<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant []
Check the appropriate box:
<TABLE>
<S> <C>
[] Preliminary Proxy Statement [] Confidential, for Use of the Commission
Only
[X] Definitive Proxy Statement
[] Definitive Additional Materials
[] Soliciting Material Pursuant to Rule 14a-11(c) OR Rule 14a-12
</TABLE>
SPEEDFAM INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
(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)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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:
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<PAGE> 2
SPEEDFAM INTERNATIONAL, INC.
305 NORTH 54TH STREET
CHANDLER, ARIZONA 85226
------------------------
NOTICE AND PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 10, 1997
------------------------
The Annual Meeting of Shareholders of SpeedFam International, Inc., an
Illinois corporation (the "Company") will be held at the Company's corporate
headquarters, 305 North 54th Street, Chandler, Arizona 85226 on Friday, October
10, 1997, at 11:00 a.m., local time, for the following purposes as described in
the attached Proxy Statement:
1. To elect a Board of seven Directors;
2. To consider and act upon a proposed Amendment to the Articles of
Incorporation of the Company to increase the number of authorized
shares of Common Stock as set forth in the accompanying Proxy
Statement; and
3. To transact such other business as may properly come before the
annual meeting or any adjournment thereof.
Shareholders of record of the Company at the close of business on September
2, 1997, will be entitled to notice of and to vote at the meeting. A copy of the
Company's 1997 Annual Report, which includes audited financial statements, is
enclosed. The officers and directors of the Company cordially invite you to
attend the Annual Meeting.
By Order of the Board of Directors,
/s/ James N. Farley
James N. Farley
Chairman of the Board
September 9, 1997
IMPORTANT
PLEASE COMPLETE, SIGN, DATE AND RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE.
<PAGE> 3
SPEEDFAM INTERNATIONAL, INC.
305 NORTH 54TH STREET
CHANDLER, ARIZONA 85226
------------------------
PROXY STATEMENT
------------------------
This Proxy Statement is furnished to the shareholders of SpeedFam
International, Inc. (the "Company")
in connection with the solicitation by the Board of Directors of the Company of
proxies for use at the Company's Annual Meeting of Shareholders to be held on
October 10, 1997.
Any shareholder giving a proxy will have the right to revoke it at any time
prior to the time it is voted. A proxy may be revoked by written notice to the
Company, execution of a subsequent proxy or attendance at the annual meeting and
voting in person. Attendance at the meeting will not automatically revoke the
proxy. All shares represented by effective proxies will be voted at the meeting
or at any adjournment thereof.
The cost of soliciting proxies will be borne by the Company. In addition to
solicitation by mail, officers and employees of the Company may solicit proxies
by telephone or in person. The Company may also reimburse brokers, banks,
nominees, and other fiduciaries for postage and reasonable clerical expenses of
forwarding the proxy material to their principals who are beneficial owners of
the Common Stock.
The information included herein should be reviewed in conjunction with the
financial statements, notes to financial statements, and independent auditors'
report included in the Company's 1997 Annual Report. The financial statements
contained in the Company's 1997 Annual Report are not deemed material to the
exercise of prudent judgment in regard to the matters to be acted upon at the
Annual Meeting and, therefore, are not incorporated by reference into this Proxy
Statement. This Proxy Statement and form of proxy were first mailed to
shareholders on or about September 9, 1997.
VOTING
Shareholders of record on the books of the Company at the close of business
on September 2, 1997, will be entitled to notice of and to vote at the meeting.
A list of the shareholders entitled to vote at the meeting shall be open to the
examination of any shareholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least 10 days prior to the meeting
at the Company's corporate headquarters, 305 North 54th Street, Chandler,
Arizona 85226. The Company had outstanding on September 2, 1997, 13,475,036
shares of Common Stock. Each outstanding share of Common Stock entitles the
holder to one vote on each matter submitted to a vote at the meeting.
The shares represented by proxies will be voted as directed in the proxies.
In the absence of specific direction, the shares represented by proxies will be
voted FOR the election of all of the nominees as Directors of the Company and
FOR the proposed amendment to the Articles of Incorporation. In the event any
nominee for Director shall be unable to serve, which is not now contemplated,
the shares represented by proxies may be voted for a substitute nominee. If any
matters are to be presented at the Annual Meeting other than the matters
referred to in this Proxy Statement, the shares represented by proxies will be
voted in the discretion of the proxy holders.
The Company's Bylaws provide that a majority of all of the shares of Common
Stock entitled to vote, whether present in person or represented by proxy, shall
constitute a quorum for the transaction of business at the meeting. Votes for
and against, abstentions and "broker non-votes" will each be counted as present
for purposes of determining the presence of a quorum. To determine whether a
specific proposal has received sufficient votes to be passed, for shares deemed
present, an abstention and a broker non-vote will have the same effect as a vote
"against" the proposal. The seven nominees for Director who receive the most
votes will be elected. The proposed amendment to the Articles of Incorporation
increasing the number of shares of Common Stock authorized for issuance must be
approved by the holders of a majority of the outstanding shares of Common Stock
of the Company.
