Thermo Remediation Inc.
1964 S. Orange Blossom Trail
Apopka, Florida 32703
August 13, 1997
Dear Stockholder:
The enclosed Notice calls the 1997 Annual Meeting of the
Stockholders of Thermo Remediation Inc. I respectfully request
all Stockholders to attend this meeting, if possible.
Our Annual Report for the fiscal year ended March 29, 1997,
is enclosed. I hope you will read it carefully. Feel free to
forward any questions you may have if you are unable to be
present at the meeting.
Enclosed with this letter is a proxy authorizing three
officers of the Corporation to vote your shares for you if you do
not attend the meeting. Whether or not you are able to attend
the meeting, I urge you to complete your proxy and return it to
our transfer agent, BankBoston, N.A., in the enclosed addressed,
postage-paid envelope, as a quorum of the Stockholders must be
present at the meeting, either in person or by proxy.
I would appreciate your immediate attention to the mailing
of this proxy.
Yours very truly,
JEFFREY L. POWELL
President and Chief
Executive Officer
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Thermo Remediation Inc.
1964 S. Orange Blossom Trail
Apopka, Florida 32703
August 13, 1997
To the Holders of the Common Stock of
THERMO REMEDIATION INC.
NOTICE OF ANNUAL MEETING
The 1997 Annual Meeting of the Stockholders of Thermo
Remediation Inc. (the "Corporation") will be held on Wednesday,
September 24, 1997, at 10:00 a.m. at the offices of Thermo
Electron Corporation, 81 Wyman Street, Waltham, Massachusetts.
The purpose of the meeting is to consider and take action upon
the following matters:
1. Election of seven directors.
2. Such other business as may properly be brought before
the meeting and any adjournment thereof.
The transfer books of the Corporation will not be closed
prior to the meeting, but, pursuant to appropriate action by the
Board of Directors, the record date for the determination of the
Stockholders entitled to receive notice of and to vote at the
meeting is August 8, 1997.
The By-laws require that the holders of a majority of the
stock issued and outstanding and entitled to vote be present or
represented by proxy at the meeting in order to constitute a
quorum for the transaction of business. It is important that your
stock be represented at the meeting regardless of the number of
shares you may hold. Whether or not you are able to be present in
person, please sign and return promptly the enclosed proxy in the
accompanying envelope, which requires no postage if mailed in the
United States.
This notice, the proxy and proxy statement enclosed herewith
are sent to you by order of the Board of Directors.
SANDRA L. LAMBERT
Secretary
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PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of
Thermo Remediation Inc. (the "Corporation") for use at the 1997
Annual Meeting of the Stockholders (the "Meeting") to be held on
Wednesday, September 24, 1997, at 10:00 a.m. at the offices of
Thermo Electron Corporation, 81 Wyman Street, Waltham,
Massachusetts, and any adjournment thereof. The mailing address
of the executive office of the Corporation is 1964 S. Orange
Blossom Trail, Apopka, Florida 32703. This proxy statement and
the enclosed proxy were first furnished to Stockholders of the
Corporation on or about August 15, 1997.
VOTING PROCEDURES
The Board of Directors intends to present to the Meeting the
election of seven directors, constituting the entire Board of
Directors.
The representation in person or by proxy of a majority of
the outstanding shares of common stock of the Corporation, $.01
par value (the "Common Stock"), entitled to vote at the Meeting
is necessary to provide a quorum for the transaction of business
at the Meeting. Shares can only be voted if the Stockholder is
present in person or is represented by returning a properly
signed proxy. Each Stockholder's vote is very important. Whether
or not you plan to attend the Meeting in person, please sign and
promptly return the enclosed proxy card, which requires no
postage if mailed in the United States. All signed and returned
proxies will be counted towards establishing a quorum for the
Meeting, regardless of how the shares are voted.
Shares represented by proxy will be voted in accordance with
your instructions. You may specify your choice by marking the
appropriate box on the proxy card. If your proxy card is signed
and returned without specifying choices, your shares will be
voted FOR the management nominees for directors and as the
individuals named as proxy holders on the proxy deem advisable on
all other matters as may properly come before the Meeting.
In order to be elected a director, a nominee must receive
the affirmative vote of a majority of the shares of Common Stock
present and entitled to vote on the election. Withholding
authority to vote for a nominee for director will be treated as
shares present and entitled to vote and, for purposes of
determining the outcome of the vote, will have the same effect as
a vote against the nominee. With respect to the election of
directors, broker "non-votes" will not be treated as shares
present and entitled to vote on a voting matter and will have no
effect on the outcome of the vote. A broker "non-vote" occurs
when a nominee holding shares for a beneficial holder does not
have discretionary voting power and does not receive voting
instructions from the beneficial owner.
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A Stockholder who returns a proxy may revoke it at any time
before the Stockholder's shares are voted at the Meeting by
written notice to the Secretary of the Corporation received prior
to the Meeting, by executing and returning a later-dated proxy or
by voting by ballot at the Meeting.
The outstanding stock of the Corporation entitled to vote
(excluding shares held in treasury by the Corporation) as of
August 8, 1997, consisted of 12,244,061 shares of Common Stock.
Only Stockholders of record at the close of business on August 8,
1997, are entitled to vote at the Meeting. Each share is entitled
to one vote.
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--PROPOSAL 1--
ELECTION OF DIRECTORS
Seven directors are to be elected at the Meeting, each to
hold office until his successor is chosen and qualified or until
his earlier resignation, death or removal.
Nominees for Directors
Set forth below are the names of the persons nominated as
directors, their ages, their offices in the Corporation, if any,
their principal occupation or employment for the past five years,
the length of their tenure as directors and the names of other
public companies in which such persons hold directorships.
Information regarding their beneficial ownership of the
Corporation's Common Stock and of the common stock of its parent
corporations, Thermo TerraTech Inc. ("Thermo TerraTech") and
Thermo Electron Corporation ("Thermo Electron"), is reported
under the caption "Stock Ownership." All of the nominees are
currently directors of the Corporation.
John P. Dr. Appleton, 62, has been the chairman of the
Appleton Board and a director of the Corporation since
1993. He also served as the Corporation's
chief executive officer from September 1993 to
May 1997. Dr. Appleton has been president,
chief executive officer and a director of
Thermo TerraTech since September 1993, and has
served as a vice president of Thermo Electron
since 1975 in various managerial capacities.
Elias P. Dr. Gyftopoulos, 70, has been a director of the
Gyftopoulos Corporation since 1994. Dr. Gyftopoulos is
Professor Emeritus of the Massachusetts
Institute of Technology, where he was the Ford
Professor of Mechanical Engineering and of
Nuclear Engineering for more than twenty years
until his retirement in 1996. Dr. Gyftopoulos
is also a director of Thermo Electron, Thermo
BioAnalysis Corporation, Thermo Cardiosystems
Inc., ThermoLase Corporation, ThermoSpectra
Corporation, Thermo Voltek Corp. and Trex
Medical Corporation.
Fred Holubow Mr. Holubow, 58, has been a director of the
Corporation since 1992. Mr. Holubow has been
vice president of Pegasus Associates, an
investment management firm, for more than five
years.
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Theo Mr. Melas-Kyriazi, 38, has been a director of
Melas-Kyriazi the Corporation since 1992. Mr. Melas-Kyriazi
has been president and chief executive officer
and a director of ThermoSpectra Corporation,
which develops and manufactures precision
imaging, inspection and measurement instruments
based on high-speed data acquisition and
digital processing technologies, since its
inception in August 1994. Mr. Melas-Kyriazi was
treasurer of Thermo Electron from May 1988 to
August 1994 and treasurer of Thermo Remediation
from 1991 to 1994. Mr. Melas-Kyriazi is also a
director of Thermo Voltek Corp.
