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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) JANUARY 13, 1999
PRI AUTOMATION, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
MASSACHUSETTS 0-2493404-2495703
(State or Other (Commission File
Jurisdiction of Incorporation) Number)
(IRS Employer
Identification
No.)
</TABLE>
<TABLE>
<S> <C>
805 Middlesex Turnpike, Billerica,
Massachusetts 01821-3986
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area
code (978) 670-4270
</TABLE>
NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)
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<PAGE>
ITEM 5. OTHER EVENTS.
This Current Report on Form 8-K contains information required by Items 401,
402 and 403 of Regulation S-K concerning the Company's directors and executive
officers, the compensation of such directors and executive officers, and the
security ownership of management and certain beneficial owners of the Company's
common stock for the fiscal year ended September 30, 1998. The Company intends
to include this information in its proxy statement for its annual meeting of
stockholders in 1999, which the Company expects to distribute to its
stockholders on or about January 28, 1999. The Company has elected to disclose
this information at this time because it intends to provide this information to
the shareholders of Promis Systems Corporation Ltd. upon the filing of this
Report.
2
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information concerning each director
and each executive officer of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------------------------- --- -----------------------------------------------------
<S> <C> <C>
Mordechai Wiesler.................................... 68 Chairman of the Board, Treasurer and Director
Mitchell G. Tyson.................................... 44 President, Chief Executive Officer and Director
Stephen D. Allison................................... 53 Chief Financial Officer
Robert G. Postle..................................... 44 Vice President, Marketing, Sales and International
Operations
Robert L. Klimm...................................... 47 Vice President, General Manager, Factory Automation
Systems Division
Paul F. Rogan........................................ 39 Executive Vice President, Equipe Division and
Director
James Cameron........................................ 36 President, General Manager, Equipe Division
Amram Rasiel (1)..................................... 68 Director
Boruch B. Frusztajer (1)(2).......................... 68 Director
Alexander V. d'Arbeloff (2).......................... 71 Director
Kenneth M. Thompson.................................. 60 Director
</TABLE>
- ------------------------
(1) Member of the Audit Committee
(2) Member of the Compensation Committee
MORDECHAI WIESLER, a founder of the Company, has been Treasurer and a
director of the Company since its inception. Mr Wiesler served as the Company's
President from its inception until February 1995 and as its Chief Executive
Officer from its inception until August 1998. Mr. Wiesler was also the founder,
president and chairman of Transistor Automation Corporation until its sale to
Teledyne, Inc. in 1966. Mr. Wiesler is a director of SEMI-SEMATECH, Inc., a
trade association of American manufacturers of semiconductor manufacturing
equipment.
MITCHELL G. TYSON was named Chief Executive Officer of the Company in August
1998. He was elected to the office of President and named a director of the
Company in 1995. Mr. Tyson served as Chief Operating Officer of the Company from
1990 to 1998. From 1987 to 1990, he served as Vice President, Operations of the
Company. From 1984 to 1987, Mr. Tyson was the director of product management of
GCA Corporation, a manufacturer of semiconductor capital equipment.
STEPHEN D. ALLISON is Chief Financial Officer of the Company. He joined the
Company in 1997. Mr. Allison was Vice President and Chief Financial Officer of
Helix Technology Corporation, a manufacturer of cryogenic vacuum systems, from
1995 to 1997. Mr. Allison also served as Vice President, Finance of Behring
Diagnostic Systems, Inc., a supplier of immunoassay test and analysis systems,
from 1991 to 1995, served as Vice President, Planning of Bay State Health Care,
Inc., from 1989 to 1991 and worked at Teradyne, Inc. in various financial
positions from 1974 to 1989.
ROBERT G. POSTLE joined the Company in 1994 as Vice President, Marketing and
Sales and was named Vice President, Marketing, Sales and International
Operations in 1998. From 1989 to 1994, Mr. Postle was Vice President of
Marketing and Sales at ULVAC Technologies, Inc., a manufacturer of vacuum
technology products. From 1987 to 1989, Mr. Postle was Vice President of
Marketing and Sales at ASM Ion Implant, Inc., a manufacturer of ion implantation
equipment.
ROBERT L. KLIMM joined the Company as Vice President, Operations in 1997 and
is presently Vice President, General Manager, Factory Automation Systems
Division. From 1990 to 1997, Mr. Klimm held a number of positions at Eaton
Corporation ("Eaton"), including General Manager of Eaton's
3
<PAGE>
Implant Systems Division. From 1982 to 1990, he was employed by BTU Engineering
International, Inc., most recently as Vice President, Marketing.