<PAGE> 4
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
Directors are to be elected at the annual meeting to serve terms of one
year or until their respective successors have been elected. The nominees for
Director, all of whom are now serving as Directors of the Company with the
exception of Mr. Richard S. Hill, are listed below together with certain
biographical information. Mr. Carl S. Pedersen has announced his intention to
retire from the Board of Directors effective as of the date of the Annual
Meeting. The Company acknowledges his long years of service and expresses
appreciation for his significant contributions.
Carl S. Pedersen (82) has been a director of SpeedFam International, Inc.
since 1979. Since 1988, he has been Chairman Emeritus of Luther S. Pedersen, a
capital equipment distributor in Aurora, Illinois. He previously served as
Chairman of Luther & Pedersen.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF ALL OF THE
NOMINEES LISTED BELOW AS DIRECTORS.
James N. Farley (68) has been a director of SpeedFam International, Inc.
since 1961. He was appointed Chairman and Chief Executive Officer by the Board
of Directors in 1993 and served in both capacities until May 1997, when Mr.
Kouzuma was appointed Chief Executive Officer. Mr. Farley had been President of
SpeedFam International, Inc. from 1967 to 1993. Prior to that, he was Vice
President of Sales and had served as Business Manager since joining SpeedFam
International, Inc. in 1960. Mr. Farley was instrumental in developing the
organization and is presently responsible for developing and directing the
future strategy of SpeedFam International, Inc. Mr. Farley also serves on the
board of two privately-held companies. He holds a BSEE from Northwestern
University.
Makoto Kouzuma (57) has been a director of SpeedFam International, Inc.
since 1982. He was appointed Chief Executive Officer by the Board of Directors
in May 1997. In 1993, Mr. Kouzuma was appointed President and Chief Operating
Officer of SpeedFam International, Inc. He was Executive Vice President of
SpeedFam International, Inc. and had the additional post of President of
SpeedFam Corporation from 1990 to 1993. He is also Executive Vice President and
General Manager of SpeedFam Co., Ltd., the Company's joint venture in the Far
East (the "Far East Joint Venture"). Mr. Kouzuma is currently responsible for
the day to day operations of both Speedfam International, Inc. and the Far East
Joint Venture, the latter since 1971. Mr. Kouzuma joined SpeedFam International,
Inc. in 1969 to open a Japanese liaison office. He graduated as an Electrical
Engineer from Chuo University in Tokyo, Japan. Mr. Kouzuma is a resident of
Japan.
Neil R. Bonke (55) has been a director of SpeedFam International, Inc.
since 1996. He has been Chairman of the Board of Electroglas, Inc., a capital
equipment supplier to the semiconductor device market, since April 1993, and its
Chief Executive Officer from April 1993 through April 1996. He also serves on
the Board of Directors of Sanmina Corp. and FSI International Inc. Electroglas,
Inc., Sanmina Corp. and FSI International Inc., each a public company, are
subject to the reporting requirements of the Securities Exchange Act of 1934, as
amended. Mr. Bonke was a Group Vice President of General Signal and President of
General Signal's Semiconductor Equipment Operations from September 1991 to July
1993.
Richard S. Hill (45) was nominated as a director of SpeedFam International,
Inc. by the Board of Directors in August 1997. If elected by the shareholders,
Mr. Hill will serve as director beginning October 1997. Mr. Hill has been the
Chief Executive Officer and a director of Novellus Systems, Inc., a capital
equipment supplier to the semiconductor device market, since 1993. In May 1996
he was appointed Chairman of the Board of Novellus Systems, Inc. From 1981, Mr.
Hill was employed by Tektronix, Inc., an electronics company, where he held such
positions as President of the Tektronix Development Company, Vice President of
the Test & Measurement Group, and President of Tektronix Components Corporation.
Thomas J. McCook (73) has been a director of SpeedFam International, Inc.
since 1979. He was formerly Vice President of Stewart-Warner, an automotive
parts manufacturer.
2
<PAGE> 5
Dr. Stuart L. Meyer (60) has been a director of SpeedFam International,
Inc. since 1982. He has been an Associate Professor of Management and Strategy
at the Kellogg Graduate School of Management, Northwestern University since
1977.
Robert M. Miller (70) has been a director of SpeedFam International, Inc.
since 1990. He is currently Director Emeritus of Okuma America Corporation in
Charlotte, North Carolina. Since 1985, Mr. Miller has been President of ITMC
Inc., a marketing consulting firm providing service to capital equipment
manufacturers.
ADDITIONAL INFORMATION CONCERNING BOARD OF DIRECTORS
The Board of Directors consists of seven persons. The Company's
non-employee directors each receive an annual retainer of $11,000, plus a fee of
$1,000 for each Board meeting and $500 for each Committee meeting they attend.
In addition, each non-employee director annually receives an option to purchase
5,000 shares of Common Stock pursuant to the 1995 Stock Plan for Employees and
Directors of the Company. All directors are reimbursed for expenses incurred in
connection with attending Board and Committee meetings.
The Compensation Committee consists of Messrs. Bonke, McCook and Miller,
with Mr. Miller serving as Chairman of the Committee. The duties of the
Compensation Committee are to provide a general review of the Company's
compensation and benefit plans to ensure that they meet corporate objectives.