Frank E. Morris Dr. Morris, 73, has been a director of the
Corporation since 1993. Dr. Morris served as
president of the Federal Reserve Bank of Boston
from 1968 until he retired in 1988. Dr. Morris
also served as the Peter Drucker Professor of
Management at Boston College from 1989 to 1994.
Dr. Morris is a director of Thermo Electron and
is a trustee of SEI Mutual Funds, The Capitol
Mutual Funds, FFB Lexicon Funds and The Arbor
Fund.
Jeffrey L. Mr. Powell, 38, has been president and a
Powell director of the Corporation since December
1991, and was named chief executive officer in
May 1997.
William A. Mr. Rainville, 55, has been a director of the
Rainville Corporation since June 1993. Mr. Rainville has
been president and chief executive officer of
Thermo Fibertek Inc., a majority owned
subsidiary of Thermo Electron that develops and
manufactures equipment and products for the
paper making and paper recycling industries,
since its inception in 1991, a senior vice
president of Thermo Electron since March 1993
and a Vice President of Thermo Electron from
1986 to 1993. From 1984 until January 1993,
Mr. Rainville was the president and chief
executive officer of Thermo Electron Web
Systems Inc., a subsidiary of Thermo Fibertek
Inc. Mr. Rainville is also a director of
Thermo Ecotek Corporation, Thermo Fibergen
Inc., Thermo Fibertek Inc. and Thermo
TerraTech.
Committees of the Board of Directors and Meetings
The Board of Directors has established an Audit Committee
and a Human Resources Committee, each consisting solely of
outside directors. The present members of the Audit Committee are
Mr. Holubow (Chairman) and Dr. Morris. The Audit Committee
reviews the scope of the audit with the Corporation's independent
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public accountants and meets with them for the purpose of
reviewing the results of the audit subsequent to its completion.
The present members of the Human Resources Committee are Dr.
Morris (Chairman), Dr. Gyftopoulos and Mr. Holubow. The Human
Resources Committee reviews the performance of senior members of
management, recommends executive compensation and administers the
Corporation's stock option and other stock-based compensation
plans. The Corporation does not have a nominating committee of
the Board of Directors. The Board of Directors met five times,
the Audit Committee met twice and the Human Resources Committee
met seven times during fiscal 1997. Each director attended at
least 75% of all meetings of the Board of Directors and
Committees on which he served held during fiscal 1997.
Compensation of Directors
Cash Compensation
Directors who are not employees of the Corporation, of
Thermo Electron or of any other company affiliated with Thermo
Electron (also referred to as "outside directors") receive an
annual retainer of $2,000 and a fee of $1,000 per day for
attending regular meetings of the Board of Directors and $500 per
day for participating in meetings of the Board of Directors held
by means of conference telephone and for participating in certain
meetings of committees of the Board of Directors. Payment of
directors' fees is made quarterly. Dr. Appleton, Mr.
Melas-Kyriazi, Mr. Powell and Mr. Rainville are all employees of
Thermo Electron or its subsidiaries and do not receive any cash
compensation from the Corporation for their services as
directors. Directors are also reimbursed for out-of-pocket
expenses incurred in attending such meetings.
Deferred Compensation Plan for Directors
Under the Corporation's deferred compensation plan for
directors (the "Deferred Compensation Plan"), a director has the
right to defer receipt of his cash fees until he ceases to serve
as a director, dies or retires from his principal occupation. In
the event of a change in control or proposed change in control of
the Corporation that is not approved by the Board of Directors,
deferred amounts become payable immediately. Either of the
following is deemed to be a change of control: (a) the
acquisition, without the prior approval of the Board of
Directors, directly or indirectly, by any person of 50% or more
of the outstanding Common Stock or the outstanding common stock
of Thermo TerraTech or 25% or more of the outstanding common
stock of Thermo Electron; or (b) the failure of the persons
serving on the Board of Directors immediately prior to any
contested election of directors or any exchange offer or tender
offer for the Common Stock or the common stock of Thermo
TerraTech or Thermo Electron to constitute a majority of the
Board of Directors at any time within two years following any
such event. Amounts deferred pursuant to the Deferred
Compensation Plan are valued at the end of each quarter as units
of the Corporation's Common Stock. When payable, amounts deferred
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may be disbursed solely in shares of Common Stock accumulated
under the Deferred Compensation Plan. A total of 37,500 shares of
Common Stock have been reserved for issuance under the Deferred
Compensation Plan. As of June 28, 1997, deferred units equal to
5,784 full shares of Common Stock were accumulated under the
Deferred Compensation Plan.
Directors Stock Option Plan
The Corporation's directors stock option plan, which was
amended in 1995 (the "Directors Plan"), provides for the grant of
stock options to purchase shares of Common Stock of the
Corporation to outside directors as additional compensation for
their service as directors.
The Directors Plan originally provided for the grant of
stock options upon a director's initial appointment. Outside
directors appointed before the amendment of the plan received an
option to purchase 22,500 shares of Common Stock upon their
appointment or election. The amended plan provides that the size
of the award to new directors is reduced by 4,500 shares each
year until 1999, when the initial grant for new directors will be
eliminated entirely. Accordingly, directors first appointed or
elected in 1997 will receive options to purchase 9,000 shares,
directors first appointed or elected in 1998 will receive options
to purchase 4,500 shares and directors first appointed or elected
in 1999 and thereafter will not receive an initial option grant.
Options granted upon a director's election or appointment may be
exercised at any time from and after the six-month anniversary of
the grant date of the option and prior to the expiration of the
option on the fifth anniversary of the grant date. Such options
are subject to restrictions on resale and to the repurchase by
the Corporation of the shares subject to option at the exercise
price if the director ceases to serve as a director of the
Corporation, Thermo Electron or any subsidiary of Thermo
Electron, for any reason other than death. The restriction and
repurchase rights lapse in equal installments of 4,500 shares
starting with the first anniversary of the grant date, provided
the director has continuously served as a director of the
Corporation or any other Thermo Electron company prior to that
date.
Commencing with the 1998 Annual Meeting of Stockholders,
outside directors will receive an annual grant of options to
purchase 1,000 shares of Common Stock pursuant to the Directors
Plan at the close of business on the date of each Annual Meeting
of the Stockholders of the Corporation. Options evidencing
annual grants may be exercised at any time from and after the
six-month anniversary of the grant date of the option and prior
to the expiration of the option on the third anniversary of the
grant date. Shares acquired upon exercise of the options are
subject to repurchase by the Corporation at the exercise price if
the recipient ceases to serve as a director of the Corporation or
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any other Thermo Electron company prior to the first anniversary
of the grant date.
The exercise price for options granted under the Directors
Plan is the average of the closing prices of the Common Stock as
reported on the American Stock Exchange (or other principal
market on which the Common Stock is then traded) for the five
trading days preceding and including the date of grant, or, if
the shares are not then traded, at the last price per share paid
by third parties in an arms-length transaction prior to the
option grant. As of June 28, 1997, options to purchase 72,000
shares of Common Stock had been granted and were outstanding
under the Directors Plan, no options had lapsed or been
exercised, and options to purchase 78,000 shares of Common Stock
were reserved and available for grant under the Directors Plan.
Stock Ownership Policies for Directors
During fiscal 1997, the Human Resources Committee of the
Board of Directors (the "Committee") established a stock holding
policy for directors. The stock holding policy requires each
director to hold a minimum of 1,000 shares of Common Stock.