AMRAM RASIEL has been a director of the Company since 1982. Dr. Rasiel is a
private investor and, from December 1989 to May 1990, was Co-Chief Executive
Officer of ENSR Corporation, an environmental engineering firm. Dr. Rasiel is a
director of Progress Software Corporation, a provider of application development
software, and of a number of privately held companies.
BORUCH B. FRUSZTAJER became a director of the Company in 1982. Mr.
Frusztajer has been the President of BBF Corporation, an industrial management
company, since 1984.
ALEXANDER V. D'ARBELOFF became a director of the Company in 1982. Mr.
d'Arbeloff has been Chairman of the Board of Teradyne, Inc., a publicly-held
manufacturer of automatic testing equipment used in the manufacture of
semiconductors, since 1977. From 1971 to 1996, Mr. d'Arbeloff served as
President of Teradyne, and also served as its Chief Executive Officer from 1971
to 1997. He is Chairman of the Corporation of the Massachusetts Institute of
Technology. Mr. d'Arbeloff is a director of GeoTel Communications Corp. and a
number of privately held companies.
PAUL F. ROGAN became Executive Vice President, Equipe Division and a
director of the Company in January 1998 and February 1998, respectively,
following the Company's acquisition of Equipe Technologies, Inc. ("Equipe"). Mr.
Rogan was a founder of Equipe, a manufacturer of wafer-handling equipment for
the semiconductor equipment industry, in 1990 and served as its President and
Chief Financial Officer until January 1998.
JAMES CAMERON became President, General Manager, Equipe Division, of the
Company in January 1998. Mr. Cameron was a founder of Equipe in 1990 and served
as its Chief Executive Officer until January 1998.
KENNETH M. THOMPSON became a director of the Company in July 1998. Mr.
Thompson was employed by Intel Corporation for twenty-five years, most recently
as Vice President of Technology Manufacturing Engineering. Mr. Thompson is a
director of LAM Research Corp., SVG Corporation and Gasonics International
Corporation.
COMMITTEES AND MEETINGS OF THE BOARD
During the fiscal year ended September 30, 1998 ("fiscal 1998"), the Board
met seven times and acted once by unanimous written consent. No director
attended fewer than 75% of the total number of meetings held by the Board or
committees of the Board on which he served.
The Board currently has two committees. The Audit Committee (currently
composed of Messrs. Rasiel and Frusztajer) reviews the internal accounting
procedures of the Company and consults with and reviews the services provided by
the Company's independent auditors. The Audit Committee met once during fiscal
1998. The Compensation Committee (currently composed of Messrs. Frusztajer and
d'Arbeloff) has general responsibility for the Company's executive compensation
policies and practices, including making specific recommendations to the Board
concerning compensation for the Company's executive officers and administering
the Company's 1984 Incentive Stock Option Plan (the "1984 Stock Option Plan"),
1994 Incentive and Nonqualified Stock Option Plan (the "1994 Stock Option
Plan"), 1994 Employee Stock Purchase Plan (the "Stock Purchase Plan") and 1997
Non-Incentive Stock Option Plan (the "1997 Stock Option Plan"). The Compensation
Committee met once during fiscal 1998 and acted three times by written consent.
4
<PAGE>
RENUMERATION OF EXECUTIVE OFFICERS AND DIRECTORS
DIRECTORS' COMPENSATION
Each non-employee director of the Company has served without cash
compensation but has been reimbursed, upon request, for expenses incurred in
attending meetings of the Board of Directors. Directors who are employees of the
Company are not paid any separate fees for serving as directors. Under the
Company's 1994 Stock Option Plan, on November 30 of each year, each non-employee
director then in office is automatically granted a non-qualified option to
purchase 3,000 shares of Common Stock at an exercise price equal to its fair
market value on that date (in May, 1998, the Compensation Committee voted to
increase this grant to 5,000 shares beginning in fiscal 1999). Pursuant to this
provision of the 1994 Stock Option Plan, on November 30, 1997, each of Messrs.
Rasiel, Frusztajer and d'Arbeloff was automatically granted a nonqualified
option to purchase 3,000 shares of Common Stock at an exercise price of
approximately $34.13 per share. Each of these options was canceled, and a new
option issued in its place to purchase 3,000 shares of Common Stock at an
exercise price of approximately $14.75 per share, in connection with the July
1998 option repricing. See "Option/SAR Repricing."
