SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
LeCROY CORPORATION
------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------------------------------
(NAME OF PERSON(S) FILING PROXY STATEMENT IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
LeCROY CORPORATION
NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 28, 1999
Chestnut Ridge, New York
October 4, 1999
To the Stockholders of
LeCroy Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of LeCroy
Corporation will be held at the KPMG Center for Leadership Development, 3
Chestnut Ridge Road, Montvale, N.J, on Thursday, October 28, 1999 at 10:00 a.m.,
local time, for the following purposes:
1. To elect two directors to serve for three-year terms and until their
successors are duly elected and qualified;
2. To consider and act upon any other matters which may properly come
before The meeting or any adjournment thereof.
Stockholders of record at the close of business on September 10, 1999
will be entitled to notice of and to vote at the meeting or any adjournment
thereof.
By Order of the Board of Directors
John C. Maag
Secretary
- -------------------------------------------------------------------------------
IF YOU ARE UNABLE TO BE PRESENT AT THE MEETING, YOU ARE REQUESTED TO
COMPLETE, DATE, AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE.
- -------------------------------------------------------------------------------
<PAGE>
LeCROY CORPORATION
-----------------
PROXY STATEMENT
RECORD DATE, SOLICITATION, VOTING AND REVOCABILITY OF PROXIES, VOTING RIGHTS
This Proxy Statement and the accompanying Notice of Annual Meeting and form
of proxy are being furnished to the holders of the Common Stock of LeCroy
Corporation (the "Company") in connection with the solicitation by the Board of
Directors of the Company of proxies to be used at the Annual Meeting of
Stockholders to be held on October 28, 1999 at 10:00 a.m., local time, to be
held at the KPMG Center for Leadership Development, 3 Chestnut Ridge Road,
Montvale, N.J., and at any adjournment or postponement thereof. The close of
business September 10, 1999 is the record date for the determination of
stockholders entitled to notice of and to vote at the Annual Meeting.
This Proxy Statement and proxies for use at the meeting will be mailed
to stockholders on or about October 4, 1999, and such proxies will be solicited
chiefly by mail, but additional solicitations may be made by telephone or in
person by the officers, directors or regular employees of the Company. The
Company may enlist the assistance of brokerage houses in soliciting proxies. All
solicitation expenses, including costs of preparing, assembling and mailing
proxy material, will be borne by the Company.
A form of proxy for use at the meeting and a return envelope for the
proxy are enclosed. Stockholders may revoke the authority granted by their
execution of proxies at any time before their effective exercise by filing with
the Secretary of the Company a written revocation or a duly executed proxy
bearing a later date or by voting in person at the meeting. Shares represented
by executed and unrevoked proxies will be voted in accordance with the choice or
instructions specified thereon. If no specifications are given, the proxies
intend to vote the shares represented thereby for the election of all directors
as indicated in Proposal No. 1, as set forth in the accompanying Notice of
Annual Meeting of Stockholders, and in accordance with their best judgment on
any other matters that may properly come before the meeting.
As of the close of business on September 10, 1999, the Company had
outstanding 7,710,994 shares of Common Stock, $.01 par value. Each share of
Common Stock is entitled to one vote on all matters presented at the Annual
Meeting. The presence, either in person or by duly executed proxy, of the
holders of a majority of outstanding shares of Common Stock entitled to vote at
a meeting is necessary to constitute a quorum. Shares that reflect abstentions
or "broker non-votes" (i.e., shares held by brokers that are represented at the
meeting but as to which such brokers have not received instructions from the
beneficial owners and, with respect to one or more but not all issues, such
brokers do not have discretionary voting power to vote such shares) will be
counted for purposes of determining whether a quorum is present for the
transaction of business at the meeting but will not be counted as votes on any
proposals at the meeting. Accordingly, abstentions and broker non-votes will
have no impact on the outcome of the vote on the election of directors. The
affirmative vote of the holders of a plurality of the shares of Common Stock
present or represented and actually voted at the meeting is required for the
election of directors.