Directors are requested to achieve this ownership level by the
1998 Annual Meeting of Stockholders. Directors who are also
executive officers of the Corporation are required to comply with
a separate stock holding policy established by the Committee in
fiscal 1997, which is described in "Committee Report on Executive
Compensation - Stock Ownership Policies."
In addition, the Committee adopted a policy requiring
directors to hold shares of the Corporation's Common Stock equal
to one-half of their net option exercises over a period of five
years. The net option exercise is determined by calculating the
number of shares acquired upon exercise of a stock option, after
deducting the number of shares that could have been traded to
exercise the option and the number of shares that could have been
surrendered to satisfy tax withholding obligations attributable
to the exercise of the option. This policy is also applicable to
executive officers and is described in "Committee Report on
Executive Compensation - Stock Ownership Policies."
STOCK OWNERSHIP
The following table sets forth the beneficial ownership of
Common Stock, as well as the common stock of Thermo TerraTech and
Thermo Electron, as of June 28, 1997, with respect to (i) each
person who was known by the Corporation to own beneficially more
than 5% of the outstanding shares of Common Stock, (ii) each
director, (iii) each executive officer named in the summary
compensation table under the heading "Executive Compensation" and
(iv) all directors and current executive officers as a group.
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While certain directors or executive officers of the
Corporation are also directors or executive officers of Thermo
Electron or Thermo TerraTech, all such persons disclaim
beneficial ownership of the shares of Common Stock owned by
Thermo TerraTech or Thermo Electron.
Thermo Thermo Thermo
Electron TerraTech
Name (1) Remediation Corporation Inc. (4)
-------- ----------- ----------- --------
Inc. (2) (3)
-------- ---
Thermo TerraTech Inc.(5) 8,891,460 N/A N/A
William Harris 1,088,562 N/A N/A
Investors, Inc. (6)
John P. Appleton 63,000 144,749 216,989
Robert W. Dunlap 95,848 10,000 10,000
Elias P. Gyftopoulos 27,600 71,070 1,500
Fred Holubow 53,764 6,000 16,500
Nels R. Johnson 30,688 21,752 12,958
James Lousararian 82,841 7,637 27,226
Theo Melas-Kyriazi 22,500 161,404 10,319
Frank E. Morris 27,301 23,910 1,500
Jeffrey L. Powell 111,000 41,287 82,835
William A. Rainville 24,000 249,292 60,000
All directors and
executive
officers as a group
(13 persons) 606,345 1,518,508 529,417
(1) Except as reflected in the footnotes to this table, shares
beneficially owned consist of shares owned by the indicated
person or by that person for the benefit of minor children
and all share ownership includes sole voting and investment
power.
(2) Shares of Common Stock beneficially owned by Dr. Appleton,
Dr. Gyftopoulos, Mr. Holubow, Mr. Johnson, Mr. Lousararian,
Mr. Melas-Kyriazi, Dr. Morris, Mr. Powell, Mr. Rainville and
all directors and current executive officers as a group
include 63,000, 27,600, 24,450, 30,250, 80,500, 22,500,
24,450, 111,000, 22,500 and 476,750 shares, respectively,
that such person or group has the right to acquire within 60
days of June 28, 1997, through the exercise of stock
options. Shares beneficially owned by Mr. Holubow, Dr.
Morris and all directors and current executive officers as a
group include 2,932, 2,851 and 5,783 shares, respectively,
that had been allocated through June 28, 1997, to their
respective accounts maintained under the Corporation's
deferred compensation plan for directors. Shares
beneficially owned by Mr. Dunlap include 16,527 shares of
Common Stock being held in an escrow account in connection
with the acquisition by the Corporation of Remediation
Technologies, Inc. on December 8, 1995, to secure
indemnification obligations of Mr. Dunlap in connection with
such acquisition, as well as warrants to purchase 23,962
shares of Common Stock, of which warrants to purchase 5,509
shares are likewise being held in escrow. No director or
current executive officer beneficially owned more than 1% of
the Common Stock outstanding as of June 28, 1997; all
directors and current executive officers as a group
beneficially owned 4.7% of the Common Stock outstanding as
of such date.
(3) Shares of the common stock of Thermo Electron beneficially
owned by Dr. Appleton, Mr. Dunlap, Dr. Gyftopoulos, Mr.
Johnson, Mr. Lousararian, Mr. Melas-Kyriazi, Dr. Morris, Mr.
Powell, Mr. Rainville and all directors and current
executive officers as a group include 107,257, 10,000,
9,375, 16,882, 4,275, 120,072, 9,375, 35,012, 197,236 and
1,146,556 shares, respectively, that such person or group
has the right to acquire within 60 days of June 28, 1997,
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through the exercise of stock options. Shares beneficially
owned by all directors and current executive officers as a
group include 3,674 full shares allocated through June 28,
1997, to their respective accounts maintained pursuant to
Thermo Electron's employee stock ownership plan, of which
the trustees, who have investment power over its assets,
were as of June 28, 1997, executive officers of Thermo
Electron ("ESOP"). Shares beneficially owned by Dr. Morris
and all directors and current executive officers as a group
each include 11,120 shares allocated through June 28, 1997,
to Dr. Morris' account maintained pursuant to Thermo
Electron's deferred compensation plan for directors. Shares
beneficially owned by Dr. Morris include 3,415 shares owned
by his spouse. No director or current executive officer
beneficially owned more than 1% of the common stock of
Thermo Electron outstanding as of June 28, 1997; all
directors and current executive officers as a group
beneficially owned approximately 1.0% of the Thermo Electron
common stock outstanding as of such date.
(4) Shares of the common stock of Thermo TerraTech beneficially
owned by Dr. Appleton, Mr. Dunlap, Dr. Gyftopoulos, Mr.
Johnson, Mr. Lousararian, Mr. Melas-Kyriazi, Dr. Morris, Mr.
Powell, Mr. Rainville and all directors and current
executive officers as a group include 215,000, 10,000,
1,500, 12,000, 27,000, 10,000, 1,500, 63,000, 60,000 and
461,000 shares, respectively, that such person or group has
the right to acquire within 60 days of June 28, 1997,
through the exercise of stock options. Shares beneficially
owned by Mr. Holubow and all directors and current executive
officers as a group include 16,500 and 29,000 shares,
respectively, that such person or group has the right to
acquire within 60 days of June 28, 1997, through the
exercise of stock purchase warrants acquired in connection
with private placements of the securities of Thermo
TerraTech and one or more of the Corporation's subsidiaries
on terms identical to terms granted to unaffiliated
investors. Shares beneficially owned by Dr. Appleton and
all directors and current executive officers as a group
include 255 and 909 full shares, respectively, allocated
through June 28, 1997, to accounts maintained pursuant to
the ESOP. Except for Dr. Appleton, who beneficially owned
approximately 1.2% of the common stock of Thermo TerraTech
outstanding as of June 28, 1997, no director or current
executive officer beneficially owned more than 1% of such
common stock outstanding as of June 28, 1997; all directors
and current executive officers as a group beneficially owned
2.9% of the Common Stock outstanding as of such date.
(5) Includes 269,492 shares of Common Stock that Thermo
TerraTech has the right to acquire within 60 days of June
28, 1997, through the conversion of certain convertible
notes of the Corporation held by Thermo TerraTech. As of
June 28, 1997, Themo TerraTech beneficially owned
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approximately 70.59% of the outstanding Common Stock.
