<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. __)
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
<TABLE>
<S><C>
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
[X] Definitive proxy statement Commission Only (as permitted
[ ] Definitive additional materials by Rule 14a-6(e)(2))
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
PERCEPTRON, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
THOMAS S. VAUGHN, ESQ.
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN 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)(1) 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 party of the fee is offset as provided by Exchange
Act Rule 1-11(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 of Schedule and the date of filing.
(1) Amount Previously Paid:
(2) Form Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[PERCEPTRON LETTERHEAD LOGO]
April 28, 1998
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders to
be held on Friday, June 5, 1998, at 9:00 a.m., local time, at 47827 Halyard
Drive, Plymouth, Michigan 48170.
The attached notice of the meeting and Proxy Statement describe the items
of business to be transacted: (i) the election of seven directors, and (ii) such
other business as may properly come before the meeting or any adjournment
thereof. After the formal business session, there will be a report to the
shareholders on the progress of the Company along with a discussion period.
I look forward to seeing you at the Annual Meeting and hope you will make
plans to attend. Whether you plan to attend the meeting, I urge you to sign,
date and return your proxy in the addressed envelope enclosed for your
convenience so that as many shares as possible may be represented at the
meeting. No postage is required if the envelope is mailed in the United States.
Returning the proxy will not affect your right to attend the meeting or your
right to vote in person.
Sincerely,
/s/ ALFRED A. PEASE
Alfred A. Pease
Chairman of the Board of Directors,
President
and Chief Executive Officer
<PAGE> 3
PERCEPTRON LOGO
----------------------------------
PERCEPTRON, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 5, 1998
------------------------------------------------------
The Annual Meeting of Shareholders of Perceptron, Inc., a Michigan
corporation, will be held on Friday, June 5, 1998, at 9:00 a.m., local time, at
47827 Halyard Drive, Plymouth, Michigan 48170 for the following purposes:
1. To elect seven directors to serve until the 1999 Annual Meeting of
Shareholders.
2. To transact such other business as may properly come before the meeting
or any adjournments thereof.
The Board of Directors has fixed the close of business on April 23, 1998,
as the record date for the determination of shareholders entitled to notice of
and to vote at the meeting. A certified list of shareholders entitled to vote at
the meeting will be available for examination by any shareholder during the
meeting at the corporate offices at 47827 Halyard Drive, Plymouth, Michigan
48170.
By the Order of the Board of Directors
/s/ THOMAS S. VAUGHN
Thomas S. Vaughn, Secretary
47827 Halyard Drive
Plymouth, Michigan 48170
April 28, 1998
- --------------------------------------------------------------------------------
THE VOTE OF EVERY SHAREHOLDER IS IMPORTANT, AND YOUR COOPERATION IN
PROMPTLY RETURNING YOUR MARKED, DATED AND SIGNED PROXY WILL BE APPRECIATED. THE
PROXY IS REVOCABLE AND WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU
ATTEND THE MEETING. YOUR PROXY WILL, HOWEVER, HELP TO ASSURE A QUORUM AND TO
AVOID ADDED PROXY SOLICITATION COSTS.
- --------------------------------------------------------------------------------
<PAGE> 4
-------------------------
PROXY STATEMENT
-------------------------
PERCEPTRON, INC.
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AT 9:00 A.M. ON JUNE 5, 1998
-------------------------
INTRODUCTION
This Proxy Statement and the accompanying form of proxy, which were first
mailed to shareholders on approximately April 30, 1998, are furnished in
connection with the solicitation of proxies on behalf of the Board of Directors
of Perceptron, Inc. (the "Company") for use at the Annual Meeting of
Shareholders of the Company (the "Annual Meeting") to be held at the corporate
offices of the Company on Friday, June 5, 1998, at 9:00 a.m., local time, and at
any adjournments thereof, for the purposes set forth in the accompanying Notice
of Annual Meeting of Shareholders and in this Proxy Statement. The corporate
offices of the Company are located at 47827 Halyard Drive, Plymouth, Michigan,
48170, and the Company's telephone number is (313) 414-6100.
Only holders of record of the Company's Common Stock, $0.01 par value (the
"Common Stock") at the close of business on April 23, 1998 (the "Record Date")
will be entitled to notice of and to vote at the Annual Meeting or any
adjournments thereof. Shareholders of record on the Record Date are entitled to
one vote per share on any matter that may properly come before the Annual
Meeting. As of the Record Date, there were 8,321,531 shares of Common Stock
outstanding and entitled to vote. The presence, either in person or by properly
executed proxy, of the holders of a majority of the outstanding shares of Common
Stock is necessary to constitute a quorum at the Annual Meeting. See "Further
Information -- Share Ownership of Management and Certain Shareholders" for a
description of the beneficial ownership of the Common Stock.
Directors and officers and other employees of the Company may solicit,
without additional compensation, proxies by any appropriate means, including
personal interview, mail, telephone, courier service and facsimile
transmissions. Arrangements will also be made with brokerage houses and other
custodians, nominees and fiduciaries which are record holders of the Company's
Common Stock to forward proxy soliciting material to the beneficial owners of
such shares and the Company will reimburse such record holders for their
reasonable expenses incurred in connection therewith. The cost of soliciting
proxies, including the preparation, assembling and mailing of the Notice of
Meeting, Proxy Statement, form of proxy and any other soliciting material, as
well as the cost of forwarding such material to the beneficial owners of Common
Stock, will be borne by the Company.
Shares represented by a duly executed proxy, unless previously revoked,
will be voted at the Annual Meeting in accordance with the instructions of the
shareholder thereon if the proxy is received by the Company before the close of
business on June 4, 1998. Shares represented by a proxy received after that date
will be voted if the proxy is received by the Company in sufficient time to
permit the necessary examination and tabulation of the proxy before the vote of
shareholders is taken. Any proxy given pursuant to this solicitation may be
revoked by the person giving it at any time before it is voted. Proxies may be
revoked by (i) filing with the Secretary of the Company, at or before the Annual
Meeting, a written notice of revocation bearing a later date than the proxy,
(ii) duly executing a subsequent proxy relating to the same shares and
delivering it to the Secretary of the Company at the Company's corporate offices
at or before the Annual Meeting, or (iii) attending the Annual Meeting and
voting in person (although attendance at the Annual Meeting will not in and of
itself constitute a revocation of a proxy).