The Company's Annual Report on Form 10-K for the fiscal year ended June 30,
1999, containing the financial statements and notes thereto, is being mailed to
stockholders concurrently with this statement.
The Board of Directors knows of no matters, other than those stated above,
to be presented for consideration at the Annual Meeting. If, however, any other
matters properly come before the Annual Meeting or any adjournment or
postponement thereof, it is the intention of the persons named in the enclosed
proxy to vote the shares represented by the proxy in accordance with their
judgment on any such matters. The persons named in the enclosed proxy may also,
if a quorum is not present, vote such proxy to adjourn the Annual Meeting from
time to time.
PRINCIPAL STOCKHOLDERS AND MANAGEMENT OWNERSHIP
The following table sets forth certain information regarding beneficial
ownership of the Common Stock as of July 31, 1999 by (i) each person or group
who is known by the Company to own beneficially more than five percent (5%) of
the issued and outstanding Common Stock, (ii) each director and nominee for
director of the Company, (iii)
<PAGE>
each named executive officer described in the section of this Proxy Statement
captioned "Executive Compensation," and (iv) all directors and executive
officers of the Company as a group. Except as otherwise indicated below, to the
knowledge of the Company, all persons listed below have sole voting and
investment power with respect to their shares of Common Stock shown as of July
31, 1999, except to the extent authority is shared by spouses under applicable
law.
<TABLE>
<CAPTION>
AMOUNT &
NATURE OF PERCENT
BENEFICIAL OF
NAME OF BENEFICIAL OWNER OWNERSHIP CLASS
- ------------------------ ---------- -------
<S> <C> <C>
Kopp Investment Advisors, Inc. ..................................................... 1,758,610 22.8
7701 France Avenue South
Suite 500
Edina, Minnesota 55435
State of Wisconsin Investment Board ................................................. 1,001,200 13.0
P.O. Box 7842
Madison, Wisconsin 53707
Lord, Abbett & Co. .................................................................. 915,090 11.9
767 Fifth Avenue
11th Floor
New York, New York 10153
Walter O. LeCroy, Jr. ............................................................... 610,461 7.9
c/o LeCroy Corporation
700 Chestnut Ridge Road
Chestnut Ridge, New York 10977
TCW Asset Management................................................................. 461,700 6.0
865 South Figueroa Street
Suite 1800
Los Angeles, California 90017
Lutz P. Henckels(1) ................................................................. 304,864 3.6
Thomas H. Reslewic(2)............................................................... 82,973 1.0
Werner H. Brokatzky(3) .............................................................. 20,285 *
Ronald S. Nersesian(4) .............................................................. 46,694 *
Robert E. Anderson(5) ............................................................... 16,453 *
William G. Scheerer(6) .............................................................. 12,931 *
Charles A. Dickinson(7) ............................................................. 5,537 *
Allyn C. Woodward, Jr.(8) ........................................................... 5,299 *
Douglas A. Kingsley(9) .............................................................. 750,000 8.9
All executive officers and directors as a group (16 persons)(10) .................... 2,014,418 21.8
<FN>
- --------------
* Less than 1% of the outstanding Common Stock
(1) Includes 2,071 shares of Common Stock held by the Employee Stock
Ownership Trust, ("ESOT") and allocated to the account of Mr. Henckels,
154,283 shares of Common Stock issuable upon exercise of presently
exercisable options and an aggregate of 40,934 shares held in certain
trusts for the benefit of Mr. Henckels' children. Mr. Henckels disclaims
beneficial ownership of the 40,934 shares held in such trusts.
(2) Includes 2,504 shares of Common Stock held by the ESOT and allocated to
the account of Mr. Reslewic and 79,317 shares of Common Stock issuable
upon exercise of presently exercisable options.
(3) Includes 11,521 shares of Common Stock issuable upon exercise of presently exercisable options.
(4) Includes 44,751 shares of Common Stock issuable upon exercise of presently exercisable options.
(5) Includes 15,453 shares of Common Stock issuable upon exercise of presently exercisable options.
(6) Includes 12,731 shares of Common Stock issuable upon exercise of presently exercisable options.