Thermo TerraTech's address is 12068 Market Street, Livonia,
Michigan 48150. As of June 28, 1997, Thermo TerraTech had
the power to elect all of the members of the Corporation's
Board of Directors. Thermo TerraTech is a majority owned
subsidiary of Thermo Electron and, therefore, Thermo
Electron may be deemed a beneficial owner of the shares of
Common Stock beneficially owned by Thermo TerraTech. Thermo
Electron disclaims beneficial ownership of these shares.
(6) Based on information provided in the Schedule 13G of William
Harris Investors, Inc. ("Harris") dated February 3, 1997,
these shares of Common Stock have been acquired by Harris on
behalf of unidentified discretionary clients of Harris.
Harris is an investment adviser registered under Section 203
of the Investment Adviser Act of 1940, as amended. Its
address is 2 North LaSalle Street, Suite 300, Chicago,
Illinois 60602.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934
requires the Corporation's directors and executive officers, and
beneficial owners of more than 10% of the Common Stock, such as
Thermo TerraTech and Thermo Electron, to file with the Securities
and Exchange Commission initial reports of ownership and periodic
reports of changes in ownership of the Corporation's securities.
Based upon a review of such filings, all Section 16(a) filing
requirements applicable to such persons were complied with during
fiscal 1997, except in the following instances. Mr. James
Lousararian, a Vice President of the Corporation, filed a Form 5
late reporting one exempt purchase of Common Stock under the
Corporation's employee stock purchase plan. Thermo TerraTech
filed two Forms 4 late reporting two transactions associated with
the exercise and lapse of options granted to employees to
purchase shares of Common Stock under its stock option program.
Thermo Electron filed six Forms 4 late, reporting a total of six
transactions, including the two transactions described above for
Thermo TerraTech, one open market purchase of shares of Common
Stock and three additional transactions associated with the grant
to employees of options to purchase shares of Common Stock under
its stock option program.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table summarizes compensation for services to
the Corporation in all capacities awarded to, earned by or paid
to the Corporation's chief executive officer and its four other
most highly compensated executive officers for the last three
fiscal years.
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The Corporation is required to appoint certain executive
officers and full-time employees of Thermo Electron as executive
officers of the Corporation, in accordance with the Thermo
Electron Corporate Charter. The compensation for these executive
officers is determined and paid entirely by Thermo Electron. The
time and effort devoted by these individuals to the Corporation's
affairs is provided to the Corporation under the Corporate
Services Agreement between the Corporation and Thermo Electron.
Accordingly, the compensation for these individuals is not
reported in the following table.
<TABLE>
Summary Compensation Table
Annual Compensation Long Term
------------------ Compensation
------------
Securities
Underlying
Options All Other
Name and Fiscal (No. of Shares
Principal Position Year Salary Bonus and Company) (1) Compensation
------------------ ---- ------ ----- ---------------- ------------
<S> <C> <C> <C> <C> <C> (2)
John P. Appleton(3)1997 $36,750 $20,000 -- $6,919
Chief Executive 1996 $33,750 $20,000 -- $6,919
Officer
1995 $7,313 $5,000 30,000(TTT) $11,171
Jeffrey L. Powell 1997 $122,000 $40,000 600(TMO) $7,023
(4 )
President and 2,000(TFG)
Chief
Operating Officer 6,000(TOC)
1996 $116,000 $60,000 300(TMO) $6,646
2,000(TBA)
5,000(TLZ)
2,000(TLT)
6,000(TMQ)
2,000(TSR)
4,000(TXM)
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1995 $108,000 $63,500 15,000(THN) $6,828
10,000(TTT)
22,275(TMO)
James Lousararian 1997 $106,000 $25,000 10,000(THN) $6,567
Vice President, 1996 $102,000 $33,000 -- $6,636
Sales
and Marketing 1995 $96,000 $49,500 10,500(THN) $6,078
4,000(TTT)
Nels R. Johnson 1997 $97,300 $28,000 8,000(THN) $5,275
(5)
Vice President 900(TMO)
1996 $93,600 $25,000 20,000(THN) $4,730
Robert W. Dunlap 1997 $165,000 $35,000 10,000(TTT)
(6)
Vice President 10,000(TMO) $5,088
</TABLE>
(1) In addition to grants of options to purchase shares of
Common Stock of the Corporation (designated in the table as
THN), the named executive officers of the Corporation have
been granted options to purchase common stock of Thermo
Electron and certain of its other subsidiaries as part of
Thermo Electron's stock option program. Options have been
granted during the last three fiscal years to the named
executive officers in the following Thermo Electron
companies: Thermo Electron (designated in the table as
TMO), Thermo TerraTech Inc. (designated in the table as
TTT), Thermo BioAnalysis Corporation (designated in the
table as TBA), Thermo Fibergen Inc. (designated in the table
as TFG), ThermoLase Corporation (designated in the table as
TLZ), ThermoLyte Corporation (designated in the table as
TLT), Thermo Optek Corporation (designated in the table as
TOC), ThermoQuest Corporation (designated in the table as
TMQ), Thermo Sentron Inc. (designated in the table as TSR),
and Trex Medical Corporation (designated in the table as
TXM).
(2) Represents the amount of matching contributions made by the
individual's employer on behalf of named executive officers
participating in the Thermo Electron 401(k) plan or, in the
case of Mr. Dunlap, the RETECH Employee's Savings and Profit
Sharing Plan.
(3) Dr. Appleton served as the Corporation's chief executive
officer from 1993 until May 14, 1997. Dr. Appleton is also
a vice president of Thermo Electron and president and chief
executive officer of Thermo TerraTech. A portion of Dr.
Appleton's annual cash compensation (salary and bonus) has
been allocated to and paid by each of the Corporation,
Thermo Electron and Thermo TerraTech over each of the past
three fiscal years as compenstion for the services provided
to these companies based on the time he devoted to his
responsibilities to these companies. The annual cash
compensation reported in the table for Dr. Appleton
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represents the amount paid from all sources, including the
Corporation, solely for Dr. Appleton's services as the chief
executive officer of the Corporation. For fiscal 1997, 1996
and 1995, approximately 20%, 20% and 5%, respectively, of
Dr. Appleton's annual cash compensation was paid by the
Corporation for his services as its chief executive officer.
Bonuses paid to Dr. Appleton reflect compensation decisions
based on calendar year performance, in accordance with
Thermo Electron's compensation practices for its officers.
Dr. Appleton has served as an officer of Thermo Electron
since 1975 and has been granted options to purchase shares
of the common stock of Thermo Electron and certain of its
subsidiaries other than the Corporation from time to time by
Thermo Electron or such other subsidiaries. These options
are not reported here as they were granted as compensation
for service to Thermo Electron companies in capacities other
than in his capacity as the chief executive officer of the
Corporation.
(4) Mr. Powell was appointed chief executive officer of the
Corporation on May 14, 1997.
(5) Mr. Johnson was appointed an executive officer of the
Corporation on June 30, 1995.
(6) Mr. Dunlap was appointed an executive officer of the
Corporation on May 8, 1996.
Stock Options Granted During Fiscal 1997
The following table sets forth information concerning
individual grants of stock options made during fiscal 1997 to the
Corporation's chief executive officer and the other named
executive officers. It has not been the Corporation's policy in
the past to grant stock appreciation rights, and no such rights
were granted during fiscal 1997.
Dr. Appleton has served as a vice president of Thermo
Electron since 1975 and from time to time has been granted
options to purchase common stock of Thermo Electron and certain
of its subsidiaries other than the Corporation. These options
are not reported in this table as they were granted as
compensation for service to other Thermo Electron companies in
capacities other than in his capacity as the chief executive
officer of the Corporation. During fiscal 1997, no options to
purchase Common Stock were granted to Dr. Appleton.