For purposes of determining the number of votes cast with respect to the
election of directors, only those cast "for" or "against" are included.
Abstentions are counted only for purpose of determining whether a quorum is
present at the Annual Meeting. Broker non-votes are not counted for any purpose.
<PAGE> 5
MATTERS TO COME BEFORE THE MEETING
PROPOSAL 1 -- ELECTION OF DIRECTORS
At the Annual Meeting, Shareholders will be asked to elect a board of seven
directors to hold office, in accordance with the Bylaws of the Company, until
the 1999 annual meeting and until the election and qualification of their
successors, or until their resignation or removal. The following table sets
forth information regarding the nominees for election to the Company's Board of
Directors. The shares represented by properly executed proxies will be voted in
accordance with the specifications made therein. PROXIES WILL BE VOTED "FOR" THE
ELECTION OF SUCH NOMINEES UNLESS THE SPECIFICATION IS MARKED ON THE PROXY
INDICATING THAT AUTHORITY TO DO SO IS WITHHELD. If a nominee is unable to serve
or, for good cause, will not serve, the proxy confers discretionary authority to
vote with respect to the election of any person to the Board. The nominees
receiving a plurality of votes cast at the Annual Meeting will be elected to the
Board of Directors. Shares may not be voted cumulatively for the election of
directors.
The nominees named below have been selected by the Board of Directors of
the Company. The following information with regard to business experience has
been furnished by the respective nominees for director.
<TABLE>
<CAPTION>
POSITION, PRINCIPAL OCCUPATIONS AND
NAME AND AGE OTHER DIRECTORSHIPS
------------ -----------------------------------
<S> <C>
David J. Beattie, 56.............. Mr. Beattie has been a director of the Company since 1997.
Mr. Beattie has been Senior Vice President Sales and
Marketing of McNaughton -- McKay Electric Company ("MME")
since February 1997, where he is responsible for all sales
and marketing activities, strategic planning, engineering
and related services. In addition, he serves as Chief
Operating Officer of MME's Southern Region. He has been
employed by MME since 1978 in various capacities including
Chief Engineer, Sales Manager and Vice President. MME is a
distributor of industrial automation products and services.
Mr. Beattie served as a director of Trident Systems, Inc.
prior to its acquisition by the Company in April 1997.
Philip J. DeCocco, 60............. Mr. DeCocco has been a director of the Company since 1996.
Mr. DeCocco has been President of Sturges House, Inc., a
company founded by Mr. DeCocco, since 1983. Sturges House,
Inc. offers executive recruiting and management consulting
services in human resources, strategic planning, executive
development and organization design and development to
various companies.
Robert S. Oswald, 56.............. Mr. Oswald has been a director of the Company since 1996.
Mr. Oswald has been Chairman, President and Chief Executive
Officer of Robert Bosch Corporation, a manufacturer of
automotive components and systems, since July 1996 and prior
to that time, from January 1994 to June 1996 was President
and Chief Executive Officer of such company. From October
1990 to December 1993, Mr. Oswald was President of the
Original Equipment Manufacturer's Division of Robert Bosch
Corporation. Mr. Oswald serves as a director and member of
the management board of Robert Bosch, Gmbh and a director of
Robert Bosch Corporation.
</TABLE>
2
<PAGE> 6
<TABLE>
<CAPTION>
POSITION, PRINCIPAL OCCUPATIONS AND
NAME AND AGE OTHER DIRECTORSHIPS
------------ -----------------------------------
<S> <C>
Alfred A. Pease, 52............... Mr. Pease has been a director of the Company since 1996 and
Chairman of the Board since July 1996. Since February 1996,
Mr. Pease has been President and Chief Executive Officer of
the Company. From November 1993 to February 1996, Mr. Pease
was President and founder of Digital Originals, Inc., a
manufacturer of digital imaging products and related
software. From December 1990 to October 1993, Mr. Pease
served as Product Line Director of Advanced Micro Devices,
Inc., a manufacturer of semi-conductor products.
Harry T. Rein, 53................. Mr. Rein has been a director of the Company since 1985.
Since 1987, he has been Managing General Partner and founder
of Canaan Partners, a venture capital firm. Mr. Rein also
serves as a director of Anadigics, Inc. and a director of
various private corporations.
Louis R. Ross, 66................. Mr. Ross has been a director of the Company since 1996. Mr.
Ross owns and operates Ross Consulting Inc., a company which
provides consulting services in quality management,
manufacturing and investments. Mr. Ross retired in January
1996 as Vice Chairman and Chief Technical Officer of Ford
Motor Company ("Ford") and as a member of Ford's Office of
Chief Executive and its Board of Directors. Mr. Ross was a
member of Ford's Board of Directors and Ford's Office of
Chief Executive since 1985, and Vice Chairman since 1993.
From October 1991 to January 1993, he served as Executive
Vice President and Chief Technical Officer of Ford. Mr. Ross
also serves as a director of a private non-profit
corporation.
Terryll R. Smith, 48.............. Mr. Smith has been a director of the Company since 1996.
From February 1996 to March 1998, Mr. Smith was Group Vice
President, Sales and Marketing of Advanced Micro Devices,
Inc. ("AMD"), a manufacturer of integrated circuits. From
January 1994 to February 1996, Mr. Smith was Group Vice
President, Applications Solutions Products of AMD. From
October 1992 to January 1994, Mr. Smith was Vice President,
International Sales and Marketing and from March 1989 to
October 1992, was Vice President, European Sales, Marketing
and Operations of AMD.
