<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
SATCON TECHNOLOGY CORPORATION
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
SATCON TECHNOLOGY CORPORATION
------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
________________________________________________________________________
(5) Total fee paid:
________________________________________________________________________
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
________________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
________________________________________________________________________
(3) Filing Party:
________________________________________________________________________
(4) Date Filed:
________________________________________________________________________
<PAGE>
SATCON TECHNOLOGY CORPORATION
161 FIRST STREET
CAMBRIDGE, MASSACHUSETTS 02142
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
----------------
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Annual
Meeting") of SATCON TECHNOLOGY CORPORATION (the "Corporation"), a Delaware
corporation, will be held on Wednesday, March 11, 1998 at 9:00 a.m. at the
offices of Hale and Dorr LLP, 60 State Street, Boston, Massachusetts 02109, to
consider and act upon the following matters:
1. To elect two (2) Class I Directors for the ensuing three years;
2. To ratify the selection of Coopers & Lybrand L.L.P. as independent
auditors for the Corporation for the fiscal year ending September 30,
1998; and
3. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on February 10, 1998,
as the record date for the determination of Stockholders entitled to receive
notice of and vote at the Annual Meeting and any adjournment thereof. The
stock transfer books of the Corporation will remain open for the purchase and
sale of the Corporation's common stock.
We hope that all Stockholders will be able to attend the Annual Meeting in
person. In order to ensure that a quorum is present at the Annual Meeting,
please date, sign and promptly return the enclosed Proxy whether or not you
expect to attend the Annual Meeting. A postage-prepaid envelope, addressed to
Boston EquiServe, the Corporation's transfer agent and registrar, has been
enclosed for your convenience. If you attend the Annual Meeting, your Proxy
will, upon your written request, be returned to you and you may vote your
shares in person.
All Stockholders are cordially invited to attend the meeting.
By Order of the Board of Directors,
MICHAEL C. TURMELLE
Secretary
Cambridge, Massachusetts
February 11, 1998
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY CARD AND PROMPTLY MAIL IT IN THE ENCLOSED ENVELOPE IN
ORDER TO ASSURE REPRESENTATION OF YOUR SHARES AT THE MEETING. NO POSTAGE NEED
BE AFFIXED IF THE PROXY CARD IS MAILED IN THE UNITED STATES.
<PAGE>
SATCON TECHNOLOGY CORPORATION
161 FIRST STREET
CAMBRIDGE, MASSACHUSETTS 02142
----------------
PROXY STATEMENT
----------------
for the 1998 Annual Meeting of Stockholders
to be held on March 11, 1998
The enclosed Proxy is solicited by the Board of Directors of SATCON
TECHNOLOGY CORPORATION (the "Corporation"), a Delaware corporation, for use at
the Annual Meeting of Stockholders (the "Annual Meeting") to be held on
Wednesday, March 11, 1998 at 9:00 a.m. at the offices of Hale and Dorr LLP, 60
State Street, Boston, Massachusetts 02109, and at any adjournment or
adjournments thereof.
All Proxies will be voted in accordance with the instructions contained
therein, and if no choice is specified, the Proxies will be voted in favor of
the matters set forth in the accompanying Notice of Meeting. Any Proxy may be
revoked by a Stockholder at any time before it is exercised by delivery of
written revocation to the Secretary of the Corporation.
The Corporation's Annual Report to Stockholders for the fiscal year ended
September 30, 1997 ("Fiscal 1997") is being mailed to Stockholders with the
mailing of this Notice and Proxy Statement on or about February 11, 1998.
A COPY OF THE CORPORATION'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED SEPTEMBER 30, 1997 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,
EXCEPT FOR EXHIBITS, WILL BE FURNISHED WITHOUT CHARGE TO ANY STOCKHOLDER UPON
WRITTEN REQUEST TO THE CHIEF FINANCIAL OFFICER OF THE CORPORATION, SATCON
TECHNOLOGY CORPORATION, 161 FIRST STREET, CAMBRIDGE, MASSACHUSETTS 02142.
VOTING SECURITIES AND VOTES REQUIRED
Stockholders of record at the close of business on February 10, 1998, will
be entitled to notice of and to vote at the Annual Meeting and at any
adjournment or adjournments thereof. On that date, 8,929,284 shares of the
Corporation's Common Stock, $.01 par value per share (the "Common Stock"),
were issued and outstanding.
Each share of Common Stock entitles the holder to one vote with respect to
all matters submitted to Stockholders at the Annual Meeting. The
representation in person or by Proxy of at least a majority of the shares of
Common Stock entitled to vote at the Annual Meeting is necessary to establish
a quorum for the transaction of business.