<TABLE>
Option Grants in Fiscal 1997
Percent of Potential Realizable
Number of Percent of Value at Assumed
Securities Total Options Annual Rates of Stock
Underlying Granted to Exercise Price Appreciation for
Options Employees in Price Per Expiration Option Term (2)
Name Granted (1) Fiscal Year Share Date 5% 10%
- ---- ----------- ----------- ----- ---- -- ---
<S> <C> <C> <C> <C> <C>
Jeffrey L. Powell 600 (TMO) 0.06% (3) $42.79 05/22/99 $4,044 $8,496
2,000 (TFG) 0.4% (3) $10.00 09/12/08 $15,920 $ 42,760
6,000 (TOC) 0.2% (3) $12.00 04/09/08 $57,300 $153,960
James Lousararian 10,000 (THN) 1.8% $10.00 10/30/08 $79,600 $213,800
Nels R. Johnson 8,000 (THN) 1.4% $10.00 10/30/08 $63,680 $171,040
900 (TMO) 0.09% (3) $42.79 05/22/99 $6,066 $12,744
Robert W. Dunlap 10,000 (TMO) 3.4% (3) $10.40 10/30/08 $82,800 $222,400
10,000 (THN) 1.0% (3) $36.05 12/03/08 $286,900 $770,900
</TABLE>
(1) In addition to the grant of options to purchase Common Stock
of the Corporation (designated in the table as THN), options
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have been granted during fiscal 1997 to the named executive
officers as part of Thermo Electron's stock option program
to purchase the common stock of Thermo Electron (designated
in the table as TMO), Thermo Fibergen Inc. (designated in
the table as TFG), Thermo Optek Corporation (designated in
the table as TOC) and Thermo TerraTech Inc. (designated in
the table as TTT). All of the options granted during the
fiscal year are immediately exercisable at the date of
grant. In all cases, the shares acquired upon exercise are
subject to repurchase by the granting corporation at the
exercise price if the optionee ceases to be employed by such
corporation or any other Thermo Electron company. The
granting corporation may exercise its repurchase rights
within six months after the termination of the optionee's
employment. For publicly traded companies, the repurchase
rights generally lapse ratably over a five- to ten-year
period, depending on the option term, which may vary from
seven to twelve years, provided that the optionee continues
to be employed by the Corporation or another Thermo Electron
company. The granting corporation may permit the holders of
options to exercise options and to satisfy tax withholding
obligations by surrendering shares equal in fair market
value to the exercise price or withholding obligation.
(2) The amounts shown on this table represent hypothetical gains
that could be achieved for the respective options if
exercised at the end of the option term. These gains are
based on assumed rates of stock appreciation of 5% and 10%
compounded annually from the date the respective options
were granted to their expiration date. The gains shown are
net of the option exercise price, but do not include
deductions for taxes or other expenses associated with the
exercise. Actual gains, if any, on stock option exercises
will depend on the future performance of the common stock of
the applicable corporation, the optionee's continued
employment through the option period and the date on which
the options are exercised.
(3) These options were granted under stock option plans
maintained by Thermo Electron or its subsidiaries as part of
Thermo Electron's compensation program and accordingly are
reported as a percentage of total options granted to
employees of Thermo Electron and its subsidiaries.
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Stock Options Exercised During Fiscal 1997 and Fiscal Year-End
Option Values
The following table reports certain information regarding
stock option exercises during fiscal 1997 and outstanding stock
options held at the end of fiscal 1997 by the Corporation's chief
executive officer and the other named executive officers. No
stock appreciation rights were exercised or were outstanding
during fiscal 1997.
<TABLE>
Aggregated Option Exercises In Fiscal 1997 And Fiscal 1997 Year-End Option Values
Number of
Unexercised
Shares Options at Fiscal Value of
Acquired Year-End Unexercised
on Value (Exercisable/ In-the-Money
Name Company Exercise Realized(1) Unexercisable) (2) Options
- ---- ------- -------- -------- ------------------ -------
<S> <C> <C> <C> <C> <C>
John P.Appleton Thermo
(3) Remediation -- -- 63,000 /-- $12,285 /--
Jeffrey L.Powell Thermo
Remediation -- -- 111,000 /-- $18,720 /--
Thermo
TerraTech -- -- 63,000 /-- (4) $74,785 /--
Thermo
Electron 5,062 $126,955 34,312 /-- (5) $470,330 /--
Thermo
BioAnalysis -- -- 2,000 /-- $0 /--
Thermo
Fibergen -- -- 2,000 /-- $0 /--
Thermo
Fibertek -- -- 4,500 /-- $32,625 /--
ThermoLase -- -- 5,000 /-- $0 /--
ThermoLyte -- -- -- /2,000 -- /$0 (6)
PAGE
<PAGE>
Thermo Optek -- -- 6,000 /-- $3,000 /--
ThermoQuest -- -- 6,000 /-- $9,000 /--
Thermo Sentron -- -- 2,000 /-- $0 /--
Trex Medical -- -- 4,000 /-- $2,500 /--
James Lousararian Thermo
Remediation -- -- 80,500 /-- $11,700 /--
Thermo
TerraTech 11,250 $95,400 27,000 /-- (4) $38,665 /--
Thermo
Electron -- -- 4,275 /-- $72,702 /--
Thermo
Fibertek -- -- 4,500 /-- $32,625 /--
Nels R. Johnson Thermo
Remediation -- -- 28,000 /-- $0 /--
Thermo
Electron -- -- 900 /-- $0 /--
Robert Dunlap Thermo
TerraTech -- -- 10,000 /-- $0 /--
Thermo
Electron -- -- 10,000 /-- $0 /--
</TABLE>
(1) Amounts shown in this column do not necessarily represent
actual value realized from the sale of the shares acquired
upon exercise of the option because in many cases the shares
are not sold on exercise but continue to be held by the
executive officer exercising the option. The amounts shown
represent the difference between the option exercise price
and the market price on the date of exercise, which is the
amount that would have been realized if the shares had been
sold immediately upon exercise.
(2) All of the options reported outstanding at the end of the
fiscal year are immediately exercisable as of fiscal
year-end, except options to purchase the common stock of
ThermoLyte Corporation, which are not exercisable until the
earlier of (i) 90 days after the effective date of the
registration of that company's common stock under Section 12
of the Securities Exchange Act of 1934 and (ii) nine years
from the grant date. In all cases, the shares acquired upon
exercise are subject to repurchase by the granting
corporation at the exercise price if the optionee ceases to
be employed by such corporation or any other Thermo Electron
company. The granting corporation may exercise its
repurchase rights within six months after the termination of
the optionee's employment. For publicly traded companies,
the repurchase rights generally lapse ratably over a five-
to ten-year period, depending on the option term, which may
vary from seven to twelve years, provided that the optionee
continues to be employed by the Corporation or another
Thermo Electron company. For companies whose shares are not
publicly traded, the repurchase rights lapse in their
entirety on the ninth anniversary of the grant date.
(3) Dr. Appleton has served as a vice president of Thermo
Electron since 1975 and has been granted options to purchase
shares of the common stock of Thermo Electron and certain of
its subsidiaries other than the Corporation from time to
time by Thermo Electron or such other subsidiaries. These
options are not reported here as they were granted as
15
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<PAGE>
compensation for service to Thermo Electron companies in
capacities other than in his capacity as the chief executive
officer of the Corporation.
(4) Options to purchase 15,000 and 9,000 shares of the common
stoc of Thermo TerraTech held by Mr. Powell and Mr.