</TABLE>
3
<PAGE> 7
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors is responsible for direction of the overall affairs
of the Company. Directors of the Company are elected to serve until their
successors are elected. The Board of Directors and each committee thereof meet
formally from time to time and also take action by consent resolutions. During
the year ended December 31, 1997, the Board of Directors met a total of eight
times and took action by consent resolution on occasion. All of the directors,
except for Messrs. Beattie and Smith, attended at least 75% of the total
meetings of the Board of Directors, and of any committee on which they served,
held during the period in 1997 in which they served as directors or members of
any such committees.
The Board of Directors has delegated certain authority to an Audit
Committee, a Management Development and Compensation and Stock Option Committee
and an Executive and Nominating Committee to assist it in executing its duties.
The composition and principal functions of each Committee are as follows:
Audit Committee. The Audit Committee is comprised of two members of the
Board of Directors: Messrs. Oswald and Ross. The principal functions of the
Audit Committee are to nominate the accounting firm to be appointed as the
Company's independent certified public accountants and to review the plan and
scope of the audit, the report of the audit upon its completion and the adequacy
of the Company's internal accounting procedures and controls. The Audit
Committee also reviews the nature and extent of all services provided to the
Company by such accountants and evaluates their fees and the effects of such
services upon their independence. The Audit Committee held three meetings in
1997.
Management Development and Compensation and Stock Option Committee. The
Management Development and Compensation and Stock Option Committee ("Management
Development Committee") is comprised of three members of the Board of Directors:
Messrs. DeCocco, Rein and Ross. The principal functions of the Committee are to
review the Company's compensation programs, to establish the compensation
programs for the Company's executive officers, and to review and approve annual
bonuses to be paid to such executive officers and to administer the Company's
Stock Option Plans. The Committee met seven times in 1997, and took action by
consent resolution on a number of occasions in 1997.
Executive and Nominating Committee. The Executive and Nominating Committee
is comprised of four members: Messrs. Pease, Rein, Beattie and Smith. The
Committee is generally authorized to act on behalf of the Board of Directors
between meetings of the Board. The Committee's duties also include recommending
to the Board of Directors the nominees to stand for election as directors at
each annual meeting of shareholders and recommending to the Board of Directors
the directors to serve on the standing committees of the Board. Recommendations
by shareholders of possible director nominees may be addressed to the Executive
and Nominating Committee of the Board of Directors in care of the Secretary of
the Company and will be forwarded to the Committee for consideration. The
Committee met once in 1997 and took action by consent resolution on a number of
occasions in 1997.
4
<PAGE> 8
FURTHER INFORMATION
EXECUTIVE OFFICERS
The officers listed below were appointed by the Board of Directors and
serve in the capacities indicated. Executive officers are normally appointed
annually by the Board of Directors and serve at the pleasure of the Board.
<TABLE>
<CAPTION>
POSITION, PRINCIPAL OCCUPATIONS AND
NAME AND AGE OTHER DIRECTORSHIPS
------------ -----------------------------------
<S> <C>
Alfred A. Pease, 52............... President and Chief Executive Officer since February 1996.
Mr. Pease's business experience is described under "Proposal
1 -- Election of Directors."
John G. Zimmerman, 57............. Mr. Zimmerman has been Vice President and Chief Financial
Officer of the Company since June 1996. Prior to that time,
he was, from 1994 to 1996, Group Vice President and Chief
Financial Officer of Sandy Corporation, a training,
communications and consulting corporation primarily focused
in the automotive industry, and from, 1990 to 1993, was
Senior Vice President, Finance and Treasurer of Software
Alternatives, Inc., a company which provided software
applications and solutions for businesses.
</TABLE>
SHARE OWNERSHIP OF MANAGEMENT AND CERTAIN SHAREHOLDERS
PRINCIPAL SHAREHOLDERS
The following table sets forth information with respect to beneficial
ownership of the Common Stock by each person known by management of the Company
to be the beneficial owner of more than five percent of its outstanding Common
Stock. The number of shares reported is as of the dates indicated in the
footnotes below. The percentage of class is based on 8,321,531 shares of Common
Stock outstanding on April 23, 1998. The information as to each person has been
furnished by such person and, except as where otherwise indicated, each person
has sole voting power and sole investment power with respect to all shares
beneficially owned by such person.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENT
OF BENEFICIAL OWNER OF BENEFICIAL OWNER OF CLASS
------------------- ------------------- --------
<S> <C> <C>
Franklin Resources, Inc.,
Charles B. Johnson and
Rupert H. Johnson, Jr.
777 Mariners Island Boulevard
San Mateo, California 94404............................... 896,280(1) 10.8
J.P. Morgan Co., Incorporated
60 Wall Street
New York, New York 10260.................................. 539,600(2) 6.5
</TABLE>
- -------------------------
(1) Based upon their statement on Schedule 13G dated and filed with the
Securities and Exchange Commission on March 6, 1998, Franklin Advisers, Inc.
has sole power to vote and dispose of 890,500 shares of Common Stock and
Franklin Management, Inc. has sole power to dispose of 5,780 shares of
Common Stock. Further, based upon their statement on Schedule 13G, the
shares of Common Stock are beneficially owned by one or more open or
closed-end investment companies or other managed accounts which are advised
by direct and indirect investment advisory subsidiaries (the "Adviser
Subsidiaries") of Franklin Resources, Inc. ("FRI"). Such advisory contracts
grant to such Adviser Subsidiaries all investment and/or voting power over
the securities owned by such advisory clients. Charles B. Johnson
5
<PAGE> 9
and Rupert H. Johnson, Jr. each own in excess of 10% of the outstanding
common stock of FRI and are the principal shareholders of FRI.
(2) Based upon its statement on Schedule 13G dated December 31, 1997 and filed
with the Securities and Exchange Commission on February 13, 1998, J.P.
Morgan has sole power to vote 444,600 shares and sole power to dispose
539,600 shares of Common Stock. Further, based upon its statement on
Schedule 13G, virtually all of J.P. Morgan's accounts involve outside
persons who have the right to receive or direct the receipt of dividends
from, or the proceeds from the sale of, securities in such accounts with
respect to the Common Stock. However, no such person's rights relate to more
than five percent of the Common Stock.