The Compensation Committee (i) determines compensation for all officers of the
Company, (ii) grants awards to officers under the Company's compensation and
benefit plans and (iii) adopts major Company compensation policies and
practices. The Compensation Committee met 3 times during fiscal 1997.
The Audit Committee currently consists of Messrs. McCook, Meyer and
Pedersen. The Audit Committee makes recommendations to the Board of Directors
regarding the selection of independent auditors and reviews the independence of
such auditors, approves the scope of the annual audit activities of the
independent auditors, approves the audit fees payable to the independent
auditors and reviews audit results. The Audit Committee met 2 times during
fiscal 1997.
The Board of Directors held 4 meetings during fiscal 1997. All of the
Directors attended at least 75% of the meetings of the Board of Directors and
the committees on which they served.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Messrs. Farley and Kouzuma receive certain amounts from SpeedFam Co., Ltd.
consisting of salaries, directors' fees and bonuses, as well as dividends on
their individual holdings of stock in certain of SpeedFam Co., Ltd.'s
subsidiaries. Pursuant to Mr. Farley's employment agreement with the Company,
all amounts payable to Mr. Farley from the Far East Joint Venture are paid
directly to the Company. During the Far East Joint Venture's fiscal year ended
April 30, 1997, such payments totaled approximately Y20.4 million ($168,177).
During the Far East Joint Venture's fiscal year ended April 30, 1997, Mr.
Kouzuma received an aggregate of approximately Y42.1 million ($365,651).
During the Far East Joint Venture's fiscal year ended April 30, 1996, Mr.
Farley received an aggregate of approximately $44,000 from the Far East Joint
Venture, which represented payments prior to the date of Mr. Farley's employment
agreement with the Company. After such date, payments totaling approximately
$85,000 for the Far East Joint Venture's 1996 fiscal year were directed to the
Company pursuant to Mr. Farley's employment agreement. During the Far East Joint
Venture's fiscal year ended April 30, 1996, Mr. Kouzuma received an aggregate of
approximately Y39.2 million ($399,587). During the Far East Joint Venture's
fiscal year ended April 30, 1995, Messrs. Farley and Kouzuma received an
aggregate of approximately Y15.3 million ($156,600) and Y32.9 million
($336,800), respectively. All amounts in U.S. dollars above are based upon the
yen/dollar exchange rates on dates of payment.
Both Messrs. Farley and Kouzuma serve as directors of SpeedFam Co., Ltd. In
addition, both serve as directors of SpeedFam Clean Systems Co. Ltd., a majority
owned subsidiary of SpeedFam Co., Ltd. Mr. Kouzuma also serves as President of
SpeedFam Clean Systems Co. Ltd. In addition, each of Messrs. Farley and Kouzuma
own 5% of the outstanding capital stock of SpeedFam Clean Systems Co., Ltd.
3
<PAGE> 6
Messrs. Farley and Kouzuma also serve as directors of Met-Coil Ltd., SpeedFam
Co. Ltd.'s 50%-owned joint venture. Mr. Kouzuma owns 10.62% of the outstanding
capital stock of Saku Seiki Co., Ltd., a majority owned subsidiary of SpeedFam
Co., Ltd., and serves as a director of Saku Seiki Co., Ltd. Messrs. Farley and
Kouzuma also serve as directors of several wholly owned subsidiaries of SpeedFam
Co., Ltd., namely SpeedFam Korea Ltd., SpeedFam Incorporated in Taiwan, SpeedFam
India (Pvt.) Ltd. and SpeedFam Malaysia SDN., BHD.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and officers to file reports of ownership and changes in ownership of
the Company's Common Stock with the Securities and Exchange Commission. The
Company is required to disclose in this proxy statement any late filings of
those reports made by its directors and executive officers in fiscal 1997. Under
the Section 16(a) rules and subject to certain exceptions, directors and
executive officers are required to file a Form 4 on or before the tenth day
after the end of the month in which a change in beneficial ownership has
occurred. Messrs. James N. Farley and Robert R. Smith, Chairman of the Board of
the Company and Managing Director -- SpeedFam Limited, respectively, were each
delinquent in their filing of one report during fiscal 1997. Dr. Stuart L.
Meyer, a director of the Company, was also delinquent in his filing of one
report.
Reports describing all such transactions were subsequently filed.
4
<PAGE> 7
OWNERSHIP OF SPEEDFAM INTERNATIONAL, INC. COMMON STOCK
The following table sets forth certain information known to the Company
with respect to beneficial ownership of the Company's Common Stock as of
September 2, 1997 by (i) each shareholder who is known by the Company to own
beneficially more than 5% of the Common Stock, (ii) each of the Company's
directors, (iii) each nominee for director, (iv) each Named Executive Officer
(as defined herein) and (v) all directors and executive officers of the Company
as a group. Except as otherwise indicated, the Company believes that the
beneficial owners of the Common Stock listed below, based on information
furnished by such owners, have sole investment and voting power with respect to
such shares, subject to community property laws where applicable. Information
with respect to FMR Corp. is based solely on public filings made by FMR Corp.