Directors are elected by a plurality of votes cast by Stockholders entitled
to vote at the Annual Meeting. All other matters being submitted to
Stockholders require the affirmative vote of the majority of shares present in
person or represented by Proxy at the Annual Meeting. The Corporation has no
other voting securities.
Shares held in "street name" by brokers or nominees who indicate on their
Proxies that they do not have discretionary authority to vote such shares as
to a particular matter will not be considered as present and entitled to vote
with respect to a particular matter and will have no effect on the voting on
such matter.
Stockholders may vote in person or by Proxy. Execution of a Proxy will not
in any way affect a Stockholder's right to attend the Annual Meeting and vote
in person. Any Stockholder voting by Proxy has the right to revoke it at any
time before it is exercised by giving written notice to the Secretary of the
Corporation prior to the Annual Meeting, or by giving to the Secretary of the
Corporation a duly executed Proxy bearing a later date than the Proxy being
revoked at any time before such Proxy is voted, or by appearing at the Annual
<PAGE>
Meeting and voting in person. The shares represented by all properly executed
Proxies received in time for the Annual Meeting will be voted as specified
therein. If a Stockholder does not specify in the Proxy how the shares are to
be voted, they will be voted in favor of the election as directors of those
persons named in this Proxy Statement and in favor of all other items set
forth herein.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of October 31, 1997, certain information
concerning the beneficial ownership of the Corporation's Common Stock by (i)
each person known by the Corporation to own beneficially five percent (5%) or
more of the outstanding shares of the Corporation's Common Stock; (ii) each of
the Corporation's executive officers and directors; and (iii) all executive
officers and directors as a group.
The number of shares beneficially owned by each director or executive
officer is determined under rules of the Securities and Exchange Commission
(the "SEC"), and the information is not necessarily indicative of beneficial
ownership for any other purpose. Under such rules, beneficial ownership
includes any shares as to which the individual has sole or shared voting power
or investment power and also any shares which the individual has the right to
acquire on or before December 30, 1997 through the exercise of any stock
option or other right. Unless otherwise indicated, each person has sole
investment and voting power (or shares such power with his or her spouse) with
respect to the shares set forth in the following table. The inclusion herein
of any shares deemed beneficially owned does not constitute an admission of
beneficial ownership of those shares.
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF
NAME AND ADDRESS SHARES BENEFICIALLY OUTSTANDING
OF BENEFICIAL OWNER OWNED(2) COMMON STOCK
- ------------------- ------------------- -------------
<S> <C> <C>
Duquesne Enterprises........................ 798,138 9.1%
One Northshore Center
Suite 100
12 Federal Street
Pittsburgh, PA 15212
David B. Eisenhaure(1)...................... 2,884,504 32.8%
James L. Kirtley, Jr.(1).................... 18,700 *
John P. O'Sullivan(1)....................... 96,428 1.1%
William E. Stanton(1)....................... 113,778 1.3%
Michael C. Turmelle(1)...................... 130,178 1.5%
Marshall J. Armstrong(1).................... 18,400 *
Anthony J. Villiotti(3)..................... 798,138 9.1%
c/o Duquesne Enterprises
One Northshore Center
Suite 100
12 Federal Street
Pittsburgh, PA 15212
All Executive Officers and Directors as a
Group (seven persons)...................... 3,261,988 36.2%
</TABLE>
- --------
* Less than 1%
(1) The address for all executive officers and directors, other than Mr.
Villiotti, is c/o SatCon Technology Corporation, 161 First Street,
Cambridge, Massachusetts 02142.
(2) Includes the following shares of Common Stock issuable upon the exercise
of outstanding stock options which may be exercised on or before December
30, 1997: Mr. Eisenhaure: 19,000; Dr. Kirtley: 18,400; Mr. O'Sullivan:
18,400; Mr. Stanton: 113,778; Mr. Turmelle: 49,750; Mr. Armstrong: 18,400;
all Executive Officers and Directors as a Group: 237,728.
(3) Includes 798,138 shares of Common Stock held by Duquesne Enterprises
("Duquesne"), of which Mr. Villiotti is the Vice President, Treasurer and
Controller. Mr. Villiotti disclaims beneficial ownership of these shares.
Duquesne holds a warrant (the "Warrant"), currently exercisable, to
purchase 500,000 shares of common stock of Beacon Power Corporation
("Beacon"), a 99.9% owned subsidiary of the Corporation. Mr. Villiotti
disclaims beneficial ownership of the shares issuable upon exercise of the
Warrant.
2
<PAGE>
ELECTION OF DIRECTORS
The Corporation has a classified Board of Directors consisting of two Class
I Directors, two Class II Directors and two Class III Directors. At each
Annual Meeting of Stockholders, directors are elected for a full term of three
years to succeed those whose terms are expiring.