BENEFICIAL OWNERSHIP BY DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information with respect to beneficial
ownership of the Common Stock by each of the directors and director nominees,
the persons named in the Summary Compensation Table and by all directors and
executive officers as a group as of April 28, 1998, unless otherwise indicated.
The information as to each person has been furnished by such person and, except
as where otherwise indicated, each person has sole voting power and sole
investment power with respect to all shares beneficially owned by such person.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENT
OF BENEFICIAL OWNER(1) OF BENEFICIAL OWNERSHIP OF CLASS
---------------------- ----------------------- --------
<S> <C> <C>
David J. Beattie(2)(3)...................................... 15,000 *
Philip J. DeCocco(2)(4)..................................... 16,000 *
Robert S. Oswald (2)(5)..................................... 15,500 *
Alfred A. Pease (2)(6)...................................... 100,000 1.2
Harry T. Rein(2)(7)......................................... 16,000 *
Louis R. Ross(2)(8)......................................... 17,500 *
Terryll R. Smith(2)(9)...................................... 15,500 *
John G. Zimmerman(10)....................................... 8,906 *
Neil E. Barlow(11).......................................... 4,686 *
Directors and executive officers as a group (8
persons)(3)(4)(5)(6)(7)(8)(9)(10)......................... 204,406 2.5
</TABLE>
- -------------------------
* Less than 1% of class
(1) The address for Messrs. Beattie, DeCocco, Oswald, Pease, Rein, Ross, Smith,
Barlow and Zimmerman is 47827 Halyard Drive, Plymouth, Michigan 48170.
(2) Serves as a member of the Board of Directors of the Company.
(3) Represents options to purchase 15,000 shares of Common Stock, which are
presently exercisable or which are exercisable within 60 days of April 28,
1998.
(4) Includes options to purchase 15,500 shares of Common Stock, which are
presently exercisable or which are exercisable within 60 days of April 28,
1998.
(5) Represents options to purchase 15,500 shares of Common Stock, which are
presently exercisable or which are exercisable within 60 days of April 28,
1998.
(6) Represents options to purchase 100,000 shares of Common Stock, which are
presently exercisable or which are exercisable within 60 days of April 28,
1998.
(7) Represents options to purchase 16,000 shares of Common Stock, which are
presently exercisable or which are exercisable within 60 days of April 28,
1998.
(8) Includes options to purchase 15,500 shares of Common Stock, which are
presently exercisable or which are exercisable within 60 days of April 28,
1998.
(9) Represents options to purchase 15,500 shares of Common Stock, which are
presently exercisable or which are exercisable within 60 days of April 28,
1998.
(10) Includes options to purchase 8,750 shares of Common Stock, which are
presently exercisable or which are exercisable within 60 days of April 28,
1998.
6
<PAGE> 10
(11) Includes options to purchase 4,686 shares of Common Stock, which are
presently exercisable or which are exercisable within 60 days of April 28,
1998.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Under the securities laws of the United States, the Company's directors,
its executive (and certain other) officers, and any persons holding more than
ten percent of the Common Stock are required to report their ownership of the
Common Stock and any changes in that ownership to the Securities and Exchange
Commission and the National Association of Securities Dealers, Inc. Specific due
dates for these reports have been established and the Company is required to
report in this proxy statement any failure to file by these dates during the
Company's last fiscal year. All of these filing requirements were satisfied by
the Company's officers, directors and ten percent shareholders. In making these
statements, the Company has relied on the written representations of its
directors, officers and ten percent shareholders and copies of the reports that
have been filed with the Commission.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS
All of the members of the Board of Directors who are not employed by the
Company receive $1,000 for each Board meeting attended. In addition, directors
are reimbursed for their out-of-pocket expenses incurred in attending Board and
committee meetings. Directors are also eligible to participate in the Company's
Stock Option Plan (the "1992 Plan").
All of the members of the Board of Directors who are not employed by the
Company (other than the Chairman of the Board) (the "Eligible Directors")
participate in the Directors Stock Option Plan (the "Directors Plan"). On
February 9, 1995, each Eligible Director was granted an option to purchase
15,000 shares of Common Stock ("Initial Option") with an exercise price of
$12.83. Any additional Eligible Director who is first elected or appointed after
February 9, 1995 will receive an Initial Option to purchase 15,000 shares of
Common Stock on the date of his or her election or appointment. In addition,
each Eligible Director who has been a director for six months before the date of
each Annual Meeting of Shareholders held during the term of the Directors Plan
automatically will be granted, as of the date of such Annual Meeting, an option
to purchase an additional 1,500 shares of Common Stock (an "Annual Option"). The
Directors' Plan expires on February 9, 2000. The exercise price of options
granted under the Directors Plan is the last reported sale price per share of
the Company's Common Stock as quoted on The Nasdaq Stock Market's National
Market on the date of grant. Each option granted under the Directors Plan as an
Initial Option becomes exercisable in full on the first anniversary of the date
of grant. Options granted as Annual Options become exercisable in three annual
increments of 33 1/3% of the shares subject to the option. The exercisability of
such options is accelerated in the event of the occurrence of certain changes in
control of the Company. All options granted under the Plan are exercisable for a
period of ten years from the date of grant, unless earlier terminated due to the
termination of the Eligible Director's service as a director of the Company.
