal 1999. Arthur Andersen LLP has acted as
independent public accountants for the Corporation since its inception in
1991. 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.
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 included in the proxy statement and
form of proxy relating to the 2000 Annual Meeting of the Stockholders of the
Corporation and to be presented at such meeting must be received by the
Corporation for inclusion in the proxy statement and form of proxy no later
than December 15, 1999. Notices of Stockholder proposals submitted outside the
processes of Rule 14a-8 of the Exchange Act (relating to proposals to be
presented at the meeting but not included in the Corporation's proxy statement
and form of proxy), will be considered untimely, and thus the Corporation's
proxy may confer discretionary voting authority on the persons named in the
proxy with regard to such proposals, if received after March 2, 2000.
21
<PAGE>
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 or by telephone, facsimile
transmission 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.
Waltham, Massachusetts
April 14, 1999
22
<PAGE>
FORM OF PROXY
THERMO FIBERTEK INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 27, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Donald E. Noble, William A. Rainville and
Theo Melas-Kyriazi, 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 Thermo Fibertek Inc., a Delaware corporation (the
"Company"), to be held on Thursday, May 27, 1999 at 9:00 a.m. at The Westin
Hotel, 70 Third Avenue, Waltham, Massachusetts, 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 March 30, 1999, 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.)
<PAGE>
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: Walter J. Bornhorst, George N. Hatsopoulos, John N. Hatsopoulos,
Francis L. McKone, Donald E. Noble and William A. Rainville.
2. 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 proposal 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.
PLEASE DATE, SIGN AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.
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.