(7) Includes 5,537 shares of Common Stock issuable upon exercise of presently exercisable options.
(8) Includes 5,299 shares of Common Stock issuable upon exercise of presently exercisable options.
(9) Includes 500,000 shares of Common Stock issuable to Advent Global GECC III Limited Partnership,
Enviro Tech Investment Fund I Limited Partnership, Advent Limited Partnership,
Oakstone Ventures Limited Partnership and Advent Partners Limited
Partnership upon conversion of Series A Convertible Redeemable Preferred
Stock and 250,000 shares of Common Stock issuable upon exercise of
warrants to purchase Common Stock.
(10) Includes an aggregate of 22,425 shares of Common Stock held by the ESOT
and allocated to the accounts of the directors and executive officers.
Includes an aggregate of 458,221 shares of Common Stock issuable upon
exercise of certain presently exercisable options.
</FN>
</TABLE>
2
<PAGE>
PROPOSAL NO. 1 -- ELECTION OF A CLASS OF DIRECTORS
The Company has a classified Board of Directors consisting of three
classes. At each Annual Meeting, a class of directors is elected for a full term
of three years to succeed those whose terms are expiring. All of the Company's
directors are listed below with their principal occupations for the last five
years.
At the Annual Meeting, two directors are to be elected in Class I, to hold
office for three years or until their respective successors are elected and
qualified. The remaining Directors will continue to serve as set forth below. It
is intended that the shares represented by the enclosed proxy will be voted for
the election of the nominees named below.
Should such nominees be unable or unwilling to accept nomination or
election, it is intended that the accompanying proxy will be voted for such
other persons as may be nominated by the Board of Directors.
The nominees have been previously elected by stockholders. The Board of
Directors has no reason to believe that the nominees will be unavailable to
serve if elected.
THE BOARD OF DIRECTORS DEEMS PROPOSAL NO. 1 TO BE IN THE BEST INTERESTS
OF THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE FOR ELECTION OF THE
TWO CANDIDATES FOR ELECTION.
INFORMATION REGARDING NOMINEES AND DIRECTORS
The following sets forth certain information with respect to the Nominees
and those Continuing Directors of the Company whose terms expire at the annual
meetings of stockholders in 2000 and 2001.
3
<PAGE>
NOMINEES FOR ELECTION AS
CLASS I DIRECTORS FOR A THREE YEAR TERM EXPIRING
AT THE 2002 ANNUAL MEETING
<TABLE>
<CAPTION>
<S> <C> <C>
DIRECTOR, YEAR FIRST ELECTED AS DIRECTOR AGE PRINCIPAL OCCUPATIONS, BUSINESS AND DIRECTORSHIPS
- ---------------------------------------- --- -------------------------------------------------
Lutz P. Henckels 58 President and Chief Executive Officer of the Company since July 1993;
1993 Consultant to Company from January 1993 to July 1993; President of
U.S. Operations of Racal-Redac, Inc. from May 1989 to January 1993.
Charles A. Dickinson 75 Chairman of the Board of Directors of the Company since February
1998 1999; President of Solectron Europe, a provider of manufacturing
services to OEMs, from 1991 until 1996 and as Chairman since 1989;
President and Chief Executive Officer of Vermont Microsystems, a
graphics board company, from 1986 until 1991. Mr. Dickinson is also
a Director of Solectron Corporation, Trident Microsystems, and Aavid
Thermal Technologies, as well as two privately held companies.
</TABLE>
CLASS II DIRECTORS CONTINUING IN OFFICE WHOSE TERM EXPIRES
AT THE 2000 ANNUAL MEETING
<TABLE>
<CAPTION>
<S> <C> <C>
DIRECTOR, YEAR FIRST ELECTED AS DIRECTOR AGE PRINCIPAL OCCUPATIONS, BUSINESS AND DIRECTORSHIPS
- ---------------------------------------- --- -------------------------------------------------
Douglas A. Kingsley 37 Vice President of Advent International Corporation, a venture capital
1999 firm, since January 1996; Investment Manager of Advent International
Corporation from September 1990 to December 1995. Mr. Kingsley is
also a director of Lightbridge, Inc. Mr. Kingsley served as a
director of the Company from March 1995 until October 1998 and was
reelected in June 1999.