7
<PAGE> 11
EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table sets forth certain information as to compensation paid
by the Company for services rendered in all capacities to the Company and its
subsidiaries during the fiscal years ended December 31, 1995, 1996, and 1997 to
(i) the Company's Chief Executive Officer, and (ii) the Company's executive
officers at December 31, 1997 (other than the Chief Executive Officer) whose
aggregate annual salary and bonus exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
----------------------------------------- -------------------------
NAME AND OTHER ANNUAL ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($)(1) OPTIONS(#) COMPENSATION
------------------ ---- --------- -------- ------------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Alfred A. Pease.............. 1995 -- -- -- -- --
President, Chief Executive 1996 175,000 104,778 42,120(3) 200,000 51,177(4)
Officer and Chairman of 1997 214,000 37,878 20,821(3) 30,000 29,925(4)(7)
the Board(2)
John G. Zimmerman............ 1995 -- -- -- -- --
Vice President and 1996 60,757 5,650 -- 35,000 627(6)
Chief Financial Officer 1997 123,418 20,025 -- 5,000 7,260(7)
Neil E. Barlow............... 1995 132,500 89,524 -- -- 5,958(5)
Former Executive 1996 141,800 77,299 -- -- 9,098(6)
Vice President(8) 1997 149,600 23,040 -- 10,000 6,388(7)
</TABLE>
- -------------------------
(1) Perquisites and other personal benefits were provided to all of the persons
named in the Summary Compensation Table. Disclosure of such amounts is not
required because such amounts were less than 10% of the total annual salary
and bonuses reported for each of the respective individuals for each period
presented.
(2) Mr. Pease became President and Chief Executive Officer in February 1996 and
Chairman of the Board in July 1996.
(3) Includes payment of certain tax "gross up" amounts of $42,120 and $20,821
for certain taxable income received by Mr. Pease in 1996 and 1997,
respectively, as described under "All Other Compensation."
(4) "All Other Compensation" includes reimbursements for temporary housing,
moving and travel expenses related to Mr. Pease's relocation to Michigan in
1996 totaling $22,925 and reimbursements for closing costs in the amount of
$28,252 related to the sale of Mr. Pease's former residence in 1996, and
$23,396 of reimbursements for closing costs relating to the purchase of a
new residence in 1997.
(5) "All Other Compensation" is comprised of (i) contributions made by the
Company to the accounts of the named executive officers under the Company's
401(k) Plan with respect to the fiscal year ended December 31, 1995 as
follows: Mr. Barlow $2,100; (ii) the dollar value of any life insurance
premiums paid by the Company in the fiscal year ended December 31, 1995 with
respect to term life insurance for the benefit of the named executive as
follows: Mr. Barlow $838; and (iii) the dollar value of any disability
insurance premiums paid by the Company in the fiscal year ended December 31,
1995 in excess of the Company's standard disability coverage for the benefit
of the following named executive: Mr. Barlow $3,020.
(6) "All Other Compensation" is comprised of (i) contributions made by the
Company to the accounts of the named executive officers under the Company's
401(k) Plan with respect to the fiscal year ended December 31, 1996 as
follows: Mr. Barlow $4,565; (ii) the dollar value of any life insurance
premiums paid by the Company in the fiscal year ended December 31, 1996 with
respect to term life insurance for the benefit of the named executives as
follows: Mr. Barlow $1,513 and Mr. Zimmerman $627; and (iii) the dollar
value of any disability insurance premiums paid by the Company in the fiscal
year ended
8
<PAGE> 12
December 31, 1996 in excess of the Company's standard disability coverage
for the benefit of the following named executive: Mr. Barlow $3,020.
(7) "All Other Compensation" is comprised of (i) contributions made by the
Company to the accounts of the named executive officers under the Company's
401(k) Plan with respect to the fiscal year ended December 31, 1997 as
follows: Mr. Pease $4,750, Mr. Barlow $4,750, and Mr. Zimmerman $4,750; and
(ii) the dollar value of any life insurance premiums paid by the Company in
the fiscal year ended December 31, 1997 with respect to term life insurance
for the benefit of the named executives as follows: Mr. Pease $1,779, Mr.
Barlow $1,638 and Mr. Zimmerman $2,510.
(8) Mr. Barlow served as Executive Vice President International until December
31, 1997, and resigned as an employee of the Company effective December 31,
1997.
GRANTS OF OPTIONS
The following table sets forth certain information concerning individual
grants of stock options to each of the persons named in the Summary Compensation
Table made during the fiscal year ended December 31, 1997. All grants described
in the following table were made under the Company's 1992 Stock Option Plan and
contain the Option Acceleration Provision (as defined under "Further Information
- -- Compensation of Directors and Officers -- Executive Officers -- Termination
of Employment and Change of Control Arrangements").
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
INDIVIDUAL GRANTS ANNUAL RATES OF
--------------------------------------- STOCK PRICE
NUMBER OF PERCENT OF TOTAL APPRECIATION FOR
SECURITIES OPTIONS GRANTED TO EXERCISE OR OPTION TERM(3)
UNDERLYING OPTION EMPLOYEES IN BASE PRICE EXPIRATION --------------------
NAME GRANTED(#) FISCAL YEAR(1) ($/SH) DATE(2) 5%($) 10%($)
---- ----------------- ------------------ ----------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Alfred A. Pease....... 30,000(4) 10.4% 26.55 11/01/07 260,400 887,000
John G. Zimmerman..... 5,000(5) 1.7% 31.40 08/01/07 19,200 123,500
Neil E. Barlow........ 10,000(6) 3.5% 31.40 08/01/07 38,300 247,000
</TABLE>
- -------------------------
(1) Options to purchase a total of 288,427 shares of Common Stock were granted
to team members in the fiscal year ended December 31, 1997.
(2) Options expire on the date indicated, or, if earlier, one year after the
optionee's death or permanent disability or three months after the
optionee's termination of employment.
(3) Represents the value of such options at the end of its 10 year term (without
discounting to present value) assuming the market prices of the Common Stock
appreciates from the grant date at an annually compounded rate of 5% or 10%.
These amounts represent rates of appreciation only. Actual gains, if any,
will be dependent on overall market conditions and on the future performance
of the Common Stock. There can be no assurance that the amounts reflected in
this table will be achieved.
(4) Consists of 26,234 of nonqualified options and 3,766 of incentive stock
options. Nonqualified options become exercisable in three annual
installments of 7,500 shares of Common Stock beginning November 1, 1998 and
a final installment of 3,734 shares of Common Stock on November 1, 2001. The
Incentive Options become exercisable on November 1, 2001.