EXECUTIVE COMPENSATION
The following table provides certain summary information concerning the
compensation earned by each person serving as the Company's Chief Executive
Officer during fiscal 1998 and each of the four other most highly compensated
executive officers of the Company (collectively, the "Named Executive
Officers"), for services rendered in all capacities to the Company during fiscal
1998 and during the fiscal years ended September 30, 1996 and 1997 ("fiscal
1996" and "fiscal 1997," respectively).
5
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
-------------
AWARDS
ANNUAL COMPENSATION -------------
(1) SECURITIES ALL OTHER
NAME AND FISCAL ---------------------- UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#)(2) ($)(3)
- ----------------------------------------------- ----------- ---------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Mordechai Wiesler.............................. 1998 $ 257,212 -- 30,000 $ 10,485
Chairman and Chief Executive Officer(4) 1997 $ 243,077 $ 187,500 40,000 $ 11,500
1996 $ 211,153 $ 90,000 11,700 $ 11,050
Mitchell G. Tyson.............................. 1998 $ 247,289 -- 130,000 $ 5,363
President and Chief Executive Officer(4) 1997 $ 218,077 $ 168,750 40,000 $ 5,260
1996 $ 191,922 $ 90,000 15,300 $ 5,483
Robert G. Postle............................... 1998 $ 196,789 -- 25,500 $ 5,667
Vice President, Marketing, Sales and 1997 $ 155,847 $ 100,000 25,000 $ 5,180
International Operations 1996 $ 140,962 $ 54,000 10,800 $ 4,103
Robert L. Klimm(5)............................. 1998 $ 216,231 -- 18,000 $ 7,106
Vice President, General Manager, Factory 1997 $ 100,010 $ 52,055 40,000 $ 1,764
Automation Systems Division 1996 -- -- -- --
Stephen D. Allison(5).......................... 1998 $ 194,789 -- 47,000 $ 2,936
Chief Financial Officer 1997 $ 84,135 $ 35,096 30,000 $ 1,512
1996 -- -- -- --
Paul F. Rogan(6)............................... 1998 $ 134,359 -- 45,000 $ 5,000
Executive Vice President, Equipe Division 1997 -- -- -- --
1996 -- -- -- --
</TABLE>
- ------------------------
(1) In accordance with the rules of the Securities and Exchange Commission,
other compensation in the form of perquisites and other personal benefits
has been omitted because such perquisites and other personal benefits
constituted less than $50,000 and less than ten percent of the total annual
salary and bonus for each executive officer.
(2) Excludes options granted in fiscal 1998 that were later canceled in
connection with the July 1998 option repricing. See table entitled "Option
Grants in Last Fiscal Year."
(3) The amounts reported include the Company's contributions to the Company's
Savings and Retirement Plan during fiscal 1998, fiscal 1997 and fiscal 1996,
respectively, for the benefit of Mr. Wiesler ($4,185, $4,750 and $5,200),
Mr. Tyson ($4,904, $4,750 and $4,973) and Mr. Postle ($5,310, $4,675 and
$3,629), during fiscal 1998 and fiscal 1997 for the benefit of Mr. Klimm
($6,427 and $1,615) and Mr. Allison ($1,928 and $1,410) and during fiscal
1998 for the benefit of Mr. Rogan ($5,000) and premiums paid by the Company
on excess life insurance policies during fiscal 1998, fiscal 1997 and fiscal
1996, respectively, for Mr. Wiesler ($6,300, $6,300 and $6,300), Mr. Tyson
($459, $510 and $510) and Mr. Postle ($357, $505 and $474) and during fiscal
1998 and fiscal 1997 for Mr. Klimm ($679 and $149) and Mr. Allison ($1,008
and $102).
(4) Mr. Wiesler served as Chief Executive Officer until August 1998, when Mr.
Tyson was named Chief Executive Officer.
(5) Messrs. Allison and Klimm joined the Company during fiscal 1997 and,
therefore, received compensation for only a portion of that fiscal year.
(6) Mr. Rogan joined the Company during fiscal 1998 and, therefore, received
compensation for only a portion of that fiscal year.