William G. Scheerer 61 President of Performance Quest LLC, a private consulting corporation,
1995 since January 1997; Vice President of Kalman Saffran Associates,
Inc., a high technology R&D contract company, since November of 1997;
Infrastructure Operations Vice President at Lucent Technologies, a
telecommunications systems company, from March 1996 to December 1996;
Quality, Engineering, Software and Technologies (QUEST) Vice President
at AT&T Bell Laboratories from May 1990 to February 1996. Mr. Scheerer
is also a director of GenRad, Inc.
Allyn C. Woodward Jr. 58 President of Adams, Harkness & Hill, Inc., an institutional research,
1998 brokerage and investment banking firm since June 1995 and Director
since June 1995; Senior Executive Vice President and Chief Operating
Officer for Silicon Valley Bank, a commercial banking institution,
from April 1990 to April 1995. Mr. Woodward is also a Director of
Cayenne Software, Inc., and several private companies.
</TABLE>
4
<PAGE>
CLASS III DIRECTORS CONTINUING IN OFFICE WHOSE TERMS EXPIRES
AT THE 2001 ANNUAL MEETING
<TABLE>
<CAPTION>
<S> <C> <C>
DIRECTOR, YEAR FIRST ELECTED AS DIRECTOR AGE PRINCIPAL OCCUPATIONS, BUSINESS AND DIRECTORSHIPS
- ---------------------------------------- --- -------------------------------------------------
Walter O. LeCroy, Jr. 64 Founder of the Company; Chairman of the Board of LeCroy Corporation
1964 1964 to 1998.
Robert E. Anderson 58 President of Omniken, Inc., a private consulting firm, since
1995 September 1993; President and Chief Executive Officer of GenRad,
Inc., a manufacturer of electronic test systems, from 1988 to June 1993
and as Chairman in 1993. Mr. Anderson is also Vice Chair of the MIT
Enterprise Forum, an Advisor to the Board of the National Association
of Corporate Directors (New England) and a director of Technology Capital
Network at MIT, and several private companies.
</TABLE>
ADDITIONAL INFORMATION RELATING TO THE BOARD OF DIRECTORS
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
During fiscal year 1999, the Board of Directors held eighteen meetings.
During that fiscal year, each Director attended 75% or more of the aggregate of
(i) the meetings of the Board of Directors and (ii) the meetings of the
committees on which such director served that were held during the period in
which he was a director.
COMMITTEES OF THE BOARD
The Company's Board of Directors has a Compensation Committee and an Audit
Committee. The responsibilities of these committees of the Company's Board of
Directors are described as follows.
COMPENSATION COMMITTEE. The Compensation Committee during fiscal 1999
consisted of Messrs. Charles A. Dickinson, Allyn C. Woodward, Jr. and William G.
Scheerer, each of whom is an independent director. Such committee reviews the
Company's executive compensation and benefit policies and administers the
Amended and Restated 1993 Stock Incentive Plan. The Compensation Committee met
seven times during fiscal year 1999.
AUDIT COMMITTEE. The Audit Committee during fiscal 1999 consisted of
Messrs. Robert E. Anderson, Charles A. Dickinson and William G. Scheerer, each
of whom is an independent director. This committee recommends to the Board of
Directors the appointment of the independent public accountants, reviews the
scope and budget for the annual audit, and reviews the results of the
examination of the Company's financial statements by the independent public
accountants. The Audit Committee met eight times during fiscal year 1999.
COMPENSATION OF DIRECTORS
The Chairman of the Company's Board of Directors receives an annual Board
retainer of $30,000 payable quarterly. The other non-employee directors receive
an annual board retainer of $20,000 payable quarterly. In addition, each
non-employee director currently receives an option to purchase 15,000 shares of
common stock upon his or her initial election or appointment to the Board. These
shares vest ratably on a monthly basis over 36 months. After each director's
initial grant he or she will receive annual option grants of 5,000 shares on
each anniversary date of the initial grant. These options will vest immediately.