(5) Consists of 3,750 of nonqualified options and 1,250 of incentive stock
options. Nonqualified options become exercisable in three annual
installments of 1,250 shares of Common Stock beginning August 1, 1998. The
Incentive Options become exercisable on August 1, 2001.
(6) Consists of 10,000 incentive stock options which become exercisable in
cumulative annual installments of 25% beginning August 1, 1998.
9
<PAGE> 13
EXERCISE AND VALUE OF OPTIONS
The following table sets forth certain information concerning exercises of
stock options during the fiscal year ended December 31, 1997 by each of the
persons named in the Summary Compensation Table and the number of and the value
of unexercised stock options held by such persons as of December 31, 1997 on an
aggregated basis.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT FISCAL YEAR-END(#) AT FISCAL YEAR-ENDS($)(1)
ACQUIRED VALUE ---------------------------- ----------------------------
NAME ON EXERCISE(#) REALIZED($)(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Alfred A. Pease...... 0 0 50,000 180,000 45,745 137,235
John G. Zimmerman.... 0 0 8,750 31,250 0 0
Neil E. Barlow....... 15,742 375,886 6,365 14,686 82,490 80,084
</TABLE>
- -------------------------
(1) Represents the total gain which would have been realized if all such options
had been exercised on December 31, 1997.
(2) Represents the fair market value of the shares of Common Stock relating to
exercised options, as of the date of exercise, less the exercise price of
such options.
EMPLOYMENT AGREEMENTS
Mr. Pease serves in his present capacity pursuant to the terms of an
employment agreement. Mr. Pease's agreement provides for an annual base salary
of $200,000, subject to increase at the discretion of the Management Development
Committee, benefits comparable to the Company's other executive officers,
including life, disability and health insurance and the use of a Company leased
automobile and an annual performance bonus target level of 60% of his base
salary. Mr. Pease's base salary for 1998 is $230,000 and he will receive
reimbursement of reasonable monthly club dues. In addition, such agreement
provides for the reimbursement of temporary housing, travel and relocation
expenses incurred by Mr. Pease, including moving expenses, real estate brokerage
commissions and certain closing and loan costs associated with the sale of Mr.
Pease's prior residence and purchase of a new residence in the state of Michigan
and certain incidental expenses related to the relocation, plus a payment equal
to the income taxes payable by Mr. Pease as a result of the receipt of such
reimbursements and tax payment. In the event Mr. Pease's employment is
terminated without cause, his salary and benefits will continue for twelve
months and he will earn a pro rata portion of any bonus that would have been
earned in the year of the termination.
In 1996, Mr. Pease was granted options to purchase 200,000 shares of Common
Stock under the 1992 Plan. The options consist of nonqualified stock options for
182,980 shares of Common Stock exercisable at an exercise price of $20.625 per
share and the remainder as incentive stock options exercisable at an exercise
price of $23.50 per share. These options become exercisable in cumulative annual
installments of 25% beginning February 14, 1997 and expire on February 14, 2006.
In addition, in the event Mr. Pease's employment is terminated without cause
after July 14, 1998, all remaining unexercisable options for shares of Common
Stock held by him will become immediately exercisable.
Following termination of Mr. Barlow's employment on December 31, 1997, he
will continue as a consultant to the Company at the gross rate of $711 per day
for services rendered from January 1, 1998 through July 31, 1998.
10
<PAGE> 14
TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL ARRANGEMENTS
Payments due to Mr. Pease upon termination of his employment with the
Company are described above under "Further Information -- Compensation of
Directors and Executive Officers -- Executive Officers -- Employment
Agreements."
Agreements relating to stock options granted under the 1992 Plan to each of
the executive officers named in the Summary Compensation Table, as well as
certain other officers of the Company, also provide that such options become
immediately exercisable in the event that the optionee's employment is
terminated without cause, or there is a diminishment of the optionee's
responsibilities, following a Change of Control of the Company or, if, in the
event of a Change of Control, such options are not assumed by the person
surviving the Change of Control or purchasing the assets in the Change of
Control. A "Change of Control" is generally defined as a merger of the Company
in which the Company is not the survivor, certain share exchange transactions,
the sale or transfer of all or substantially all of the assets of the Company,
or any person or group of persons (as defined by Section 13(d) the Securities
Exchange Act of 1934, as amended) acquires more than 50% of the Common Stock
("Option Acceleration Provision").
11
<PAGE> 15
REPORT OF THE MANAGEMENT DEVELOPMENT AND
COMPENSATION AND STOCK OPTION COMMITTEE
The Management Development and Compensation and Stock Option Committee of
the Board of Directors ("Management Development Committee") is responsible for
the planning, review and administration of the Company's executive compensation
program and the Company's stock-based compensation programs, including the 1992
Stock Option Plan. During the year ended December 31, 1997, all members of these
Committees were non-employee directors of the Company.
The Company's objective is to provide a superior return to its
shareholders. To support this objective, the Company believes it must attract,
retain and motivate top quality executive talent. The Company's executive
compensation program is a critical tool in this process.
The Company's executive compensation program has been designed to link
executive compensation to Company performance through at-risk compensation
opportunities, providing significant reward to executives who contribute to the
Company's success. The Company's executive compensation program consists of base
salary, annual cash incentive opportunities and long-term incentives represented
by stock options.
The base salary, performance bonus, stock option and other compensation
terms of new executive officers are established based upon each executive's
qualifications, position and level of responsibility as compared with the
Company's other executives.
BASE SALARY
The Management Development Committee recognizes the importance of a
competitive compensation structure in retaining and attracting valuable senior
executives. Executive salary levels are reviewed and established annually. The
salaries received by the Company's executives generally reflect their levels of
responsibility, the profitability of the Company and other factors, such as
assessments of individual performance.
The Management Development Committee increased the base salary of Alfred A.