6
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information concerning stock option grants made
during fiscal 1998 under the 1994 Stock Option Plan and the 1997 Stock Option
Plan to each person serving as the Company's Chief Executive Officer during
fiscal 1998 and each of the other Named Executive Officers:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF STOCK
OPTIONS PRICE APPRECIATION FOR
GRANTED TO EXERCISE OR OPTION TERM(2)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ----------------------
NAME GRANTED(#) FISCAL YEAR ($/SHARE)(1) DATE 5%($) 10%($)
- ----------------------------------- --------------- --------------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Mordechai Wiesler.................. 30,000(3) 0.80% $ 28.5000 12/11/03 --(3) --(3)
30,000(4) 0.80% $ 14,7500 07/17/04 $ 150,492 $ 341,416
Mitchell G. Tyson.................. 30,000 (3) 0.80% $ 28.5000 12/11/03 --(3) --(3)
30,000 (4) 0.80% $ 14.7500 07/17/04 $ 150,492 $ 341,416
100,000 (6) 2.66% $ 11.3750 09/25/04 $ 386,859 $ 877,651
Robert G. Postle................... 20,000 (3) 0.53% $ 28.5000 12/11/03 --(3) --(3)
20,000 (4) 0.53% $ 14.7500 07/17/04 $ 100,328 $ 227,611
5,500 (6) 0.15% $ 11.3750 09/25/04 $ 21,277 $ 48,271
Robert L. Klimm.................... 12,000 (7) 0.32% $ 28.5000 12/11/03 --(3) --(3)
12,000 (4) 0.32% $ 14.7500 07/17/04 $ 60,197 $ 136,566
6,000 (6) 0.16% $ 11.3750 09/25/04 $ 23,212 $ 52,659
Stephen D. Allison................. 12,000 (7) 0.32% $ 28.5000 12/11/03 --(3) --(3)
6,272 (8) 0.17% $ 14.7500 07/17/04 $ 31,463 $ 71,379
23,728 (8) 0.63% $ 14.7500 07/17/04 $ 119,029 $ 270,037
12,000 (4) 0.32% $ 14.7500 07/17/04 $ 60,197 $ 136,566
5,000 (6) 0.13% $ 11.3750 09/25/04 $ 19,343 $ 43,883
Paul F. Rogan...................... 20,000 (9) 0.53% $ 25.8125 01/22/04 --(3) --(3)
20,000 (4) 0.53% $ 14.7500 07/17/04 $ 60,197 $ 136,566
5,000 (6) 0.13% $ 11.3750 09/25/04 $ 19,343 $ 43,883
</TABLE>
- ------------------------
(1) All options were granted at exercise prices not less than fair market value,
which was determined by the Board of Directors of the Company to be the last
sale price of the Common Stock on the date of grant as reported by the
Nasdaq Stock Market.
(2) Amounts reported in this column represent hypothetical values that may be
realized upon exercise of the options immediately prior to the expiration of
their term, assuming the specified compounded rates of appreciation of the
Common Stock over the term of the options. These numbers are calculated
based on rules promulgated by the Securities and Exchange Commission and do
not represent the Company'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 exercises and the future performance of the
Common Stock. There can be no assurance that the rates of appreciation
assumed in this table can be achieved or that the amounts reflected will be
received by the Named Executive Officers. This table does not take into
account any appreciation in price of the Common Stock from the date of grant
to the current date. The values shown are net of the option price, but do
not include deductions for taxes or other expenses associated with the
exercise.
7
<PAGE>
(3) Represents an option later canceled in connection with the July 1998
repricing of options. See "Option/SAR Repricing."
(4) Option vests in 20 equal quarterly installments beginning October 17, 1998
and ending July 17, 2004.
(5) Represents an option granted in connection with Mr. Tyson's promotion to
Chief Executive Officer in August 1998.
(6) Option vests in 20 equal quarterly installments beginning December 25, 1998
and ending September 25, 2004.
(7) Represents a performance-based grant for fiscal 1997, for which each of
Messrs. Klimm and Allison had only a partial year of service.
(8) Represents an option issued to replace an option granted in fiscal 1997 and
canceled in connection with the July 1998 option repricing.
(9) Represents an option granted in connection with the Company's acquisition of
Equipe Technologies, Inc.