5
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
The following table sets forth information with respect to all compensation
awarded to, earned by, or paid to (i) the Chief Executive Officer of the
Company, and (ii) the four highest compensated executive officers who were
serving as executive officers at the end of fiscal 1999 (collectively, the
"Named Executive Officers"):
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
-----------
ANNUAL SECURITIES
COMPENSATION UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) COMPENSATION($)(2)
- --------------------------- ---- ----------- -------- ---------- ------------------
<S> <C> <C> <C> <C> <C>
Walter O. LeCroy, Jr........................... 1999 254,115 -- -- 11,800 (4)
Honorary Chairman of the Board of Directors 1998 305,000 -- -- 13,717
1997 305,000 -- -- 10,769
Lutz P. Henckels............................... 1999 335,000 -- 80,000 15,500 (4)
Chief Executive Officer and President 1998 333,654 106,425 60,000 16,665 (4)
1997 300,000 165,340 -- 19,829
Thomas H. Reslewic............................. 1999 268,000 -- 60,000 10,800
Executive Vice President and Chief 1998 290,061 83,850 30,000 10,800
Operating Officer 1997 302,782 15,000 54,000 19,760
Werner H. Brokatzky............................ 1999 210,245 (1) -- 15,000 25,796 (1)(3)
Vice President--Operations 1998 220,229 (1) 17,793(1) 10,000 24,268 (1)(3)
1997 221,137 (1) 10,615(1) 10,000 25,788 (1)(3)
Ronald S. Nersesian............................ 1999 188,000 -- 30,000 15,550 (4)
Senior Vice President 1998 176,577 47,300 15,000 14,268
1997 157,308 62,500 20,000 10,692
<FN>
- ---------
(1) Dollar amount reflects the conversion of compensation amounts from Swiss
francs to United States dollars using the average exchange rate during
fiscal 1999, 1998 and 1997, respectively.
(2) Includes the value of Company-provided automobile.
(3) Includes $11,045, $10,584, and $10,558 for Mr. Brokatzky representing the
Company's payment to the subsidiary defined contribution plan in fiscal
1999, 1998 and 1997, respectively.
(4) Fiscal 1999 includes estimated amounts to be paid to individual 401(k)
accounts as a matching contribution by the Company as follows: Mr. LeCroy
$4,750, Mr. Henckels $4,750 and Mr. Nersesian $4,750.
</FN>
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
The following table sets forth information concerning the exercise of
stock options during fiscal year 1999 by each of the named executive officers
and the fiscal year-end value of unexercised options.
6
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
YEAR-END (#) AT FISCAL YEAR-END(1) $
SHARES ------------ -----------------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
- ---- ---------------- -------------- --------------------- ---------------------------
<S> <C> <C> <C> <C>
Walter O. LeCroy, Jr. ..... -- -- -- --
Lutz P. Henckels .......... -- -- 154,283 / 125,000 2,315,717 / 502,588
Werner H. Brokatzky ....... -- -- 11,521 / 30,000 124,426 / 165,900
Thomas H. Reslewic ........ -- -- 79,317 / 113,248 649,992 / 599,551
Ronald S. Nersesian ....... -- -- 44,751 / 66,749 219,024 / 382,802
<FN>
- ---------
(1) Calculated on the basis of the fair market value of the Common Stock on June 30, 1999 ($23.6875), less
the applicable option exercise price.