Pease, Chairman of the Board, President and Chief Executive Officer of the
Company by 7% during 1997. The base salary levels of the other executive
officers of the Company were increased from between 3% and 6% during 1997. These
increases principally reflected the Company's strong financial performance in
1996 and the Management Development Committee's evaluation of each of these
executive's contribution to the Company's 1996 financial performance.
ANNUAL BONUS
The Company's executive officers are eligible for annual cash performance
bonuses. At the beginning of each year, the Management Development Committee
develops a Management Bonus Plan applicable to all executives of the Company,
including the Chief Executive Officer of the Company.
The 1997 Management Bonus Program provided that bonuses could be earned
only if the Company achieved at least 75% of its targeted pre-tax income level.
If this minimum performance level was achieved, the Company's executives were
then eligible to earn bonuses, on a pro rata basis, for performance exceeding
75% of targeted revenue levels (30% of bonus), 75% of targeted pre-tax net
income levels (30% of bonus) and 75% of targeted new order bookings levels (40%
of bonus). In addition, bonuses could be earned at a one-half rate for
performance exceeding 100% of the targeted levels. Seventy percent of the
executives' overall bonus was payable based solely upon achievement of these
performance standards and the remaining 30% of their bonuses was payable at the
discretion of the Management Development Committee, with all executive officers
earning the same percentage of the discretionary portion of their bonuses.
The Management Development Committee set the 1997 targeted performance
standards at levels consistent with the 1997 operating plan approved by the
Company's Board of Directors.
Targeted performance bonus levels for 1997 were established as a percentage
of base salary. During 1997, Mr. Pease's targeted performance bonus level was
60% of his base salary, while the other executive officers'
12
<PAGE> 16
targeted performance levels were approximately 55% of their base salaries. The
Management Development Committee established the targeted performance bonus
levels for Mr. Pease and the other executive officers during 1997 at the same
percent of their base salary as had been established for these individuals in
1996. Targeted performance bonus levels in 1997 reflected the Management
Development Committee's continued emphasis on providing the Company's executives
with significant reward for superior performance through increased at-risk
compensation opportunities, rather than through increases in base salary.
During 1997, the Company achieved in excess of the minimum 1997 targeted
revenue level, 1997 targeted new order bookings and 1997 targeted pre-tax income
level. As a result, 29.5% of the non-discretionary portion of the executive
officers' 1997 bonus was earned. Based upon this performance, the Management
Development Committee approved the payment of 29.5% of the discretionary portion
of the executive officers' 1997 bonus.
STOCK OPTIONS
Stock option grants have historically been utilized by the Company as part
of its compensation program for all levels of team members, including the
Company's executives. The Company's stock option program permits team members to
buy a specific number of shares of Common Stock, in the future, at the fair
market value of such shares on the date the option is granted. Since stock
options gain value only if the price of the Common Stock increases above the
option exercise price, this use of stock option grants reflects the Company's
philosophy of linking compensation to performance. In addition, the Committee
believes that stock option grants to team members help to provide an incentive
for their continued employment and otherwise more closely align their interests
with those of the Company and its shareholders. The Company also utilizes stock
options as part of its standard compensation package developed to attract highly
qualified employment candidates to the Company.
During 1997, Mr. Pease was granted options to purchase 30,000 shares of the
Common Stock under the 1992 Stock Option Plan. These options become exercisable
in four equal annual installments, beginning one year from their date of grant,
at an exercise price equal to the fair market value of the Common Stock on the
dates of grant. These options were granted to Mr. Pease in recognition of Mr.
Pease's performance as the Chairman of the Board, President and Chief Executive
Officer of the Company since he was appointed to such position in February 1996.
In particular, these option grants were in recognition of the Company's strong
financial performance in 1996 and Mr. Pease's efforts in diversifying the
Company's product line and industry concentration and expanding its management
team.
Also during 1997, the Management Development Committee granted options to
purchase shares of Common Stock under the 1992 Stock Option Plan to the officers
of the Company. Each of the officers with more than 2 years of service as an
officer of the Company received options to purchase 10,000 shares of Common
Stock and each of the officers with between 1 and 2 years of service as an
officer of the Company received options to purchase 5,000 shares of Common
Stock. These options become exercisable in four equal annual installments,
beginning one year from their date of grant, at an exercise price equal to the
fair market value of the Common Stock on the date of grant. These option grants
were in recognition of the Company's strong financial performance in 1996. In
addition, these were the first option grants that individuals serving as
executives of the Company for more than 2 years had received since 1993. Since
prior stock options would become fully exercisable during the course of the next
year, the Management Development Committee granted these individuals additional
stock options to encourage their continued employment with the Company.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
The Board of Directors of the Company has reviewed the provisions of the
Internal Revenue Code and related regulations of the Internal Revenue Service
which restrict deductibility of executive compensation paid to any of the five
most highly compensated executive officers at the end of the fiscal year to the
extent such compensation exceeds $1,000,000 in any year.
13
<PAGE> 17
The Board of Directors of the Company has established certain restrictions
on the granting of options under the Company's 1992 Stock Option Plan so that
compensation realized in connection with the exercise of options granted under
such plan would be exempt from the restrictions on deductibility described
above. The 1992 Stock Option Plan restricts to 200,000 the number of shares of
Common Stock that may be subject to options granted to any salaried employee in
any fiscal year. It is important to note that while this restriction allows the
Committee continuing discretion in establishing executive officer compensation,
it does limit such discretion by restricting the size of option awards which the
Committee may grant to any single individual. The permitted size of the option
awards to a single individual was established based on the Committee's
determination of the maximum number of option shares which would be required to
be granted in any fiscal year to retain or attract a chief executive officer of
the Company.
The Board of Directors does not believe that other components of the
Company's compensation program are likely to result in payments to any executive
officer in any year which would be subject to the restriction on deductibility,
and therefore concluded that no further action with respect to qualifying such
compensation for deductibility was necessary at this time. The Board of
Directors will continue to evaluate the advisability of qualifying future
executive compensation programs for deductibility under the Internal Revenue
Code.