OPTION/SAR EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth information concerning option exercises and
holdings under the PRI Automation, Inc. 1984 Incentive Stock Option Plan, the
1994 Stock Option Plan and the 1997 Stock Option Plan as of September 30, 1998
with respect to each person serving as the Company's Chief Executive Officer
during fiscal 1998 and each of the other Named Executive Officers:
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
COMMON STOCK
UNDERLYING VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
ACQUIRED VALUE FISCAL YEAR-END (#) FISCAL YEAR-END $(2)
ON REALIZED -------------------------- ---------------------------
NAME EXERCISE(#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------- ----------- ---------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Mordechai Wiesler....................... 15,000 $ 641,625 116,871 81,529 $ 736,176 $ 104,422
Mitchell G. Tyson....................... 3,000 $ 130,875 193,330 187,271 $ 1,540,751 $ 239,250
Robert G. Postle........................ 8,750 $ 115,188 11,338 58,220 $ 14,348 $ 63,563
Robert L. Klimm......................... -- $ -- 10,000 48,000 $ -- $ 6,750
Stephen D. Allison...................... -- $ -- -- 47,000 $ -- $ 5,625
Paul F. Rogan........................... -- $ -- -- 25,000 $ -- $ 5,625
</TABLE>
- ------------------------
(1) Amounts disclosed in this column do not necessarily reflect amounts received
by the Named Executive Officers but are calculated based on the difference
between the fair market value of the Common Stock on the date of exercise
and the exercise price of the options. Named Executive Officers will receive
cash only if and when they sell the Common Stock issued upon exercise of the
options, and the amount of cash received by the individuals is dependent on
the price of the Common Stock at the time of such sale.
(2) Calculated on the basis of the last sale price of the Common Stock on
September 30, 1998 as reported by the Nasdaq Stock Market ($12.50 per
share), less the applicable option exercise price.
8
<PAGE>
OPTION/SAR REPRICING
The following table sets forth information concerning the repricing during
fiscal 1998 of options previously awarded to the Named Executive Officers as
well as information concerning all such repricing of options held by an
executive officer of the Company during the ten fiscal years ended September 30,
1998. See "Compensation Committee Report on Executive Compensation" for further
information.
TEN-YEAR OPTION/SAR REPRICING
<TABLE>
<CAPTION>
NUMBER OF MARKET EXERCISE LENGTH OF
SECURITIES VALUE AT PRICE AT ORIGINAL OPTION
UNDERLYING TIME OF TIME OF TERM REMAINING
OPTIONS/SARS REPRICING REPRICING NEW AT DATE OF
REPRICED OR OR OR EXERCISE REPRICING OR
NAME DATE AMENDED AMENDMENT AMENDMENT PRICE AMENDMENT
- ------------------------------------- --------- ------------- ----------- ----------- --------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Mordechai Wiesler.................... 2/1/96 9,882 $ 13.625 $ 18.875 $ 13.625 5 years, 293 days
Chairman and Chief Executive 7/17/98 30,000 $ 14.750 $ 28.500 $ 14.750 5 years, 147 days
Officer(1)
Mitchell G. Tyson.................... 2/1/96 8,706 $ 13.625 $ 18.875 $ 13.625 5 years, 293 days
President and Chief Executive 7/17/98 30,000 $ 14.750 $ 28.500 $ 14.750 5 years, 147 days
Officer(1)
Robert G. Postle..................... 2/1/96 21,600 $ 13.625 $ 18.875 $ 13.625 5 years, 293 days
Vice President, Marketing, Sales 7/17/98 20,000 $ 14.750 $ 28.500 $ 14.750 5 years, 147 days
and International Operations
Robert L. Klimm...................... 7/17/98 12,000 $ 14.750 $ 28.500 $ 14.750 5 years, 147 days
Vice President, General Manager,
Factory Automation Division
Stephen D. Allison................... 7/17/98 23,728 $ 14.750 $ 22.563 $ 14.750 4 years, 282 days
Chief Financial Officer 7/17/98 6,272 $ 14.750 $ 22.563 $ 14.750 4 years, 282 days
7/17/98 12,000 $ 14.750 $ 28.500 $ 14.750 5 years, 147 days
Paul F. Rogan........................ 7/17/98 20,000 $ 14.750 $ 28.500 $ 14.750 5 years, 147 days
Executive Vice President, Equipe
Division
</TABLE>
- ------------------------
(1) Mr. Wiesler served as Chief Executive Officer until August 1998, when Mr.
Tyson was named Chief Executive Officer.