</FN>
</TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning individual
grants of stock options made during fiscal year 1999 to each of the named
executive officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS GRANT DATE VALUE
--------------------------------------- ---------------------------
POTENTIAL REALIZABLE
NUMBER OF PERCENT OF TOTAL VALUE AT ASSUMED
SECURITIES OPTIONS ANNUAL RATES OF STOCK PRICE
UNDERLYING GRANTED EXERCISE OR APPRECIATION FOR
OPTIONS TO EMPLOYEES IN BASE PRICE EXPIRATION OPTION TERM
---------------------
NAME GRANTED(#) FISCAL YEAR ($/SHARE) DATE 5%($) 10%($)
- ---- ---------- ----------- --------- ---- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Walter O. LeCroy, Jr.......... -- -- -- -- -- --
Lutz P. Henckels.............. 80,000 20.8 18.000 01/04/09 905,600 2,295,200
Werner H. Brokatzky........... 15,000 3.9 14.875 10/28/08 140,250 355,500
Thomas H. Reslewic............ 60,000 15.6 14.875 10/28/08 561,000 1,422,000
Ronald S. Nersesian........... 30,000 7.8 14.875 10/28/08 280,500 711,000
</TABLE>
Options described in this table were issued under the Company's Amended
and Restated 1993 Stock Incentive Plan, and consist primarily of incentive stock
options, as permitted by such Plan. The options have a term of ten years from
the date of grant, were issued with an exercise price equal to the fair market
value of a share of common stock at the time of grant, and permit exercise of
one half of the options on the second anniversary of the grant and one fourth of
the options on the third and fourth anniversaries of the grant date,
respectively. The purchase price upon exercise of an option may be paid either
in cash or, if the option permits, in shares of Company common stock already
owned, or a combination thereof. If the employment of a member of the management
group, which includes the five individuals described in this table, terminates
by reason of early retirement, his vested options may thereafter be exercised in
full if permitted by the Board of Directors, or otherwise only to the extent
they were exercisable at time of early retirement for three months from the date
of termination or the stated period of the option, whichever is shorter. Upon
death of an optionee, the vested options are exercisable for twelve months from
the date of death, or the expiration of the option period, whichever is shorter.
7
<PAGE>
TRANSACTIONS INVOLVING OFFICERS, DIRECTORS OR AFFILIATES.
The Company has adopted a policy that all transactions between the Company
and its officers, directors and affiliates must be on terms no less favorable to
the Company than those that could be obtained from unrelated third parties and
must be approved by a majority of the disinterested members of the Board of
Directors. During fiscal 1999 the Company pledged a $180,000 certificate of
deposit with a commercial lender as collateral for a loan obtained by Thomas H.
Reslewic, the Company's Executive Vice President and Chief Operating Officer.
EMPLOYMENT AGREEMENT
Mr. Lutz Henckels and the Company have entered into an employment agreement
providing for his services as President and Chief Executive Officer of the
Company. The contract will immediately terminate if Mr. Henckels voluntarily
leaves the employment of the Company. Mr. Henckels is currently being paid
compensation at the annual rate of $335,000, and he will receive an annual cash
bonus of up to $206,250 if the Company achieves certain financial targets for
the fiscal year ended June 30, 2000.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is comprised solely of
independent, non-employee Directors. The Compensation Committee reviews and
approves all compensation plans, benefit programs, and perquisites for
executives and other employees. The Compensation Committee sets the salary of
the Chief Executive Officer (CEO), sets relative relationships between the CEO
salary and salary of other key executives, and recommends to the Board the
compensation program for Directors. The Compensation Committee reviews and
approves management recommendations for stock option grants under the Company's
stock option plan. The Compensation Committee periodically reviews the job
performance of the CEO.
COMPENSATION PHILOSOPHY
The Company's executive compensation program has been designed to attract
and retain exceptional executives who seek a long-term association with the
Company and who enjoy the challenge of pay for performance. The basic program
consists of two cash compensation components: base salary and a performance
based annual bonus. A third component, ownership-linked stock options, is used
for executive retention, to attract new key people, to recognize accomplishments
under individually tailored business growth programs, and to align the long-term
interests of eligible executives with those of the stockholders.