The persons named in the enclosed Proxy will vote to elect, as Class I
Directors, David B. Eisenhaure and James L. Kirtley, Jr., the two director
nominees named below, unless the Proxy is marked otherwise. Each Class I
Director will be elected to hold office until the 2001 Annual Meeting of
Stockholders and until his successor is elected and qualified. To comply with
the Corporation's Certificate of Incorporation and Bylaws, both as amended to
date, regarding the classification of Directors, Mr. Eisenhaure was
reclassified from a Class III Director to a Class I Director. Upon the
election of Mr. Eisenhaure and Dr. Kirtley at the Annual Meeting, the Board of
Directors will consist of two Class I Directors, two Class II Directors and
two Class III Directors.
If a stockholder returns a Proxy without contrary instructions, the persons
named as Proxies will vote to elect as directors the nominees named below,
each of whom is currently a member of the Board of Directors of the
Corporation. The nominees have indicated their willingness to serve, if
elected; however, if either nominee should be unable to serve, the shares of
Common Stock represented by Proxies may be voted for a substitute nominee
designated by the Board of Directors. The Board of Directors has no reason to
believe that either nominee will be unable to serve if elected.
For each member of the Board of Directors, including those who are nominees
for election as Class I Directors, there follows information given by each
concerning his principal occupation and business experience for the past five
years, the name of other publicly held companies of which he serves as a
director and his age and length of service as a director of the Corporation.
With the exception of Mr. Eisenhaure, who is married to Mr. O'Sullivan's
first cousin, no director or executive officer is related by blood, marriage
or adoption to any other director or executive officer.
Pursuant to the Securities Purchase Agreement (the "Securities Purchase
Agreement"), dated as of May 28, 1997, by and among the Corporation, Beacon
and Duquesne, Mr. Villiotti was elected to the Corporation's Board of
Directors on June 30, 1997. Pursuant to the terms of the Securities Purchase
Agreement, as long as Duquesne owns five percent (5%) of the Corporation's
Common Stock, the Corporation must recommend that the Corporation's
Stockholders vote for Duquesne's representative and cause to be voted for such
representative the shares of Common Stock for which the Corporation's
management or Board of Directors holds proxies or are otherwise entitled to
vote.
NOMINEES FOR TERMS EXPIRING IN 2001 (CLASS I DIRECTORS)
DAVID B. EISENHAURE, age 52, became a Director in 1985.
Mr. Eisenhaure has served as President, Chief Executive Officer and Chairman
of the Board of Directors of the Corporation since 1985. Prior to founding the
Corporation, Mr. Eisenhaure was associated with the Charles Stark Draper
Laboratory, Incorporated ("Draper") from 1974 to 1985, and with its
predecessor, the Massachusetts Institute of Technology's Instrumentation
Laboratory, from 1967 to 1974. Mr. Eisenhaure holds S.B. and S.M. degrees in
Mechanical Engineering, as well as a Mechanical Engineering Degree, from the
Massachusetts Institute of Technology ("M.I.T."). In addition to his duties at
the Corporation, Mr. Eisenhaure holds an academic position at M.I.T., serving
as a Lecturer in the Department of Mechanical Engineering.
JAMES L. KIRTLEY, JR., PH.D., age 52, became a Director in 1992.
Dr. Kirtley has been a consultant to the Corporation since 1985. Dr.
Kirtley, currently a Professor of Electrical Engineering at M.I.T., became a
member of the M.I.T. faculty in 1971. Dr. Kirtley received his S.B., S.M.,
E.E. and Ph.D. degrees in Electrical Engineering from M.I.T.
3
<PAGE>
DIRECTORS WHOSE TERMS EXPIRE IN 1999 (CLASS II DIRECTORS)
JOHN P. O'SULLIVAN, age 55, became a Director in 1985.
From October 1994 through December 23, 1997, Mr. O'Sullivan served as Chief
Financial Officer of Brunswick Technologies, Inc. ("Brunswick"), a
manufacturer of fiberglass reinforcements. On December 23, 1997, Mr.
O'Sullivan resigned from his position with Brunswick. From 1979 through April
1994, Mr. O'Sullivan was employed by Bangor Hydro-Electric Company, an energy
provider, of which he was also a Director and Vice President of Finance and
Administration. Mr. O'Sullivan was Commissioner of Finance and Administration
for the State of Maine from 1975 through 1979. He received a B.A. degree in
Economics from the College of the Holy Cross and an M.B.A. degree from the
Amos Tuck School of Business Administration at Dartmouth College.
MICHAEL C. TURMELLE, age 38, became a Director in 1993.
Mr. Turmelle has served as the Corporation's Secretary since June 1993, and
as a Vice President, Chief Financial Officer and Treasurer, since 1991. Mr.