RETENTION AGREEMENTS
The Company has entered into retention agreements with each of Messrs,
Wiesler, Tyson, Postle, Klimm, Allison and Cameron in order to encourage each
executive to remain with the Company in the event of a change in control. The
agreements provide for severance payments upon the occurrence of certain events
following a "Change of Control" of the Company. A "Change of Control" is defined
in each agreement to mean (i) any person becoming the beneficial owner of
securities of the Company representing fifty percent (50%) or more of the total
voting power of all outstanding securities; (ii) a change in the composition of
the Board of Directors creating a majority of directors consisting of
individuals other than directors of the Company as of the date of the retention
agreement or their designated successors; (iii) the merger or consolidation of
the Company with any other corporation
9
<PAGE>
(other than a merger or consolidation keeping at least fifty percent (50%) of
the total voting power in the hands of the Company's stockholders) or (iv) the
liquidation of the Company or the sale or disposition by the Company of all or
substantially all of the Company's assets.
Each agreement provides for certain severance benefits to be paid to the
executive officer in the event that, within 18 months after a Change of Control,
the executive's employment is terminated other than for cause, as defined in the
agreement, or because of the executive's total and permanent disability, or if
the executive resigns after the occurrence of one or more certain events such as
a material reduction in responsibilities or salary or relocation to a
geographically distant facility without the executive's consent.
Each agreement provides that, if the executive is terminated or resigns
within 18 months after a Change of Control under circumstances that would
entitle the executive to severance benefits, then the Company will be obligated
to pay to the executive, in a single payment, an amount equal to the sum of (a)
his then-current annual base compensation, (b) the bonus (if any) that the
Company (or its successor) paid the executive with respect to its fiscal year
most recently ended before such termination or resignation and (c) a prorated
fraction of the amount of his "target bonus" for the fiscal year of the Company
in which the termination or resignation occurs. Each agreement further provides
that, upon such termination or resignation, 50% of the otherwise unvested
portion of each stock option held by the executive will become fully
exercisable, and 50% of each option held by the Company to repurchase stock of
the Company owned by the executive will terminate.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee is a former or current employee of
the Company or a party to any other relationship of a character required to be
disclosed pursuant to Item 402(j) of Regulation S-K.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report has been furnished by the Compensation Committee of the Company.
Boruch B. Frusztajer and Alexander V. d'Arbeloff, two non-employee members of
the Board, are the members of the Committee. The Committee meets at least
annually or more frequently if requested by the Board. The Committee is
primarily responsible for the review of executive compensation, which includes
base salary, profit sharing, and stock option awards.
COMPENSATION POLICIES. The Company believes that it is critical to its
continued success to attract and retain highly qualified executive officers who
will play a vital role in future achievements. To this end, the Company has
established its compensation policy to reward executives based upon corporate,
departmental and individual performance which is measured against the internal
goals set for each area. The Company also understands the need to provide long
term incentives to its executive officers to achieve future financial and
strategic goals which include the growth of the Company and enhancement of
Company profitability and thus shareholder value. The Company believes that its
total compensation is sufficiently competitive to retain and, if necessary,
attract executive officers capable of leading the Company in accomplishing its
business goals.
Executive compensation for fiscal 1998 consisted of a base salary and
equity-based long-term incentive compensation in the form of incentive and
nonqualified stock options. Since options granted under the 1994 Stock Option
Plan generally vest over a five-year period, option participants are encouraged
to improve the profitability and shareholder value of the Company. Also, to
reward performance the Company provides executives with additional cash
compensation in the form of profit sharing bonuses. However, no bonus
compensation was awarded in fiscal 1998.
10
<PAGE>
BASE SALARIES. The salaries of the executive officers are established
annually by evaluating requirements of the position and the contribution of the
individual executive with respect to Company performance and the executive's
responsibility, technical experience and future potential. Base salaries of the
executive officers are generally adjusted annually in January to reflect
comparable executive salaries for comparably sized companies and to maintain the
objectives of the compensation policy noted above. In determining base salaries,
the Compensation Committee relies upon independent surveys of companies in the
industry to determine whether the Company's executive compensation is in a
competitive range for executives within the Company's industry.
The base salary of Mordechai Wiesler, the Chief Executive Officer of the
Company through August 1998, was $257,212 for fiscal 1998. This represented an
increase of approximately 5.8% from fiscal 1997. In August 1998 Mitch Tyson, the
Company's President and Chief Operating Officer, was named Chief Executive
Officer. Mr. Tyson's base salary for fiscal 1998 was $247,289. This represented
an increase of approximately 13.4% from fiscal 1997.