BASE SALARY
Base salary for the CEO is set annually taking into consideration Company
sales and profit growth, overall job performance, and pay levels for CEOs of
corporations of a similar size. The Committee utilizes, as a reference,
up-to-date information on compensation practices of other companies from several
independent sources. Base salary is then set so as to represent no more than 70%
of total attainable compensation, the balance of which is fully contingent upon
the achievement of both qualitative and quantitative levels of performance and
stockholder return. Mr. Henckels' base salary is $335,000 effective July 1,
1997. His prior increase as Chief Executive Officer of the Company was on July
1, 1995. Mr. Henckels' base salary is considered to be at approximately the
median base compensation level paid to chief executive officers of corporations
of a similar size and complexity to the Company.
8
<PAGE>
ANNUAL CASH INCENTIVES
The Company's pay for performance annual bonus program is a cash-based
compensation component for senior executives of the Company. Executives in this
program earn a bonus set by specific performance levels in areas applicable to
their individual business unit. The plan is designed to reward efficient,
profitable performance with the highest payout. The intent is to encourage
management decisions that will provide the best financial results for the
Company. For fiscal year 1999, Mr. Henckels' bonus, earned as a result of
current year performance measurements, was zero. This compares to fiscal year
1998 when his bonus was $106,425 and represented 31.8% of his base salary.
STOCK OPTIONS
The third compensation component is an ownership-linked stock option
program, which provides long-term incentives to executives that are aligned with
the interests of the Company's stockholders. Stock options, granted at market
price, typically vest annually in 25% increments over four years or 50% after
the second year and 25% for third and fourth years. A longer term perspective is
established by the sequential vesting of options. The program is designed to
encourage senior executives to be long-term stockholders and to have owner
concern and care for the Company as a whole. The intent of the option program is
to provide an executive with the opportunity for financial gain which is larger
than the cumulative annual bonuses but which takes much longer to achieve; and
which requires meaningful long-term growth in the market price of the Company's
Common Stock for the gain to be realized.
The size and frequency of option grants are based on level of
responsibility, performance of the Company as a whole and the executive's
personal performance. Annually, both financial and non-financial specific goals
are set aimed at building future marketplace strengths and achieving corporate
success factors. Other option grants may be made based upon management's
specific recommendations, and review and approval by the Compensation Committee.
Grants are made from a Compensation Committee defined pool of shares.
SECTION 162(M)
Section 162(m) of the Internal Revenue Code ("the Code"), generally limits
the Company's ability to deduct compensation expense in excess of $1 million
paid to the Company's Chief Executive Officer or other executive officers named
in the Summary Compensation Table contained in this proxy statement. The
Compensation Committee's policy with respect to Section 162(m) is to make every
reasonable effort to insure that compensation is deductible to the extent
permitted while simultaneously providing Company executives with appropriate
rewards for their performance. Towards this end, the Company's Amended and
Restated 1993 Stock Incentive Plan has been drafted in a manner that will
qualify stock options as performance- related compensation not subject to the
cap on deductibility imposed by Section 162(m).
Allyn C. Woodward, Jr., Chairman
William G. Scheerer
Charles A. Dickinson
9
<PAGE>
COMPARISON OF 45 MONTH CUMULATIVE TOTAL RETURN*
AMONG LECROY CORPORATION,
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE S & P TECHNOLOGY SECTOR INDEX
DOLLARS
Cumulative Total Return
-----------------------------------
10/6/95 6/96 6/97 6/98 6/99
LECROY CORPORATION 100 167 307 191 197
NASDAQ STOCK MARKET (U.S.) 100 115 139 183 262
S & P TECHNOLOGY SECTOR 100 112 171 229 378
* $100 INVESTED ON 10/6/95 IN STOCK OR 9/30/95
IN INDEX - INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING JUNE 30.
10
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers and directors and persons who own more than 10%
of outstanding shares of the Company's Common Stock to file certain reports on
Securities and Exchange Commission Forms 3, 4, and 5 with respect to their
beneficial ownership of the Company's equity securities.
Based solely upon a review of Forms 3 and 4 furnished to the Company
pursuant to Securities and Exchange Commission Rule 16a-3(e) during its fiscal
year ended June 30, 1999, Forms 5 furnished to the Company with respect to such
fiscal year, and certain written representations furnished to the Company, it
appears that Walter O. LeCroy Jr., an executive officer of the Company, failed
to file Form 4 for seven transactions in August 1998, two transactions in
November 1998, one transaction in December 1998, four transactions in February
1999 and five transactions in May 1999. The Company believes that these failures
to file reports on a timely basis were inadvertent and has implemented routine
procedures designed to periodically remind its officers and directors of the
filing requirements.