Lousararian, respectively, are subject to the same terms
described in footnote (1), except that in the event of the
optionee's voluntary resignation or discharge for cause
prior to February 8, 1998, all of the shares acquired upon
exercise of these options are subject to repurchase by
Thermo TerraTech at the exercise price. In addition, all
shares acquired upon the exercise of these options are
subject to restrictions on resale until February 8, 1998.
(5) Options to purchase 22,500 shares of the common stock of
Thermo Electron granted to Mr. Powell are subject to the
same terms as described in footnote (1), except that the
repurchase rights of the granting corporation generally do
not lapse until the tenth anniversary of the grant date. In
the event of the employee's death or involuntary termination
prior to the tenth anniversary of the grant date, the
repurchase rights of the granting corporation shall be
deemed to lapse ratably over a five-year period commencing
with the fifth anniversary of the grant date.
(6) No public market existed for the shares underlying these
options as of June 28, 1997. Accordingly, no value in excess
of exercise price has been attributed to these options.
Severance Agreements
Thermo Electron has entered into severance agreements with
several key employees, including Dr. Appleton. These agreements
provide severance benefits if there is a change in control of
Thermo Electron that is not approved by the Board of Directors of
Thermo Electron and the employee's employment with Thermo
Electron or one of its majority-owned subsidiaries is terminated,
for whatever reason, within one year thereafter. For purposes of
the severance agreements, a change in control exists upon (i) the
acquisition of 50% or more of the outstanding common stock of
Thermo Electron by any person without the prior approval of the
board of directors of Thermo Electron, (ii) the failure of the
board of directors of Thermo Electron, within two years after any
contested election of directors or tender or exchange offer not
approved by the board of directors, to be constituted of a
majority of directors holding office prior to such event or (iii)
any other event that the board of directors of Thermo Electron
determines constitutes an effective change of control of Thermo
Electron. The benefit under these agreements is stated as an
initial percentage which was established by the Board of
Directors of Thermo Electron and is generally based upon the
employee's age and length of service with Thermo Electron at the
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time of severance. Benefits are to be paid over a five-year
period. The benefit to be paid in the first year is determined
by applying this percentage to the employee's highest annual
total remuneration in any 12-month period during the preceding
three years. This benefit is reduced by 10% in each of the
succeeding four years in which benefits are paid. The initial
percentage to be so applied to Dr. Appleton is 40.1%. Assuming
that severance benefits would have been payable under such
agreements as of March 29, 1997, Dr. Appleton would have received
approximately $119,906 in the first year thereof from Thermo
Electron.
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Executive Compensation
All decisions on compensation for the Corporation's
executive officers are made by the Human Resources Committee of
the Board of Directors (the "Committee"). In reviewing and
establishing total cash compensation and stock-based compensation
for executives, the Committee follows guidelines established by
the Human Resources Committee of the Board of Directors of its
parent corporation, Thermo Electron. The executive compensation
program presently consists of annual base salary ("salary"),
short-term incentives in the form of annual cash bonuses, and
long-term incentives in the form of stock options.
The Committee believes that the compensation of executive
officers should reflect the scope of their responsibilities, the
success of the Corporation, and the contributions of each
executive to that success. In addition, the Committee believes
that base salaries should approximate the mid-point of
competitive salaries derived from market surveys and that
short-term and long-term incentive compensation should reflect
the performance of the Corporation and the contributions of each
executive.
External competitiveness is an important element of the
Committee's compensation policy. The competitiveness of the
Corporation's compensation for its executives is assessed by
comparing it to market data provided by its compensation
consultant and by participating in annual executive compensation
surveys, primarily "Project 777," an executive compensation
survey prepared by Management Compensation Services, a division
of Hewitt Associates. The majority of firms represented in the
Project 777 survey are included in the Standard & Poor's 500
Index, but do not necessarily correspond to the companies
included in the Corporation's peer group.
Principles of internal equity are also central to the
Committee's compensation policies. Compensation considered for
the Corporation's officers, whether cash or stock-based
incentives, is also evaluated by comparing it to compensation of
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other executives within the Thermo Electron organization with
comparable levels of responsibility for comparably sized business
units.
The process for determining each of these elements for the
Corporation's executive officers is outlined below.
Base Salary
Base salaries are set to approximate the mid-point of
competitive salaries for similar organizations of comparable size
and complexity to the Corporation. Executive salaries are
adjusted gradually over time and only as necessary to meet this
objective. Increases in base salary may be moderated by other
considerations, such as geographic or regional market data,
industry trends or internal fairness within the Corporation and
Thermo Electron. It is the Committee's intention that over time
the base salaries for the chief executive officer and the
Corporation's other named executive officers will approach the
mid-point of competitive data. The salary increases in fiscal
1997 for the chief executive officer and the other named
executive officers generally reflect this practice of gradual
increases and moderation.
Cash Bonus
The Committee establishes a median potential bonus for each
executive by using the market data on total cash compensation
from the same executive compensation surveys as used to determine
salaries for executives. Specifically, the median potential bonus
plus the salary of an executive officer is approximately equal to
the mid-point of competitive total cash compensation for a
similar position and level of responsibility in businesses having
comparable sales and complexity to the Corporation. The actual
bonus awarded to an executive officer may range from zero to
three times the median potential bonus. The value within the
range (the bonus multiplier) is determined at the end of each
year by the Committee in its discretion. The Committee exercises
its discretion by evaluating each executive's performance using a
methodology developed by its parent corporation, Thermo Electron,
and applied throughout the Thermo Electron organization. The
methodology incorporates measures of operating returns which are
designed to measure profitability and contributions to
shareholder value, and are measures of corporate and divisional
performance that are evaluated using graphs developed by Thermo
Electron intended to reward performance that is perceived as
above average and to penalize performance that is perceived as
below average. The measures of operating returns used in the
Committee's determinations in fiscal 1997 measured return on net
assets, growth in income, and return on sales, and the
Committee's determinations also included a subjective evaluation
of the contributions of each executive that are not captured by
operating measures but are considered important to the creation
of long-term value for the Stockholders. These measures of
achievements are not financial targets that are met, not met or
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exceeded. The relative weighting of the operating measures and
subjective evaluation varies among the executives, depending on
their roles and responsibilities within the organization.
The bonuses for named executive officers approved by the
Committee with respect to fiscal 1997 performance in each
instance were less than the median potential bonus, primarily due
to the objective measures of the Corporation's fiscal 1997
performance.
Stock Option Program
The primary goal of the Corporation is to excel in the
creation of long-term value for the Stockholders. The principal
incentive tool used to achieve this goal is the periodic award to
key employees of options to purchase common stock of the
Corporation and other Thermo Electron companies.
The Committee and management believe that awards of stock
options to purchase the shares of both the Corporation and other
companies within the Thermo Electron group of companies
accomplish many objectives. The grant of options to key employees
encourages equity ownership in the Corporation, and closely
aligns management's interests to the interests of all the
Stockholders. The emphasis on stock options also results in
management's compensation being closely linked to stock
performance. In addition, because they are subject to vesting
periods of varying duration and to forfeiture if the employee
leaves the Corporation prematurely, stock options are an
incentive for key employees to remain with the Corporation
long-term. The Committee believes stock option awards in its
parent companies, Thermo TerraTech and Thermo Electron, and the
other majority-owned subsidiaries of Thermo Electron, are
important tools in providing incentives for performance within
the entire organization.
In determining awards, the Committee considers the average
annual value of all options to purchase shares of the Corporation
and other companies within the Thermo Electron organization that
vest in the next five years. (Values are established using a
modified Black-Scholes option pricing model.) As a guideline,
the Committee strives to maintain the aggregate amount of net
awards to purchase shares of Common Stock to all employees over a
five-year period below 12% of the Corporation's outstanding
Common Stock, although other factors such as unusual
transactions, acquisitions and standards for awards of comparably
situated companies may affect the number of awards granted.