LONG-TERM INCENTIVE COMPENSATION. One of the Company's goals is the
enhancement of shareholder value. The principal incentive tool used to achieve
this goal is the periodic award to key employees of options to purchase Common
Stock. The Company's stock option plans are long-term plans designed to link
executive rewards to shareholder value over time. Stock options granted
typically have a term of six (6) years and vest in twenty quarterly installments
over a period of five (5) years from the date of grant. In fiscal 1998, the
Company granted long-term incentive compensation in the form of incentive and
nonqualified stock options under the 1994 Stock Option Plan and 1997 Stock
Option Plan to the Company's executive officers. Excluding grants that were
later canceled in connection with the July 1998 repricing of options, these
grants included options granted to Messrs. Wiesler, Tyson, Postle, Klimm,
Allison and Rogan to purchase up to 30,000, 130,000, 25,500, 18,000, 47,000 and
25,000 shares of Common Stock, respectively. See "Option Grants in Last Fiscal
Year" at page 7.
REPORT ON REPRICING OF OPTIONS. The July 1998 repricing of options held by
certain Named Executive Officers, described in the table above captioned
"Ten-Year Option/SAR Repricing," reflects the consistent application of the
policy of the Compensation Committee regarding stock options. The Compensation
Committee and the Board believe that to provide maximum incentive to employees,
including senior executives, incentive options should be granted at exercise
prices equal to or not materially in excess of the market price of the Common
Stock. As a result of this policy, options granted by the Board and approved by
the Compensation Committee from April 1997 through May 1998 were repriced on
July 17, 1998. The options were repriced in order to more accurately reflect the
market value of the Company's Common Stock, determined by reference to the
closing price of the stock as reported by the Nasdaq Stock Market on that date.
Boruch B. Frusztajer
Alexander V. d'Arbeloff
11
<PAGE>
PERFORMANCE GRAPH
The following performance graph compares the performance of the Company's
cumulative stockholder return with that of a broad market index, the Nasdaq
Stock Market Index for U.S. Companies, and a published industry index, the
Hambrecht & Quist Semiconductor Sector Index. The cumulative stockholder returns
for shares of the Company's Common Stock and for the market and industry indices
are calculated assuming that $100 was invested on October 13, 1994, the date on
which the Company's Common Stock commenced trading on the National Market System
of the Nasdaq Stock Market. The Company paid no cash dividends during the
periods shown. The performance of the market and industry indices is shown on a
total return (dividends reinvested) basis, calculated monthly as of the last day
of month indicated.
PRI AUTOMATION INC. CUMULATIVE TOTAL RETURNS
[GRAPH APPEARS HERE]
1998 PERFORMANCE GRAPH DATA
MONTHLY DATA SERIES
SCALED PRICES: STOCK AND INDEX PRICES SCALED TO
100 AT 10/13/94
<TABLE>
<CAPTION>
NASDAQ STOCK H&Q SEMICONDUCTOR
DATES PRI AUTOMATION MARKET -- U.S. SECTOR
- ---------- --------------- --------------- -------------------
<S> <C> <C> <C>
10-13-94 100 100 100
Oct-94 112.96 101.45 109.51
Nov-94 124.07 98.09 106.94
Dec-94 119.44 98.36 106.95
Jan-95 118.52 98.91 108.71
Feb-95 133.33 104.14 122.14
Mar-95 164.81 107.23 129.15
Apr-95 194.44 110.61 147.43
May-95 209.26 113.46 159.60
Jun-95 242.59 122.66 181.26
Jul-95 303.70 131.67 206.77
Aug-95 279.63 134.34 202.91
Sep-95 303.70 137.43 204.85
Oct-95 274.07 136.64 192.49
Nov-95 303.70 139.85 170.34
Dec-95 260.19 139.11 148.84
Jan-96 211.11 139.79 146.82
Feb-96 176.85 145.11 147.57
Mar-96 181.48 145.59 140.57
Apr-96 209.26 157.67 161.05
May-96 295.87 164.91 156.06
Jun-96 225.93 157.48 134.72
Jul-96 194.44 143.45 119.60
Aug-96 216.67 151.49 130.90
Sep-96 242.59 163.08 152.94
Oct-96 262.96 161.28 154.35
Nov-96 353.70 171.25 194.51
Dec-96 337.04 171.09 192.76
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
NASDAQ STOCK H&Q SEMICONDUCTOR
DATES PRI AUTOMATION MARKET -- U.S. SECTOR
- ---------- --------------- --------------- -------------------
<S> <C> <C> <C>
Jan-97 445.37 183.25 232.40
Feb-97 365.74 173.12 221.25
Mar-97 353.70 161.82 216.65
Apr-97 379.63 166.88 235.23
May-97 564.81 185.80 254.01
Jun-97 562.03 191.48 244.32
Jul-97 735.19 211.69 298.83
Aug-97 792.59 211.37 304.50
Sep-97 866.67 223.87 305.41
Oct-97 566.67 212.24 239.09
Nov-97 505.56 213.30 230.66
Dec-97 427.78 209.88 203.29
Jan-98 407.41 216.47 227.08
Feb-98 515.27 236.78 249.46
Mar-98 387.96 245.51 233.09
Apr-98 396.30 249.67 253.54
May-98 300.46 235.97 208.36
Jun-98 252.78 252.61 200.26