with the Securities and Exchange Commission.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
---------------------
NAME AND ADDRESS NUMBER PERCENT
- ------------------------------------------------------------------------- --------- -------
<S> <C> <C>
FMR Corp................................................................. 806,300 6.0%
82 Devonshire Street
Boston, Massachusetts 02109
James N. Farley(1)(2).................................................... 1,373,170 10.2%
Nancy J. Farley(1)(3).................................................... 1,069,695 7.9%
James N. and Nancy J. Farley Foundation(4)............................... 184,720 1.4%
Makoto Kouzuma(1)(5)..................................................... 738,999 5.5%
SpeedFam Employees Profit Sharing Trust(1)(6)............................ 184,380 1.4%
Roger K. Marach(7)....................................................... 41,574 *
Christopher E. Augur..................................................... 57,632 *
Robert R. Smith(8)....................................................... 81,854 *
Neil R. Bonke............................................................ 5,500 *
Richard S. Hill.......................................................... 0 *
Thomas J. McCook......................................................... 12,400 *
Dr. Stuart L. Meyer...................................................... 62,360 *
Robert M. Miller......................................................... 2,180 *
Carl S. Pedersen(9)...................................................... 69,520 *
All directors and executive officers as a group (10 persons)............. 2,445,190 18.1%
</TABLE>
- ---------------
* Less than one percent.
(1) The business address of Messrs. Farley and Kouzuma, Mrs. Farley and the
SpeedFam Employees Profit Sharing Trust is 305 North 54th Street, Chandler,
Arizona 85226.
(2) All shares beneficially owned by Mr. Farley are held in the James N. Farley
Trust, of which Mr. Farley acts as sole trustee. Excludes (i) shares
beneficially owned by Nancy J. Farley (Mr. Farley's spouse), (ii) an
aggregate of 1,272,966 shares beneficially owned by Mr. Farley's adult
children, (iii) 691,380 shares held in the Makoto Kouzuma Trust, a revocable
trust, of which Mr. Farley serves as co-trustee, and (iv) 184,380 shares
owned by the SpeedFam Employees Profit Sharing Trust, of which Mr. Farley
acts as co-trustee. Mr. Farley disclaims beneficial ownership of all shares
referred to (i) through (iv) above. Also excludes 184,720 shares held by the
James N. and Nancy J. Farley Foundation.
(3) Of such shares, 642,070 are held in the Nancy J. Farley Trust, a revocable
trust. Charles A. Kelly, Secretary of the Company, acts as co-trustee of
such trust with Mr. Farley (the spouse of Nancy J. Farley). Pursuant to the
trust agreement, Mr. Kelly has sole voting and shares dispositive power with
Mrs. Farley over shares held in the trust. The Nancy J. Farley Trust may be
voluntarily terminated by Mrs. Farley at any time. Includes 427,625 shares
of Common Stock over which Mrs. Farley has sole voting and dispositive power
as Custodian for eleven minor grandchildren. Mrs. Farley disclaims
beneficial ownership as to such shares. Excludes shares beneficially owned
by Mr. Farley and an aggregate of 1,272,966 shares beneficially owned by
Mrs. Farley's adult children, as to all of which Mrs. Farley disclaims
beneficial ownership. Also excludes 184,720 shares held by the James N. and
Nancy J. Farley Foundation.
(4) James N. Farley serves as trustee for the James N. and Nancy J. Farley
Foundation.
(5) Of such shares, 691,380 are held in the Makoto Kouzuma Trust, a revocable
trust. Mr. Kelly and Mr. Farley act as cotrustees of such trust and share
voting and dispositive power over shares held in the trust. The Makoto
Kouzuma Trust may be voluntarily terminated by Mr. Kouzuma at any time. The
remaining 47,619 shares are subject to issuance to Mr. Kouzuma upon the
exercise of certain stock options.
(6) Messrs. Farley, Marach and Kelly act as co-trustees of the Plan and share
voting and dispositive power over shares held by the Plan.
(7) Excludes 184,380 shares owned by the SpeedFam Employees Profit Sharing Trust
of which Mr. Marach serves as co-trustee. Mr. Marach disclaims beneficial
ownership of such shares.
(8) Includes 11,120 shares beneficially owned by Mr. Smith's spouse.
(9) Of such shares, 37,000 are held in the Pedersen Family Limited Partnership,
of which Pedersen Holdings, Inc. is sole general partner and Mr. Pedersen
serves as sole limited partner. Mr. Pedersen serves as President of Pedersen
Holdings, Inc. and owns 33% of its outstanding stock. The remaining 32,520
shares are subject to issuance to Mr. Pedersen upon the exercise of certain
stock options.