Turmelle joined the Corporation in 1987 as Controller. From 1982 to 1984 he
was employed by the aerospace division of General Electric Corporation, and
held several positions, including internal auditor. Mr. Turmelle holds a B.A.
degree in Economics from Amherst College.
DIRECTORS WHOSE TERMS EXPIRE IN 2000 (CLASS III DIRECTORS)
MARSHALL J. ARMSTRONG, age 62, became a Director in 1994.
From 1992 through 1997, Mr. Armstrong served as Chief Executive Officer and
Chairman of the Board of Thermo Power Corporation ("TPC"). TPC provides
research and development relating to engines, cogeneration and refrigeration
equipment to the marine, food processing, transportation, power generating,
petrochemical and pharmaceutical industries. Mr. Armstrong is a Senior Vice
President of Thermo Electron Corporation ("Thermo") where he has been employed
since 1968 in various capacities and presently manages Thermo's government
affairs. Mr. Armstrong also serves as a Director of Thermo Sentron, Inc. Mr.
Armstrong holds an M.S. degree from George Washington University and a B.S.
degree in Mechanical Engineering from the University of Vermont.
ANTHONY J. VILLIOTTI, age 51, became a Director in 1997.
Since October 1993, Mr. Villiotti has served as Vice President, Treasurer
and Controller of Duquesne, where he is responsible for identifying and
implementing investment opportunities and for all financial and administrative
activities. From June 1990 through October 1993, Mr. Villiotti served as
Treasurer and Controller of Duquesne. Mr. Villiotti holds a B.S. degree in
accounting from Pennsylvania State University.
EXECUTIVE OFFICERS OF THE CORPORATION
WILLIAM E. STANTON, age 54.
Mr. Stanton served as a Vice President, Chief Operating Officer and Director
of the Corporation from May 1993 through December 23, 1997. On December 23,
1997, Mr. Stanton resigned from all of these positions with the Corporation.
In July 1997, Mr. Stanton was elected to the offices of President and Chief
Executive Officer of Beacon and continues to oversee the operations of that
subsidiary to date. Mr. Stanton previously served as Vice President, Applied
Systems & Technologies Programs Operations of Draper. Mr. Stanton was employed
by Draper from 1967 to 1993, where he was responsible for the development and
program management of four major business areas: Aircraft and Communications
Systems, Ocean Systems and Technology, Integrated Information Systems, and
Scientific Instrumentation and Control Applications. Mr. Stanton holds an
M.B.A. from Harvard Business School, an S.M. in Aeronautics from M.I.T., and a
B.S.E.E. from the University of Maine.
4
<PAGE>
For information relating to other Executive Officers of the Corporation, see
disclosure regarding Messrs. Eisenhaure and Turmelle set forth under the
heading "Election of Directors."
For information relating to shares of Common Stock owned by each of the
Directors and Executive Officers of the Corporation, see "Security Ownership
of Certain Beneficial Owners and Management."
BOARD AND COMMITTEE MEETINGS
The Board of Directors met six times during Fiscal 1997. During Fiscal 1997,
each of the Corporation's directors attended at least 75% of the aggregate of
the total number of meetings of the Board of Directors of the Corporation and
the total number of meetings held by all committees of the Board of Directors
of the Corporation on which he served.
The Corporation does not have a standing nominating committee or a committee
performing similar functions.
Messrs. Armstrong and O'Sullivan and Dr. Kirtley serve as the members of the
Audit Committee. The Audit Committee was established for the purposes of (i)
recommending the selection of the Corporation's independent auditors; (ii)
reviewing the effectiveness of the Corporation's accounting policies and
practices, financial reporting and internal controls; (iii) reviewing any
transactions that involve a potential conflict of interest; and (iv) reviewing
the scope of independent audit coverages and the fees charged by the
independent accountants. The Audit Committee met one time during Fiscal 1997.
Messrs. Armstrong, O'Sullivan and Villiotti serve as the members of the
Compensation Committee. The Compensation Committee was established to set and
administer the policies that govern annual compensation for the Corporation's
executives. Following review and approval by the Compensation Committee of the
compensation policies, all issues pertaining to executive compensation are
submitted to the Board of Directors for approval. The Compensation Committee
negotiates and approves compensation arrangements for officers, employees,
consultants and directors of the Corporation including but not limited to the
grant of options to purchase the Corporation's Common Stock pursuant to the
Corporation's stock option plans or other plans that may be established. The
Compensation Committee met one time during Fiscal 1997.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Corporation's directors, executive officers and holders of more than 10%
of the Corporation's Common Stock to file with the SEC initial reports of
ownership of the Corporation's Common Stock and other equity securities on a
Form 3 and reports of changes in such ownership on a Form 4 or Form 5.
Officers, directors and 10% Stockholders are required by SEC regulations to
furnish the Corporation with copies of all Section 16(a) forms they file.