DATED: APRIL 24, 1998 MANAGEMENT DEVELOPMENT AND
COMPENSATION AND STOCK OPTION
COMMITTEE:
Philip J. DeCocco, Harry T. Rein,
Louis R. Ross
14
<PAGE> 18
STOCK PRICE PERFORMANCE GRAPH
Set forth below is a graph comparing the cumulative total return on the
Common Stock from December 31, 1992, through December 31, 1997 with an index
consisting of returns from a peer group of companies, consisting of Cognex
Corp., Cyberoptics Corporation, Medar Inc., PPT Vision, Inc. (formerly Pattern
Processing Technology) and Robotic Vision Systems Inc. (the "Peer Group Index")
and The Nasdaq Stock Market Composite Index (the "Nasdaq Composite Index"). The
returns of each company in the Peer Group Index have been weighted according to
their respective stock market capitalization. The graph assumes that the value
of the investment in the Company's Common Stock, the Peer Group Index and the
Nasdaq Composite Index was $100 on December 31, 1992 and that all dividends were
reinvested.
The graph displayed below is presented in accordance with Securities and
Exchange Commission requirements. Shareholders are cautioned against drawing any
conclusions from the data contained therein, as past results are not necessarily
indicative of future performance. This graph in no way reflects the Company's
forecast of future financial performance.
<TABLE>
<CAPTION>
Measurement Period Perceptron, NASDAQ
(Fiscal Year Covered) Inc. Peer Group Composite
<S> <C> <C> <C>
12/31/92 100 100 100
12/31/93 171 149 115
12/31/94 297 226 112
12/31/95 431 595 159
12/31/96 663 306 195
12/31/97 419 409 240
</TABLE>
15
<PAGE> 19
INDEPENDENT ACCOUNTANTS
The accounting firm of Coopers & Lybrand, L.L.P. has been appointed by the
Board of Directors to audit the consolidated financial statements for the
Company for the year ending December 31, 1998. Representatives of Coopers &
Lybrand, L.L.P. are expected to be at the Annual Meeting and to be available to
respond to appropriate questions. Such representatives will have the opportunity
to make a statement at such meeting if they desire to do so.
PROPOSALS BY SHAREHOLDERS FOR 1999 ANNUAL MEETING
Shareholder proposals intended to be presented at the 1999 annual meeting
are eligible for inclusion in the Company's proxy statement for the meeting
under the applicable rules of the Securities and Exchange Commission if received
by the Secretary of the Company at its executive offices no later than December
30, 1998. In order to curtail controversy as to the date on which a proposal was
received by the Company, it is suggested that proposals be submitted by
certified mail, return receipt requested.
OTHER MATTERS
At the date of this Proxy Statement, the Board of Directors is not aware of
any matters to be presented for action at the Annual Meeting other than those
described above. However, if any other matters should come before the meeting,
it is the intention of the persons named in the accompanying proxy to vote such
proxy in accordance with their judgment on such matters.
By order of the Board of Directors,
/s/ T.S. VAUGHN
Thomas S. Vaughn, Secretary
Plymouth, Michigan
April 28, 1998
16
<PAGE> 20
PERCEPTRON, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF PERCEPTRON, INC.
The undersigned shareholder hereby appoints ALFRED A. PEASE and THOMAS
S. VAUGHN, or either of them, the attorney and proxies of the undersigned, with
power of substitution, to vote all the shares of common stock of Perceptron,
Inc. standing in the name of the undersigned at the close of business on April
23, 1998 at the Annual Meeting of Shareholders of the Company to be held on
Friday, June 5, 1998 at 9:00 a.m., local time, and at any and all adjournments
thereof, with all the powers the undersigned would possess if then and there
present.
The shareholder instructs the proxies to vote as specified on this
proxy on the matters described in the Proxy Statement dated April 28, 1998.
Proxies will be voted as instructed.
IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF
THE COMPANY'S NOMINEES AS DIRECTORS (INCLUDING THE ELECTION OF ANY PERSON TO
THE BOARD OF DIRECTORS WHERE A NOMINEE NAMED IN THE PROXY STATEMENT IS UNABLE
OR, FOR GOOD CAUSE, WILL NOT SERVE).
THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF THE PROXY STATEMENT AND NOTICE
OF SAID MEETING, BOTH DATED APRIL 28, 1998.
---------------
(TO BE SIGNED ON REVERSE SIDE.) SEE REVERSE
SIDE
---------------
<PAGE> 21
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF SHAREHOLDERS
PERCEPTRON, INC.
JUNE 5, 1998
Please Detach and Mail in the Envelope Provided
- --------------------------------------------------------------------------------
<TABLE>
<S><C>
A [X] Please mark your
votes as in this
example.
WITHHELD
FOR from all
all nominees nominees
1. ELECTION [ ] [ ] NOMINEES: David J. Beattie BROKERS EXECUTING PROXIES SHOULD
OF Philip J. DeCocco INDICATE THE NUMBER OF SHARES WITH
DIRECTORS Robert S. Oswald RESPECT TO WHICH AUTHORITY IS
Election of Alfred A. Pease CONFERRED BY THIS PROXY IF LESS
directors to hold office until the Annual Meeting of Harry T. Rein THAN ALL SHARES HELD AS NOMINEES
Shareholders in 1999. Louis R. Ross ARE TO BE VOTED.
Terryll R. Smith
For, except vote withheld from the following nominee(s): PLEASE EXECUTE AND RETURN THIS
PROXY IN THE ENCLOSED ENVELOPE
- ------------------------------------------ PROMPTLY.
(INSTRUCTION: To withhold authority to vote for any
nominee, write that nominee's name in the space
provided.)
Signature Signature Dated: , 1998
------------------------------------- ---------------------------------- -----------
Note: Please sign exactly as your name appears. If acting as attorney, executor, trustee or in other representative capacity, sign
name and title.
</TABLE>