5
<PAGE> 8
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table shows the compensation awarded or paid by the Company
to the Chairman of the Board, the Chief Executive Officer and the three
executive officers (the "Named Executive Officers") of the Company during the
fiscal years ended May 31, 1995, 1996 and 1997:
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
AWARDS
------------
SECURITIES
ANNUAL COMPENSATION UNDERLYING
NAME AND FISCAL ------------------- OTHER ANNUAL OPTIONS ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) (# SHARES) COMPENSATION(2)
- --------------------------- ------ -------- -------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
James N. Farley(3)......... 1997 $250,000 $162,500 $13,754 0 $ 1,481
Chairman of the Board 1996 252,120 100,000 13,754 0 2,097
1995 303,748 258,267 13,754 0 900
Makoto Kouzuma(3).......... 1997 $247,509 $162,500 $13,754 21,300 $ 2,335
President and Chief 1996 166,859 140,000 -- 46,796 1,800
Executive Officer 1995 254,823 117,906 -- 22,000 900
Roger K. Marach............ 1997 $154,615 $ 97,500 $ 6,838 9,300 $ 2,134
Treasurer and Chief 1996 144,200 92,500 6,838 31,198 1,337
Financial Officer 1995 118,844 47,000 31,168 19,040 900
Christopher E. Augur....... 1997 $173,654 $105,000 $ 9,851 15,500 $ 2,175
President of SpeedFam 1996 139,327 90,000 6,838 28,078 1,005
Corporation 1995 117,974 45,000 7,524 19,040 900
Robert R. Smith............ 1997 $155,592 $ 51,984 $24,128 5,100 --
Managing Director -- 1996 141,883 41,292 18,118 12,479 --
SpeedFam Limited 1995 137,164 37,752 18,772 9,520 --
</TABLE>
- ---------------
(1) Represents auto allowances and $24,330 of relocation expenses for Mr. Marach
in fiscal 1995 and $3,013 of a portion of relocation expenses for Mr. Augur
in fiscal 1997. Mr. Augur's remaining relocation expenses will be reimbursed
by the Company in fiscal 1998.
(2) Consists of the Company's matching contribution to the Company's 401(k) Plan
and, for fiscal 1996 and 1997, payments of life insurance premiums in the
following respective amounts: $1,197 and $211 for Mr. Farley, $1,270 and
$535 for Mr. Kouzuma, $437 and $334 for Mr. Marach and $105 and $375 for Mr.
Augur.
(3) Messrs. Farley and Kouzuma received an aggregate of approximately $156,600
and $336,800, respectively, from the Far East Joint Venture during the Far
East Joint Venture's fiscal year ended April 30, 1995. During the Far East
First Venture's fiscal year ended April 30, 1996, Mr. Kouzuma received an
aggregate of approximately $399,587 from the Far East Joint Venture and,
prior to entering into his employment agreement with the Company, Mr. Farley
received an aggregate of approximately $44,000 from the Far East Joint
Venture. During the Far East Joint Venture's fiscal year ended April 30,
1997, Mr. Kouzuma received an aggregate of approximately $365,651 from the
Far East Joint Venture. All amounts in US. dollars above are based upon the
yen/dollar exchange rate on dates of payment. See "Certain Relationships."
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with James N. Farley as
Chairman of the Board of Directors, Makoto Kouzuma as President and Chief
Executive Officer and Roger K. Marach as Chief Financial Officer and Treasurer;
SpeedFam Corporation, a wholly owned subsidiary of the Company in the U.S., has
entered into an employment agreement with Christopher E. Augur as President; and
SpeedFam Limited, the Company's British subsidiary, has entered into an
employment agreement with Robert R. Smith, its Managing Director (collectively,
the "Employment Agreements"). The Employment Agreements, each dated June 1997,
have a term ending May 31, 1998 and may be terminated only for cause.
6
<PAGE> 9
The Employment Agreements set salaries, provide for bonuses at the
discretion of the Compensation Committee of the Board of Directors, grant car
allowances, and entitle the employee to participate in and receive the benefits
of any and all pension, profit sharing, health, disability and insurance plans
which the respective company may maintain. Salaries for each of Messrs. Farley,
Kouzuma, Marach, Augur and Smith have been set by their respective Employment
Agreement at an annual amount of $278,500, $368,400, $180,000, $225,000 and
L96,729 (approximately $158,684) (based on pound/dollar exchange rate on May 31,
1997), respectively. Mr. Farley has agreed to pay to the Company all
compensation received from the Far East Joint Venture.
In the event of sickness or disability which renders the employee unable to
perform his duties, the respective company may, at its option, cease to pay
compensation to the employee other than premiums on group health, disability and
life insurance plans until the employee is able to reassume his duties.
The Employment Agreements provide that upon the termination of the
employee, the employee agrees not to disclose trade secrets of the respective
company and also agrees that any inventions originated or conceived by such
employee during the term of his employment, and for a period of one year
thereafter, relating to the respective company's business will be the property
of the respective company. The employee further agrees not to compete against
the respective company for a period of two years after termination of
employment.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth each grant of stock options made during the
fiscal year ended May 31, 1997 to each of the Named Executive Officers. Mr.