Awards are not made annually in conjunction with the annual
review of cash compensation, but are made periodically. The
Committee considers total compensation of executives, actual and
anticipated contributions of each executive (which includes a
subjective assessment by the Committee of the value of the
executive's future potential within the organization), as well as
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the value of previously awarded options, as described above, in
determining option awards. The option awards made to the named
executive officers in fiscal 1997 with respect to the common
stock of the Corporation's parent company, Thermo Electron, and
its subsidiaries as part of Thermo Electron's overall stock
option program, were determined by the human resources committee
of the board of directors of the granting company using a similar
analysis.
Stock Ownership Policies
During fiscal 1997, the Committee established a stock
holding policy for executive officers of the Corporation. The
stock holding policy specifies an appropriate level of ownership
of the Corporation's Common Stock as a multiple of the officer's
compensation. For the chief executive officer, the multiple is
one times his base salary and reference bonus for the fiscal
year. For all other officers, the multiple is one times the
officer's base salary. The Committee deemed it appropriate to
permit officers to achieve these ownership levels over a
three-year period.
In order to assist officers in complying with the policy,
the Committee also adopted a stock holding assistance plan under
which the Corporation is authorized to make interest-free loans
to officers to enable them to purchase shares of the Common Stock
in the open market. The loans are required to be repaid upon the
earlier of demand or the fifth anniversary of the date of the
loan, unless otherwise authorized by the Committee. No loans
were outstanding under this program in fiscal 1997. See
"Relationship with Affiliates - Stock Holding Assistance Plan."
The Committee also adopted a policy requiring its executive
officers to hold shares of the Corporation's Common Stock
acquired upon the exercise of stock options granted by the
Corporation. Under this policy, executive officers are required
to hold one-half of their net option exercises over a period of
five years. The net option exercise is determined by calculating
the number of shares acquired upon exercise of a stock option,
after deducting the number of shares that could have been traded
to exercise the option and the number of shares that could have
been surrendered to satisfy tax withholding obligations
attributable to the exercise of the option.
Policy on Deductibility of Compensation
The Committee has also considered the application of Section
162(m) of the Internal Revenue Code to the Corporation's
compensation practices. Section 162(m) limits the tax deduction
available to public companies for annual compensation paid to
senior executives in excess of $1 million, unless the
compensation qualifies as "performance based" or is otherwise
exempt from Section 162(m). The annual cash compensation paid to
individual executives does not approach the $1 million threshold,
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and it is believed that the stock incentive plans of the
Corporation qualify as "performance based." Therefore, the
Committee does not believe any further action is necessary in
order to comply with Section 162(m). From time to time, the
Committee will reexamine the Corporation's compensation practices
and the effect of Section 162(m).
CEO Compensation
Cash compensation for Dr. Appleton is reviewed by both the
Committee and the human resources committees of the boards of
directors of Thermo TerraTech and Thermo Electron, due to his
responsibilities as the chief executive officer of the
Corporation and Thermo TerraTech and as a vice president of
Thermo Electron. Each committee evaluates Dr. Appleton's
performance and proposed compensation using a process similar to
that used for the other executive officers of the Corporation.
At the Thermo Electron and Thermo TerraTech levels, Dr. Appleton
is evaluated on his performance related to the Corporation as
well as other operating units of Thermo Electron and Thermo
TerraTech for which he is responsible, weighted in accordance
with the amount of time and effort devoted to each operation.
The Corporation's Committee then reviews the analysis and
determinations of the Thermo TerraTech and Thermo Electron
committees, makes an independent assessment of Dr. Appleton's
performance as it relates to the Corporation using criteria
similar to those used for the other executive officers of the
Corporation, and then agrees to an appropriate allocation of Dr.
Appleton's compensation to be paid by the Corporation.
In December 1996, the Committee conducted its review of Dr.
Appleton's proposed salary for calendar 1997 and bonus for
calendar 1996 performance. The Committee concurred in the
recommendations made by the Thermo TerraTech committee, and
agreed to an allocation of 20% of Dr. Appleton's total cash
compensation for calendar 1996 to the Corporation, based on his
relative responsibilities at the Corporation and Thermo
TerraTech.
Dr. Frank E. Morris (Chairman)
Dr. Elias P. Gyftopoulos
Mr. Fred Holubow
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COMPARATIVE PERFORMANCE GRAPH
The Securities and Exchange Commission requires that the
Corporation include in this proxy statement a line-graph
presentation comparing cumulative, five-year shareholder returns
for the Corporation's Common Stock with a broad-based market
index and either a nationally recognized industry standard or an
index of peer companies selected by the Corporation. The
Corporation's Common Stock has been publicly traded only since
December 9, 1993 and, as a result, the following graph commences
as of such date. The Corporation has compared its performance
with the American Stock Exchange Market Value Index and a peer
group of companies consisting of Ecology & Environmental Inc.,
Fluor Daniel GTI, Inc. (formerly Groundwater Technology Inc.),
Safety Kleen Corp., TRC Cos. Inc. and Roy F. Weston Inc.
Comparison of Total Return Among Thermo Remediation Inc.,
the American Stock Exchange Market Value Index and the
Corporation's Peer Group from December 9, 1993 to March 27, 1997
[GRAPH APPEARS HERE]
<TABLE>
12/09/93 03/31/94 03/31/95 03/29/96 03/27/97
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
THN 100 110 162 177 91
AMEX 100 95 99 122 124
PEER GROUP 100 91 107 91 92
</TABLE>
The total return for the Corporation's Common Stock (THN),
the American Stock Exchange Market Value Index (AMEX) and the
Corporation's peer group (PEER GROUP) assumes the reinvestment of
dividends. Cash dividends of $.15 per share of Common Stock were
paid on March 15, 1994, September 30, 1994, and March 31, 1995,
respectively, to shareholders of record on February 15, 1994,
September 8, 1994, and March 15, 1995, respectively. Cash
dividends of $.10 per share of Common Stock were paid on
September 15, 1995, and March 20, 1996, respectively, to
shareholders of record on August 30, 1995, and March 1, 1996,
respectively. Cash dividends of $.10 per share of Common Stock
were paid on September 5, 1996, and March 24, 1997, respectively,
to shareholders of record on August 22, 1996, and March 3, 1997,
respectively. No assurance can be given, however, that the
Corporation will continue to pay dividends in the future.
The American Stock Exchange Market Value Index tracks the aggregate
performance of equity securities of companies listed on the
American Stock Exchange ("AMEX"). The Corporation's Common Stock is
traded on the AMEX under the ticker symbol "THN."
RELATIONSHIP WITH AFFILIATES
Thermo Electron has adopted a strategy of selling a minority
interest in subsidiary companies to outside investors as an
important tool in its future development. As part of this
strategy, Thermo TerraTech has created the Corporation as a
publicly held subsidiary, and Thermo Electron and certain of its
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subsidiaries have created several other privately and publicly
held subsidiaries. From time to time, Thermo Electron and its
subsidiaries will create other majority-owned subsidiaries as
part of its spinout strategy. (The Corporation and the other
majority-owned Thermo Electron subsidiaries are hereinafter
referred to as the "Thermo Subsidiaries.")