Jul-98 206.48 249.85 206.50
Aug-98 185.19 200.98 157.84
Sep-98 185.19 228.68 174.59
</TABLE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of January 6, 1999 by (i)
each person or entity known to the Company to own beneficially five percent or
more of the Company's Common Stock, (ii) each director of the Company, (iii) the
Chief Executive Officer of the Company and the other Named Executive Officers
who were serving as executive officers at the end of fiscal 1998 and (iv) by the
executive officers and directors of the Company as a group:
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED(1)(2)
-----------------------
NAME AND ADDRESS(3) NUMBER PERCENT
- -------------------------------------------------------------------------------------------- ---------- -----------
<S> <C> <C>
Mordechai Wiesler(4)........................................................................ 967,831 4.8%
Dr. Amram Rasiel(5)......................................................................... 569,710 2.8%
Mitchell G. Tyson(6)........................................................................ 283,266 1.4%
Boruch B. Frusztajer(7)..................................................................... 100,512 *
Alexander V. d'Arbeloff(8).................................................................. 81,764 *
Robert G. Postle(9)......................................................................... 8,018 *
Robert L. Klimm(10)......................................................................... 18,545 *
Stephen D. Allison(11)...................................................................... 4,739 *
Paul F. Rogan(12)........................................................................... 884,210 4.4%
Kenneth M. Thompson(13)..................................................................... 15,000 *
All directors and executive officers as a group (11 persons)(14)............................ 3,642,159 17.8%
</TABLE>
- ------------------------
* Less than one percent.
13
<PAGE>
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. The persons named in this table have
sole voting and investment power with respect to all shares of Common Stock
shown as beneficially owned by them, subject to community property laws
where applicable and subject to the information contained in the footnotes
to this table. Shares of the Company's Common Stock subject to options
currently exercisable or exercisable within 60 days following the date of
this table are deemed outstanding for computing the share ownership and
percentage of the person holding such options, but are not deemed
outstanding for computing the percentage of any other person.
(2) The number of shares of Common Stock deemed outstanding as of the date of
this table, January 6, 1999, is 19,992,009.
(3) Address is in care of PRI Automation, Inc., 805 Middlesex Turnpike,
Billerica, Massachusetts 01821-3986.
(4) Includes 111,511 shares issuable upon the exercise of outstanding options
exercisable within 60 days of the date of this table.
(5) Includes 17,000 shares issuable upon the exercise of outstanding options
exercisable within 60 days of the date of this table.
(6) Includes 187,641 shares issuable upon the exercise of outstanding options
exercisable within 60 days of the date of this table and 5,250 shares held
by Mr. Tyson's minor children.
(7) Includes 17,000 shares issuable upon the exercise of outstanding options
exercisable within 60 days of the date of this table and 58,762 shares held
by members of Mr. Frusztajer's family.
(8) Includes 17,000 shares issuable upon the exercise of outstanding options
exercisable within 60 days of the date of this table.
(9) Represents 8,018 shares issuable upon the exercise of outstanding options
exercisable within 60 days of the date of this table.
(10) Includes 15,200 shares issuable upon the exercise of outstanding options
exercisable within 60 days of the date of this table.
(11) Includes 4,201 shares issuable upon the exercise of outstanding options
exercisable within 60 days of the date of this table.
(12) Includes 2,000 shares issuable upon the exercise of outstanding options
exercisable within 60 days of the date of this table.
(13) Represents 15,000 shares issuable upon the exercise of outstanding options
exercisable within 60 days of the date of this table.
(14) Includes 396,571 shares issuable upon the exercise of outstanding options
exercisable within 60 days of the date of this table. See notes 4 through
13.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
<TABLE>
<S> <C> <C>
PRI AUTOMATION, INC.
Date: January 13, 1999
By: /s/ STEPHEN D. ALLISON
-----------------------------------------
Stephen D. Allison
Chief Financial Officer
</TABLE>