To the Corporation's knowledge, based solely on a review of the
Corporation's records and written representations by the persons required to
file such reports, the filing requirements of Section 16(a) were satisfied
with respect to the Corporation's most recent fiscal year other than the
failure to file a Form 4 by Mr. Stanton with respect to the exercise of stock
options and the subsequent sale of the shares of Common Stock issued upon such
exercise (Mr. Stanton reported these transactions on a Form 5, which filing
was not made on a timely basis). In addition, the following filings were not
made on a timely basis: (i) a filing of a Form 5 by Mr. Eisenhaure with
respect to a stock option grant; (ii) a filing of a Form 5 by Mr. Stanton with
respect to a stock option grant; and (iii) a filing of a Form 5 by Mr.
Turmelle with respect to a stock option grant.
COMPENSATION OF DIRECTORS
Since November 1992, each of the Corporation's directors has received a fee
of $200 for each Board of Directors meeting attended, as well as a retainer of
$300 per month.
5
<PAGE>
CERTAIN TRANSACTIONS
Pursuant to the terms of the Securities Purchase Agreement, Duquesne
purchased from the Corporation 798,138 shares of the Corporation's Common
Stock and received the Warrant to purchase 500,000 shares of Beacon's common
stock at a purchase price of $6.00 per share. The Warrant expires on the
earlier of May 28, 1999 and 30 days prior to the filing of a registration
statement with respect to Beacon's common stock. The aggregate consideration
received by the Corporation pursuant to this transaction with Duquesne was
$5,000,000. Mr. Villiotti is the Vice President, Treasurer and Controller of
Duquesne and is a member of the Board of Directors of the Corporation and
Beacon.
For executive officer compensation and option exercise information, see
"Compensation of Executive Officers" and "Compensation Committee Report on
Executive Compensation."
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation Table. The following table sets forth information
concerning the annual and long-term compensation for services rendered to the
Corporation for the fiscal years ended September 30, 1997, 1996 and 1995, of
those persons who were at September 30, 1997 (i) the chief executive officer
of the Corporation and (ii) each other executive officer of the Corporation
whose annual compensation exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------------------- ------------
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND FISCAL COMPENSATION OPTIONS COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($) (#) ($)
------------------ ------ --------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
David B. Eisenhaure..... 1997 $205,000 -- $ 5,200(1) 13,500 $ 9,787(2)
President, Chief Execu-
tive Officer 1996 $205,000 -- $38,800(1) -- $ 7,447(2)
and Chairman of the
Board 1995 $193,756 -- $19,304(1) 10,000 $ 7,447(2)
William E. Stanton...... 1997 $157,500 -- $ 5,000(1) 13,500 $ 7,995(2)
Vice President and Di-
rector 1996 $157,500 -- $ 4,400(1) -- $ 3,553(2)
1995 $153,125 -- $16,178(1) 10,000 $ 3,553(2)
Michael C. Turmelle..... 1997 $135,000 -- $10,392(1) 13,500 $ 7,995(2)
Vice President, Chief
Financial 1996 $135,000 -- $14,784(1) -- $ 3,553(2)
Officer, Treasurer, 1995 $131,250 -- $14,495(1) 10,000 $ 3,553(2)
Secretary and Director
</TABLE>
- --------
(1) Amounts include (i) accrued vacation benefit payouts to the executive
officer and (ii) Board of Director fees paid to the executive officer in
his capacity as a Director of the Corporation.
(2) Amounts include the dollar value of term life insurance premiums paid by
the Corporation on a $1,000,000 term life insurance policy of which
members of the executive officers' families are the beneficiaries.
6
<PAGE>
Option Grants Table. The following table sets forth information concerning
individual grants of options to purchase the Corporation's Common Stock made
to the executive officers named in the Summary Compensation Table during
Fiscal 1997.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
INDIVIDUAL GRANTS REALIZABLE VALUE
------------------------------------------ AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF
SECURITIES OPTIONS STOCK PRICE
UNDERLYING GRANTED TO EXERCISE APPRECIATION FOR
OPTIONS EMPLOYEES OR BASE OPTION TERM(3)
GRANTED IN FISCAL PRICE EXPIRATION ----------------
NAME (#)(1) YEAR (2) ($/SHARE) DATE 5%($) 10%($)
---- ---------- ---------- --------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
David B. Eisenhaure..... 13,500 9.38% $9.00 07/10/07 $76,411 $193,640
William E. Stanton...... 13,500 9.38% $9.00 07/10/07 $76,411 $193,640
Michael C. Turmelle..... 13,500 9.38% $9.00 07/10/07 $76,411 $193,640
</TABLE>
- --------
(1) Each of these options was granted on July 10, 1997 and vests over a three-
year period.