Thermo Electron and each of the Thermo Subsidiaries
recognize that the benefits and support that derive from their
mutual affiliation are essential elements of their individual
performance. Accordingly, Thermo Electron and each of the Thermo
Subsidiaries have adopted the Thermo Electron Corporate Charter
(the "Charter") to define the relationships and delineate the
nature of such cooperation among themselves. The purpose of the
Charter is to ensure that (1) all of the companies and their
stockholders are treated consistently and fairly, (2) the scope
and nature of the cooperation among the companies, and each
company's responsibilities, are adequately defined, (3) each
company has access to the combined resources and financial,
managerial and technological strengths of the others, and (4)
Thermo Electron and the Thermo Subsidiaries, in the aggregate,
are able to obtain the most favorable terms from outside parties.
To achieve these ends, the Charter identifies the general
principles to be followed by the companies, addresses the role
and responsibilities of the management of each company, provides
for the sharing of group resources by the companies and provides
for centralized administrative, banking and credit services to be
performed by Thermo Electron. The services provided by Thermo
Electron include collecting and managing cash generated by
members, coordinating the access of Thermo Electron and the
Thermo Subsidiaries (the "Thermo Group") to external financing
sources, ensuring compliance with external financial covenants
and internal financial policies, assisting in the formulation of
long-range planning and providing other banking and credit
services. Pursuant to the Charter, Thermo Electron may also
provide guarantees of debt or other obligations of the Thermo
Subsidiaries or may obtain external financing at the parent level
for the benefit of the Thermo Subsidiaries. In certain instances,
the Thermo Subsidiaries may provide credit support to, or on
behalf of, the consolidated entity or may obtain financing
directly from external financing sources. Under the Charter,
Thermo Electron is responsible for determining that the Thermo
Group remains in compliance with all covenants imposed by
external financing sources, including covenants related to
borrowings of Thermo Electron or other members of the Thermo
Group, and for apportioning such constraints within the Thermo
Group. In addition, Thermo Electron establishes certain internal
policies and procedures applicable to members of the Thermo
Group. The cost of the services provided by Thermo Electron to
the Thermo Subsidiaries is covered under existing corporate
services agreements between Thermo Electron and each of the
Thermo Subsidiaries.
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The Charter presently provides that it shall continue in
effect so long as Thermo Electron and at least one Thermo
Subsidiary participate. The Charter may be amended at any time by
agreement of the participants. Any Thermo Subsidiary, including
the Corporation, can withdraw from participation in the Charter
upon 30 days' prior notice. In addition, Thermo Electron may
terminate a subsidiary's participation in the Charter in the
event the subsidiary ceases to be controlled by Thermo Electron
or ceases to comply with the Charter or the policies and
procedures applicable to the Thermo Group. A withdrawal from the
Charter automatically terminates the corporate services agreement
and tax allocation agreement (if any) in effect between the
withdrawing company and Thermo Electron. The withdrawal from
participation does not terminate outstanding commitments to third
parties made by the withdrawing company, or by Thermo Electron or
other members of the Thermo Group, prior to the withdrawal. In
addition, a withdrawing company is required to continue to comply
with all policies and procedures applicable to the Thermo Group
and to provide certain administrative functions mandated by
Thermo Electron so long as the withdrawing company is controlled
by or affiliated with Thermo Electron.
As provided in the Charter, the Corporation and Thermo
Electron have entered into a Corporate Services Agreement (the
"Services Agreement") under which Thermo Electron's corporate
staff provides certain administrative services, including certain
legal advice and services, risk management, certain employee
benefit administration, tax advice and preparation of tax
returns, centralized cash management and certain financial and
other services to the Corporation. The Corporation was assessed
an annual fee equal to 1.0% of the Corporation's revenues for
these services for fiscal 1997. The fee is reviewed annually and
may be changed by mutual agreement of the Corporation and Thermo
Electron. During fiscal 1997, Thermo Electron assessed the
Corporation $1,148,000 in fees under the Services Agreement.
Management believes that the charges under the Services Agreement
are reasonable and that the terms of the Services Agreement are
fair to the Corporation. For items such as employee benefit
plans, insurance coverage and other identifiable costs, Thermo
Electron charges the Corporation based on charges attributable to
the Corporation. The Services Agreement automatically renews for
successive one-year terms, unless canceled by the Corporation
upon 30 days' prior notice. In addition, the Services Agreement
terminates automatically in the event the Corporation ceases to
be a member of the Thermo Group or ceases to be a participant in
the Charter. In the event of a termination of the Services
Agreement, the Corporation will be required to pay a termination
fee equal to the fee that was paid by the Corporation for
services under the Services Agreement for the nine-month period
prior to termination. Following termination, Thermo Electron may
provide certain administrative services on an as-requested basis
by the Corporation or as required in order to meet the
Corporation's obligations under Thermo Electron's policies and
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procedures. Thermo Electron will charge the Corporation a fee
equal to the market rate for comparable services if such services
are provided to the Corporation following termination.
As of March 29, 1997, $19,674,000 of the Corporation's cash
equivalents were invested in a repurchase agreement with Thermo
Electron. Under this agreement, the Corporation in effect lends
excess cash to Thermo Electron, which Thermo Electron
collateralizes with investments principally consisting of
corporate notes, U.S. government agency securities, money market
funds, commercial paper and other marketable securities, in the
amount of at least 103% of such obligation. The Corporation's
funds subject to the repurchase agreement are readily convertible
into cash by the Corporation and have a maturity of three months
or less. The repurchase agreement earns a rate based on the
90-day Commercial Paper Composite Rate plus 25 basis points, set
at the beginning of each quarter.
As of March 29, 1997, the Corporation owed Thermo TerraTech
$2,650,000.
Thermo TerraTech owned approximately 70.6% of the Common
Stock outstanding as of June 28, 1997.
Stock Holding Assistance Plan
In fiscal 1997, the Corporation adopted a stock holding
policy which requires its executive officers to acquire and hold
a minimum number of shares of Common Stock. In order to assist
the executive officers in complying with the policy, the
Corporation also adopted a stock holding assistance plan under
which it may make interest-free loans to certain key employees,
including its executive officers, to enable such employees to
purchase the Common Stock in the open market. Loans will be
repaid upon the earlier of demand or the fifth anniversary of the
date of the loan, unless otherwise authorized by the Human
Resources Committee of the Board of Directors. No such loans
were outstanding in fiscal 1997.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Arthur Andersen LLP as
independent public accountants for fiscal 1998. Arthur Andersen
LLP has acted as independent public accountants for the
Corporation since its inception in 1991. Representatives of that
firm are expected to be present at the Meeting, will have the
opportunity to make a statement if they desire to do so and will
be available to respond to questions. The Board of Directors has
established an Audit Committee, presently consisting of two
outside directors, the purpose of which is to review the scope
and results of the audit.
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OTHER ACTION
Management is not aware at this time of any other matters
that will be presented for action at the Meeting. Should any such
matters be presented, the proxies grant power to the proxy
holders to vote shares represented by the proxies in the
discretion of such proxy holders.
STOCKHOLDER PROPOSALS
Proposals of Stockholders intended to be presented at the
1998 Annual Meeting of the Stockholders of the Corporation must
be received by the Corporation for inclusion in the proxy
statement and form of proxy relating to that meeting no later
than April 24, 1998.
SOLICITATION STATEMENT
The cost of this solicitation of proxies will be borne by
the Corporation. Solicitation will be made primarily by mail, but
regular employees of the Corporation may solicit proxies
personally, by telephone or by telegram. Brokers, nominees,
custodians and fiduciaries are requested to forward solicitation
materials to obtain voting instructions from beneficial owners of
stock registered in their names, and the Corporation will
reimburse such parties for their reasonable charges and expenses
in connection therewith.
Apopka, Florida
August 13, 1997