Farley, Chairman of the Board, has not been granted any stock options. No stock
appreciation rights were granted during such year to any of the Named Executive
Officers.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT
--------------------------------------------------------------- ASSUMED ANNUAL RATES OF
PERCENT OF STOCK PRICE
NUMBER OF SECURITIES TOTAL OPTIONS APPRECIATION
UNDERLYING OPTIONS GRANTED TO EXERCISE FOR OPTION TERM(4)
GRANTED(1) EMPLOYEES IN PRICE EXPIRATION -----------------------
NAME (#) FISCAL YEAR(2) ($/SH)(3) DATE 5% 10%
- --------------------- -------------------- --------------- --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Makoto Kouzuma....... 21,300 4.7% $ 36.44 5/30/07 $488,097 $1,236,933
Roger K. Marach...... 9,300 2.0% $ 36.44 5/30/07 $213,113 $ 540,070
Christopher E.
Augur.............. 15,500 3.4% $ 36.44 5/30/07 $355,188 $ 900,116
Robert R. Smith...... 5,100 1.1% $ 36.44 5/30/07 $116,868 $ 296,167
</TABLE>
- ---------------
(1) Options become exercisable over a five-year period with 20% vesting annually
beginning May 31, 1998. The term of the options is ten years.
(2) Based on an aggregate of 496,200 options granted to directors, officers and
employees in fiscal 1997, including the Named Executive Officers.
(3) The exercise price per share of each option was equal to 100% of the fair
market value of the Common Stock on the date of grant, or the closing price
on May 31, 1997.
(4) The potential realizable value is calculated based on the term of the option
at its time of grant (ten years). It is calculated assuming that the stock
price on the date of grant appreciates at the indicated annual rate
compounded annually for the entire term of the option and the option is
exercised and sold on the last day of its term for the appreciated stock
price. No gain to the optionee is possible unless the stock price increases
over the option term.
7
<PAGE> 10
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
The following table sets forth number of options exercised during the
fiscal year ended May 31, 1997 and the number and value of unexercised options
held by each of the Named Executive Officers at May 31, 1997. Mr. Farley,
Chairman of the Board, has not been granted any stock options.
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FY-END(#) FY-END($)(2)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) REALIZED($)(1) UNEXERCISABLE UNEXERCISABLE
- -------------------------- --------------- -------------- ------------- --------------------
<S> <C> <C> <C> <C>
Makoto Kouzuma............ 48,600 $1,226,533 47,619/91,577 $1,420,859/1,664,654
Roger K. Marach........... 44,808 $1,092,497 19,848/65,282 $ 553,083/1,421,635
Christopher E. Augur...... 16,200 $ 396,694 42,632/68,986 $1,333,882/1,381,855
Robert R. Smith........... -- -- 42,704/36,794 $ 1,408,138/ 884,294
</TABLE>
- ---------------
(1) Value is based on the difference between the stock option exercise price and
the closing price on the date such options were exercised, multiplied by the
number of shares of Common Stock underlying such stock options.
(2) Value is based on the difference between the stock option exercise price and
the closing price on May 31, 1997 of $36.44, multiplied by the number of
shares of Common Stock underlying the stock options.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee consists of Messrs. Bonke, McCook and Miller,
with Mr. Miller serving as Chairman of the Committee. The duties of the
Compensation Committee are to provide a general review of the Company's
compensation and benefit plans to ensure that they meet corporate objectives.
Specifically, the Compensation Committee, after consultation with senior
management: (i) determines compensation for all officers of the Company, (ii)
grants awards to officers under the Company's compensation and benefit plans,
and (iii) adopts major Company compensation policies and practices. The
Compensation Committee met 3 times during fiscal 1997 and reviewed the
compensation packages of all executive officers and determined appropriate
bonuses and other compensation, including the granting of options to purchase
Common Stock.
The Compensation Committee's executive compensation policies are intended
to enable the Company to attract and retain qualified executives through a
compensation program consisting of base salary, annual incentives and stock
options. The level of compensation for the executive officers are generally
intended to be competitive with those of other executives in similar positions
and companies in the semiconductor equipment manufacturing business and other
high technology-related companies, based upon the relative size of those
companies and the scope of the executive's responsibilities. It is the Company's
policy to target both base salaries and stock option awards at a competitive
level with this group. Annual incentive opportunities are set slightly above the
competitive group. This competitive group of companies is similar to, but not
identical to, those companies used in the Peer Group Index described on page 10
of this Proxy Statement.
After determining the level of compensation for each executive officer as
compared with such person's counterparts, the Compensation Committee weighs the
individual's performance and considers such officer's contribution to the
financial and other objectives of the Company. The goals and objectives are
established in advance of the performance period, and may reflect specific
individual objectives for the officer, financial or other objectives for the
Company, or a combination of these factors. Among the criteria used by the
Company in making pay decisions both for salary actions and incentive awards are
revenues, earnings, results of operations and special projects and the overall
financial performance of the Company from year to year. Further, the
Compensation Committee may adjust awards to an individual based on the specific
achievements of the individual officer.
In fiscal 1997, the Compensation Committee reviewed each officer's
performance evaluation and the recommendations of the Chairman as to the
achievements of the Company's and individual officer's
8
<PAGE> 11
performance goals. Based upon these reviews, the Compensation Committee
determined the annual compensation payments reflected in the Summary
Compensation Table included in this Proxy Statement.