(2) In Fiscal 1997, options to purchase a total of 144,000 shares of Common
Stock were granted to employees of the Corporation, including executive
officers.
(3) Amounts reported in these columns represent amounts that may be realized
upon exercise of the options immediately prior to the expiration of their
term assuming the specified compounded rates of appreciation (5% and 10%)
on the Corporation's Common Stock over the term of the options. These
numbers are calculated based on rules promulgated by the SEC and do not
reflect the Corporation's estimate of future stock price growth. Actual
gains, if any, on stock option exercises and Common Stock holdings are
dependent on the timing of such exercise and the future performance of the
Corporation's Common Stock.
Aggregated Option Exercises and Fiscal Year-End Option Value Table. The
following table sets forth certain information regarding stock options
exercised during Fiscal 1997 and held as of September 30, 1997 by the
executive officers named in the Summary Compensation Table.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS
YEAR-END (#) AT YEAR-END($)(2)
SHARES ---------------- --------------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) REALIZED ($)(1) UNEXERCISABLE UNEXERCISABLE
---- ------------ --------------- ---------------- --------------------
<S> <C> <C> <C> <C>
David B. Eisenhaure..... 0 $ 0 19,000 / 13,500 $ 35,000 / $50,625
William E. Stanton...... 15,000 $111,875 113,778 / 13,500 $627,363 / $50,625
Michael C. Turmelle..... 0 $ 0 49,750 / 13,500 $258,706 / $50,625
</TABLE>
- --------
(1) Represents the difference between the exercise price and the fair market
value of the Common Stock on the date of exercise.
(2) Value is based on the closing sales price of the Corporation's Common
Stock on September 30, 1997, the last trading day of Fiscal 1997 ($12.75),
less the applicable option exercise price.
7
<PAGE>
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
The Corporation has entered into Key Employee Agreements (the "Employee
Agreements") with each of Messrs. Eisenhaure, Stanton and Turmelle, which
expire on June 30, 1998. The Employee Agreements provide for automatic renewal
for three-year periods unless written notice of termination is given by either
party not less than three months prior to the expiration date. On December 23,
1997, Mr. Stanton's employment agreement terminated upon his resignation from
all of his positions with the Corporaton on that date. The Employee Agreements
specify the annual salaries for Messrs. Eisenhaure and Turmelle.
In addition, pursuant to the Employee Agreements, each of Messrs. Eisenhaure
and Turmelle is entitled to receive benefits offered to the Corporation's
employees generally as well as a severance payment equal to 100% of his annual
salary, payable in twelve equal monthly installments if (i) the Corporation or
a substantial portion of the Corporation is acquired without the approval of
the Board of Directors of the Corporation; (ii) his employment is terminated
without cause; or (iii) without his consent, his salary is reduced, there is a
substantial change in his position, there is a change in his principal place
of employment from the greater Boston, Massachusetts area, or the Employee
Agreement is not renewed following the expiration of its term. The Employee
Agreements also contain provisions prohibiting Messrs. Eisenhaure and Turmelle
from competing with the Corporation for a one-year period following
termination of employment.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Corporation's executive compensation program is administered by the
Compensation Committee. This committee, composed of Messrs. Armstrong,
O'Sullivan and Villiotti, is responsible for establishing the policies that
govern base salary, as well as short and long-term incentives for the
Corporation's senior management team.
The Committee believes that the primary objectives of the Corporation's
compensation policies are to attract and retain a management team that can
effectively implement and execute the Corporation's strategic business plan.
These compensation policies include (i) an overall management compensation
program that is competitive with management compensation programs at companies
of similar sizes and lines of business; (ii) short-term bonus incentives,
which may be put in place, for management to meet the Corporation's net income
performance goals; and (iii) long-term incentive compensation in the form of
stock options which will encourage management to continue to focus on
stockholder return.
The Committee's goal is to use compensation policies to closely align the
interests of management with the interests of Stockholders in building long-
term value for the Corporation's stockholders. The Committee will review its
compensation policies from time to time in order to determine the
reasonableness of the Corporation's compensation programs and to take into
account factors which are unique to the Corporation.
As described above, Messrs. Eisenhaure and Turmelle have signed Employee
Agreements with the Corporation defining the executive officer's duties,
salary, severance arrangements and restrictions on competition with the
Corporation.
Base Salary. The Committee's goal is not only to assure a base level
sufficient to attract and retain key executives, but also to balance that goal
with long-term incentives which assure that a significant portion of annual
compensation is dependent upon the financial performance of the Corporation.
Base salaries for executive officers did not increase from Fiscal 1996 to
Fiscal 1997. Base salaries for executive officers may increase in the future
as the Corporation advances in size and profitability.