INFORMATION CONCERNING INDEPENDENT AUDITORS
Ernst & Young LLP acted as principal accountant for the Company for the
fiscal year ended June 30, 1999. A representative of Ernst & Young LLP will be
present at the Annual Meeting; available to respond to appropriate questions and
will have the opportunity to make a statement if he so desires to do so. The
Audit Committee has not yet recommended the appointment of the independent
public accountants for the fiscal year ending June 30, 2000, but anticipates
making a formal selection at the October meeting of the Board.
PROPOSALS BY STOCKHOLDERS
In order for a proposal of a stockholder to be included in the Board of
Director's proxy statement for the Company's 2000 Annual Meeting, it must be
received at the principal executive office of the Company on or before June 30,
2000, pursuant to Rule 14a-8 under the Exchange Act. Such a proposal must comply
with the requirements as to form and substance established by the Securities and
Exchange Commission in order to be included in the proxy statement.
OTHER MATTERS
The Board of Directors of the Company is not aware of any other matters
which may come before the meeting. It is the intention of the persons named in
the enclosed proxy to vote the proxy in accordance with their best judgment if
any other matters should properly come before the meeting, including voting for
election of a Director in place of any person named in the proxy who may not be
available for election.
REGARDLESS OF WHETHER YOU PLAN TO BE PRESENT AT THE MEETING, IT WOULD BE
APPRECIATED IF YOU WOULD COMPLETE, DATE, AND SIGN THE ENCLOSED PROXY AND RETURN
IT PROMPTLY IN THE ENCLOSED ENVELOPE. IF YOU ATTEND THE MEETING AND WISH TO VOTE
IN PERSON, YOUR PROXY WILL NOT BE USED.
Chestnut Ridge, New York
October 4, 1999
11
<PAGE>
LCC79B
DETACH HERE
PROXY
LeCROY CORPORATION
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned stockholder of LeCroy Corporation hereby appoints each of
Walter O. LeCroy, Jr., Lutz P. Henckels and John C. Maag, as the undersigned's
attorney-in-fact and proxy, with full powers of substitution and resubstitution,
and hereby authorizes each of them, acting individually, to vote in the name of
and on behalf of the undersigned all shares of the Common Stock of LeCroy
Corporation that the undersigned may be entitled to vote at the Annual Meeting
of Stockholders of LeCroy Corporation to be held on Thursday, October 28, 1999,
and at any adjournment or postponement thereof, with all powers that the
undersigned would have if personally present.
WHEN PROPERLY EXECUTED THIS PROXY WILL BE VOTED AS SPECIFIED BUT IF NO
SPECIFICATION IS MADE IT WILL BE VOTED FOR PROPOSAL 1, THE ELECTION OF THE
NOMINEES LISTED ON THE REVERSE SIDE, AND IN THE DISCRETION OF THE PERSONS
NAMED AS PROXIES AS TO SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING AND ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF.
PLEASE DATE AND SIGN ON REVERSE SIDE AND MAIL YOUR PROXY CARD PROMPTLY IN THE
ENCLOSED ENVELOPE.
SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
<PAGE>
LCC79A DETACH HERE
[X] Please mark
votes as in
this example.
The Board of Directors recommends a vote FOR Proposal 1.
1. To elect Directors for a term expiring in 2002 (as set
forth in the Proxy Statement).
Nominees: Lutz P. Henckels and Charles A. Dickinson
FOR WITHHELD
ALL FROM ALL
NOMINEES [ ] [ ] NOMINEES
[ ] _______________________________________
For both nominees except as noted above
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
Sign exactly as name appears hereon. When signing as Executor,
Administrator, Trustee, or Guardian, etc., please add full title. This
proxy votes all shares held in all capacities.