The Compensation Committee also may grant executives and other employees
stock options under the Company's stock option plans. The Compensation Committee
believes that stock ownership by management encourages management to maximize
share owner value. Stock options granted to executives and other employees of
the Company give optionees the right to purchase shares of the Company's Common
Stock. Generally, the Compensation Committee grants stock options based on a
number of factors, including, but not limited to, competitive practice, the
individual's position in the Company, and the individual's performance and
potential. At the end of fiscal 1997, every employee of the Company, including
employees of its wholly owned subsidiaries, were granted options to purchase
Common Stock of the Company.
The Company intends, to the extent practicable, to preserve the
deductibility under the Internal Revenue Code for all compensation paid to its
executive officers while maintaining compensation programs to attract, retain
and motivate the highly qualified executives needed by the Company to operate
successfully in a highly competitive marketplace.
The Compensation Committee's basis for determining the compensation of the
Company's Chairman of the Board, Mr. James Farley, have been substantially the
same as those referred to for the other executive officers of the Company. In
determining Mr. Farley's annual compensation, the Compensation Committee
considered the extent to which the Company had achieved its strategic financial
and operating goals. At Mr. Farley's request, the Compensation Committee did not
grant any stock options to him.
The Company has entered into employment agreements with each of the Named
Executive Officers. The current employment agreements, dated June 1997, replaced
the previous agreements and revised the same only to the extent that the current
employment agreements cover a one-year period ending May 31, 1998 (the Company's
fiscal year end), instead of September 30, 1997.
COMPENSATION COMMITTEE
Neal R. Bonke
Thomas J. McCook
Robert M. Miller, Chairman
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There are no transactions involving members of the Compensation Committee
and the Company.
9
<PAGE> 12
STOCK PRICE PERFORMANCE GRAPH
The following graph compares the twenty month cumulative total return on
the Common Stock to the twenty month cumulative total returns on the Nasdaq
Market Index and the Peer Group Index. This measurement period begins on the
date the Common Stock began trading and ends on the last trading date of the
Company's last completed fiscal year. The Company designs, develops,
manufactures, markets and services chemical mechanical planarization, or CMP,
systems used in the fabrication of semiconductor devices and other high
throughput precision surface processing systems used in the fabrication of thin
film memory disk media, semiconductor wafers and general industrial components.
The Peer Group Index used by the Company consists of nine companies that the
Company believes engage in a similar business and serve similar markets as that
of the Company. The companies in the Peer Group Index are as follows: Applied
Materials Inc., FSI International, Inc., Integrated Process Equipment Corp., Lam
Research Corp., Novellus Systems Inc., OnTrak Systems Inc., PRI Automation,
Inc., Semitool Inc., and Silicon Valley Group, Inc.
<TABLE>
<CAPTION>
Measurement Period NASDAQ STOCK MARKET SPEEDFAM
(Fiscal Year Covered) (U.S.) PEER GROUP INTERNATIONAL, INC.
<S> <C> <C> <C>
10/10/95 100 100 100
Nov-95 108 103 143
Feb-96 112 76 119
May-96 127 80 184
Aug-96 117 53 102
Nov-96 132 80 183
Feb-97 134 101 335
May-97 143 122 328
</TABLE>
In the case of the Nasdaq Market Index and the Peer Group Index, a $100
investment made on October 10, 1995, and reinvestment of all dividends are
assumed. In the case of the Company, a $100 investment made on October 10, 1995,
is assumed (the Company paid no dividends in fiscal years 1995, 1996 or 1997).
10
<PAGE> 13
PROPOSAL 2:
AMENDMENT TO THE ARTICLES OF INCORPORATION
TO INCREASE AUTHORIZED COMMON STOCK
This proposed amendment to Article Five of the Articles of Incorporation
would increase the number of shares of Common Stock, without par value, which
the Company is authorized to issue from 20,000,000 to 60,000,000. The text of
such proposed amendment is attached to this Proxy Statement as Exhibit A.
As of September 2, 1997, 13,475,036 shares of Common Stock were issued with
an additional 2,412,164 shares reserved for issue under the Company's 1991
Employee Incentive Stock Option Plan, 1995 Stock Plan for Employees and
Directors and 1995 Employee Stock Purchase Plan. The additional shares of Common
Stock for which authorization is sought would be a part of the existing class of
Common Stock and, if and when issued, would have the same rights and privileges
as the shares of Common Stock presently outstanding.
The Board believes that it is desirable to have the additional authorized
shares of Common Stock available for possible future financing and acquisition
transactions, stock dividends or splits and other general corporate purposes.
Having such additional authorized shares available for issuance in the future
would give the Company greater flexibility. The additional shares of Common
Stock would be available for issuance without further action by the
shareholders. Shareholders will have no pre-emptive rights with respect to any
such authorized shares.
The authority of the Board to issue Common Stock might be considered as
having the effect of discouraging an attempt by another person or entity to
effect a takeover or otherwise gain control of the Company, since the issuance
of additional shares of Common Stock could dilute the voting power of the Common
Stock owned by a party attempting to obtain control of the Company and could
increase the cost of any such transaction.
The authorized but unissued shares of Common Stock could also be used by
incumbent management to make more difficult a change in control of the Company.