Bonus. The Corporation has traditionally paid starting bonuses to its
officers upon the commencement of their employment with the Corporation as an
incentive to attract high caliber officers. The Corporation has not typically
paid annual bonuses, other than starting bonuses, to its executive officers,
though it may do so in the future.
8
<PAGE>
Stock Options. In examining stock option, equity incentive, phantom stock
and other plans typically provided to senior management in publicly held
corporations, the Compensation Committee determined that the Corporation
should provide equity incentives to its senior management. Stock options have
been issued in recognition of the performance of the senior management team to
date in improving the Corporation's financial position, establishing important
strategic relationships with manufacturers and distributors, and developing
and bringing to market innovative new technologies. The Committee also
believes that the granting of stock options is a valuable incentive tool for
management to continue to focus on realizing strategic goals and in building
value for all stockholders. Most of the option grants vest over a multi-year
period.
Compensation of Chief Executive Officer. In Fiscal 1997, the Corporation's
Chief Executive Officer, David Eisenhaure, received salary compensation of
$205,000, representing no increase over his salary in Fiscal 1996. This
compensation for Mr. Eisenhaure was based upon careful analysis of other
comparable public companies' Chief Executive Officer's compensation and the
performance of the Corporation in Fiscal 1996.
Compliance with Internal Revenue Code Section 162(m). Section 162(m) of the
Internal Revenue Code, enacted in 1994, generally disallows a tax deduction to
public companies for compensation over $1 million paid to the Corporation's
Chief Executive Officer and four other most highly compensated executive
officers. Qualifying performance-based compensation will not be subject to the
deduction limit if certain requirements are met. The Corporation intends to
structure stock option grants to its executive officers to comply with the
statute to mitigate any disallowance of deductions and, in any event, does not
expect Section 162(m) to apply to the compensation paid by the Corporation to
its executive officers.
COMPENSATION COMMITTEE
MARSHALL J. ARMSTRONG
JOHN P. O'SULLIVAN
ANTHONY J. VILLIOTTI
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During Fiscal 1997, Messrs. Armstrong, O'Sullivan and Villiotti and Dr.
Kirtley served as members of the Compensation Committee. Dr. Kirtley resigned
from the Compensation Committee on June 26, 1997. On September 12, 1997, Mr.
Villiotti was unanimously elected by the Board of Directors to serve as a
member of the Compensation Committee.
For information regarding Mr. Villiotti's relationship with Duquesne
Enterprises, see "Certain Transactions."
9
<PAGE>
COMPARATIVE STOCK PERFORMANCE GRAPH
The comparative stock performance graph below compares the cumulative total
stockholder return (assuming reinvestment of dividends, if any) from investing
$100 on November 12, 1992 (the date of the Corporation's initial public
offering), and plotted at the middle and end of each fiscal year and the most
recent practicable time thereafter, in each of (i) the Corporation's Common
Stock; (ii) the Nasdaq National Market Index of U.S. Companies ("Nasdaq
Index"); and (iii) a peer group index of four companies that provide similar
services to those of the Corporation (Aura Systems, Inc., Noise Cancellation
Technologies, Inc., Unique Mobility, Inc. and Andrea Electronics Corp. (the
"Peer Group Index")).
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG SATCON TECHNOLOGY CORPORATION,
NASDAQ INDEX AND PEER GROUP INDEX
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION> SatCon Peer
Measurement period Technology NASDAQ Group
(Fiscal Year Covered) Corporation Index Index
- --------------------- ----------- -------- --------
<S> <C> <C> <C>
Measurement PT -
11/12/92 $100.00 $100.00 $100.00
04/30/93 $148.61 $119.17 $ 81.08
09/30/93 $288.89 $129.83 $119.54
04/29/94 $244.44 $131.88 $ 95.53
09/30/94 $284.72 $136.53 $ 81.41
04/28/95 $222.22 $143.49 $ 53.23
09/29/95 $238.89 $169.63 $ 75.48
04/30/96 $222.22 $187.96 $ 61.01
09/30/96 $177.78 $192.37 $ 46.00
04/30/97 $141.67 $196.88 $ 28.57
09/30/97 $283.33 $263.11 $ 76.03
</TABLE>
10
<PAGE>
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The persons named in the enclosed Proxy will vote to ratify the selection of
Coopers & Lybrand L.L.P. as independent auditors for the fiscal year ending
September 30, 1998 unless otherwise directed by the Stockholders. A
representative of Coopers & Lybrand L.L.P. is expected to be present at the
Annual Meeting, and will have the opportunity to make a statement and answer
questions from stockholders if he or she so desires. If the Stockholders do
not ratify the selection of Coopers & Lybrand L.L.P. as the Corporation's
independent auditors, the selection of such independent auditors will be
reconsidered by the Audit Committee and the Board of Directors.
OTHER MATTERS
The Board of Directors does not know of any other matters which may come
before the Annual Meeting. However, if any other matters are properly
presented to the Annual Meeting, it is the intention of the persons named in
the accompanying Proxy to vote, or otherwise act, in accordance with their
judgment on such matters.
SOLICITATION OF PROXIES
The cost of solicitation of Proxies will be borne by the Corporation. In
addition to the solicitation of Proxies by mail, officers and employees of the
Corporation may solicit Proxies in person or by telephone. The Corporation may
reimburse brokers or persons holding stock in their names, or in the names of
their nominees, for their expenses in sending Proxies and Proxy material to
beneficial owners.
REVOCATION OF PROXY
Subject to the terms and conditions set forth herein, all Proxies received
by the Corporation will be effective, notwithstanding any transfer of the
shares to which such Proxies relate, unless at or prior to the Annual Meeting
the Corporation receives a written notice of revocation signed by the person
who, as of the record date, was the registered holder of such shares. The
Notice of Revocation must indicate the certificate number and numbers of the
shares to which such revocation relates and the aggregate number of shares
represented by such certificate(s).
STOCKHOLDER PROPOSALS
In order to be included in Proxy material for the 1999 Annual Meeting of
Stockholders, stockholders' proposed resolutions must be received by the
Corporation on or before August 30, 1998. The Corporation suggests that
proponents submit their proposals by certified mail, return receipt requested,
addressed to the Secretary of the Corporation.
By Order of the Board of Directors
MICHAEL C. TURMELLE
Secretary
Cambridge, Massachusetts
February 11, 1998
THE BOARD OF DIRECTORS HOPES THAT STOCKHOLDERS WILL ATTEND THE ANNUAL
MEETING. WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE,
SIGN, AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. A PROMPT
RESPONSE WILL GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR
COOPERATION WILL BE APPRECIATED. STOCKHOLDERS WHO ATTEND THE MEETING MAY VOTE
THEIR STOCK PERSONALLY EVEN THOUGH THEY HAVE SENT IN THEIR PROXIES.
11
<PAGE>
STCCN-PR-98
<PAGE>
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
- --------------------------------------------------------------------------------
SATCON TECHNOLOGY CORPORATION
- --------------------------------------------------------------------------------
Mark box at right if an address change or comment has been [_]
noted on the reverse side of this card.
RECORD DATE SHARES:
1. To elect the following two (2) nominees as Class I
Directors of the Corporation For All With- For All
Nominees hold Except
David B. Eisenhaure [_] [_] [_]
James L. Kirtley, Jr.
INSTRUCTION: To withhold authority to vote for any individual nominee, mark
the "For All Except" box and strike a line through the name of the nominee for
whom you do not wish to vote. Your shares will be voted for the remaining
nominee.
For Against Abstain
2. To ratify the selection of Coopers & Lybrand L.L.P.
as independent auditors of the Corporation for the [_] [_] [_]
fiscal year ending September 30, 1998.
For Against Abstain
3. To transact such other business as may properly
come before the meeting or any adjournment or [_] [_] [_]
adjournments thereof.
-----------------------------
Please be sure to sign and date this Proxy. Date
- --------------------------------------------------------------------------------
- ---------Stockholder sign here---------------Co-owner sign here-----------------
DETACH CARD
<PAGE>
SATCON TECHNOLOGY CORPORATION
Proxy for Annual Meeting of Stockholders to be held March 11, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
THE UNDERSIGNED, revoking all prior proxies, hereby appoints David B. Eisenhaure
and Michael C. Turmelle as Proxies, with full power of substitution to each, to
vote for and on behalf of the undersigned at the 1998 Annual Meeting of
Stockholders of SATCON TECHNOLOGY CORPORATION to be held at the offices of Hale
and Dorr LLP, 60 State Street, Boston, Massachusetts 02109, on Wednesday, March
11, 1998, at 9:00 a.m., and at any adjournment or adjournments thereof. The
undersigned hereby directs the said David B. Eisenhaure and Michael C. Turmelle
to vote in accordance with their best judgment on any matters which may properly
come before the Annual Meeting, all as indicated in the Notice of the Annual
Meeting, receipt of which is hereby acknowledged, and to act on the matters set
forth in such Notice as specified by the undersigned.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned stockholder. If no direction is given, this proxy will be
voted FOR proposals 1, 2 and 3. Attendance of the undersigned at the Annual
Meeting or at any adjournment thereof will not be deemed to revoke this proxy
unless the undersigned will revoke this proxy in writing.
- --------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY
IN THE ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
When shares are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title
as such. If the person named on the stock certificate has died, please submit
evidence of your authority. If a corporation, please sign in full corporate name
by the President or other authorized officer and indicate the signer's office.
If a partnership, please sign in partnership name by an authorized person.
- --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
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