Under certain circumstances, such shares could be used to create voting
impediments or to frustrate persons seeking to effect a takeover or otherwise
gain control of the Company. Such shares could be privately placed with
purchasers who might side with the Board in opposing a hostile takeover bid.
The amendment could also have the effect of discouraging an attempt by
another person or entity, through the acquisition of a substantial number of
shares of the Company's Common Stock, to acquire control of the Company with a
view to imposing a merger, sale of all or any part of the Company's assets or a
similar transaction that may not be in the best interest of all of the
shareholders, because the issuance of new shares could be used to dilute the
stock ownership of a person or entity seeking to obtain control of the Company.
At the date of this Proxy Statement, the Company has no plans, arrangements
or understandings with respect to the issuance of the shares of Common Stock to
be authorized.
The Articles of Incorporation also authorize the issuance of up to
1,000,000 shares of Preferred Stock with such rights, preferences and
limitations as may be determined by the Board of Directors. Such Preferred Stock
could be issued with terms which might make more difficult a change in control
of the Company. The Company is not aware of any pending or threatened efforts to
obtain control of the Company.
The proposed amendment to the Articles of Incorporation increasing the
number of shares of Common Stock authorized for issuance must be approved by the
holders of a majority of the outstanding shares of Common Stock of the Company.
MANAGEMENT AND THE BOARD OF DIRECTORS OF THE COMPANY RECOMMEND UNANIMOUSLY A
VOTE "FOR" THE AMENDMENT TO INCREASE THE COMPANY'S AUTHORIZED SHARES OF COMMON
STOCK AS SET FORTH IN PROPOSAL 2.
11
<PAGE> 14
APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of the Company has appointed KPMG Peat Marwick LLP,
certified public accountants, as independent auditors to examine the annual
consolidated financial statements of the Company and its subsidiaries for fiscal
1998. A representative of KPMG Peat Marwick LLP will be present at the meeting
to make a statement, if such representative so desires, and to respond to
shareholders' questions.
STOCKHOLDER PROPOSALS
Any shareholder proposal intended to be presented at the 1998 annual
meeting of the Company's shareholders must be received at the principal
executive offices of the Company by May 12, 1998, in order to be considered for
inclusion in the Company's proxy materials relating to that meeting.
OTHER MATTERS
As of the date of this Proxy Statement, management knows of no matters to
be brought before the meeting other than the matters referred to in this Proxy
Statement.
By Order of the Board of Directors,
/s/ James N. Farley
James N. Farley
Chairman of the Board
September 9, 1997
12
<PAGE> 15
EXHIBIT A
TEXT OF PROPOSED AMENDMENT TO THE ARTICLES OF INCORPORATION
TO INCREASE AUTHORIZED COMMON STOCK
RESOLVED, THAT: Paragraph 1 of Article Five of the Articles of
Incorporation of the corporation is hereby amended in its entirety to read as
follows:
"Paragraph 1: The aggregate number of shares which the corporation is authorized
to issue is 61,000,000, divided into two classes consisting of 1,000,000 shares
designated as Preferred Stock, without par value, issuable in series as
hereinafter provided (hereinafter referred to as the "Preferred Stock"), and
60,000,000 shares designated as Common Stock, without par value (hereinafter
referred to as the "Common Stock")."
<PAGE> 16
SPEEDFAM INTERNATIONAL, INC.
305 NORTH 54TH STREET
CHANDLER, ARIZONA 85226-2416
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints James N. Farley and Roger K. Marach, and each of
them, with full power of substitution, Proxies, and hereby authorizes them to
represent and to vote as designated below all of the shares of Common Stock of
SpeedFam International, Inc. held of record by the undersigned on September 2,
1997 at the Annual Meeting of Shareholders to be held on October 10, 1997, or
any adjournment or postponement thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" THE ELECTION OF THE BOARD'S NOMINEES.
o DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED o
- -------------------------------------------------------------------------------
SPEEDFAM INTERNATIONAL, INC. 1997 ANNUAL MEETING
1. ELECTION OF DIRECTORS:
(terms expiring at the 1998
Annual Meeting)
1 - JAMES N. FARLEY 2 - MAKOTO KOUZUMA 3 - NEIL R. BONKE
4 - RICHARD S. HILL 5 - THOMAS J. MCCOOK
6 - DR. STUART MEYER 7 - ROBERT M. MILLER
[ ] FOR all [ ] WITHHOLD AUTHORITY
nominees listed to to vote for all
the left (except as nominees listed
specified below). to the left.
(Instructions: To withhold authority to vote for any indicated nominees,
write the number(s) of the nominee(s) in the box provided to the right.)
[arrow pointing to the box at right] [__________]
2. Proposed amendment to the Articles of Incorporation of SpeedFam
International, Inc. to increase the number of authorized shares of Common
Stock from 20,000,000 to 60,000,000, as set forth in the proxy statement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
Address Change? Date
MARK BOX [ ] ---------------------------------
Indicate changes below:
NO. OF SHARES
- ----------------------------------------------
- ----------------------------------------------
Signature(s) in Box
Please sign exactly as your name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give your full title as such. If a corporation,
please sign in full corporate name by President or other authorized officer.
If a partnership, please sign in partnership name by authorized person.
